We get to participate a tiny bit in the 667 ounces delivered to Deutsche Bank each month (gold price between US$900 and US$988).
667 ounces * US$88 * 1.04 exch = C$61,000
We get C$61,000 each month (over the original US$33M financing amount).
Also, as mentioned yesterday, the gold price has risen above US$1,200. It is now US$1,232.
Applying this $32 increase to the analysis from yesterday (instead of $29) now gives us C$150,000 in funding above the US$1,200 gold price.
C$61,000 + C$150,000 = C$211,000
These collective bread crumbs should be sufficient to fund about 35 of our workers or 15% of our workforce at Lamaque, based only on today`s production levels.
Then we still have our original US$1,200 of the gold price. Against current Lamaque and San Juan ounces (with the Deutsche delivered ounces backed out) we are looking at C$5,620,000 in monthly gross revenue, above the C$211,000.
7 comments:
1,232 sure looks a bit rich to use as an average price for gold for third quarter.
Using London PM Fix Data one gets an average (quarter to date), through today 19-August, of 1198.62.
http://www.kitco.com/gold.londonfix.html
http://www.gold.org/deliver.php?file=/value/stats/statistics/xls/web_daily.xls
Gold.org has the monthly average for July at 1192.97
Usually the "London Fix" is close to the average price that Gold Companies get when they sell their product to the bankers.
Only a few have been bright enough to hire traders or hedgies to sell their gold and optimize the price. [AMC did it for a while, but if the "trader" was operating last quarter he should be fired since they missed "average" badly.]
This is a forward looking analysis.
``A sustained $29 increase in the gold price, as a gold producer, provides....``
OK, fair enough.... "forward looking"
...but since we are already half way through the third quarter it seems like the price of gold would have to AVERAGE 1266 for the rest of the quarter in order for the third quarter average to work out to be 1232 the number.
(1198 + 1266) / 2 = 1232
...probably not much effect on the overall concept of your post and good analysis...
Hi Prod05
Simplistically, in year 2011
-production Lamaque90,000 + SJ20,000= 110,000oz
-Ave gold price =$1300/oz
-total gross revenue=$1300x110,000=$143,000,000
-cash cost = $600
-total gross profit=$700x110,000=$77,000,000
Can we just retire the +-33,000,000 DB loan outright by then? I know I am grossing over lots of financial issues. Just like to get a feel
Hi Wingfong,
I don`t know what the exact rules are, but I`m guessing they will need to deliver the ounces as oppose paying down the debt amount booked on the balance sheet (again, I really don`t know for sure).
At this particular moment in time (we`ll see how things develop), I would like for Century to maintain the current delivery schedule with Deutsche Bank. I would like Century to keep all of the extra cash flow (via production) and grow the company aggressively. For example, if the gold price goes to US$1,500 or US$2,000 in 2011 or 2012 then I want us to take full advantage of that situation. If we are able to use the cash to grow the production both organically and through M&A in the interim, to say 300,000 ounces annually, then everything becomes exponential for us when the US$2,000 gold price arrives (and the Deutsche Bank commitment becomes an even smaller percentage of our overall production, if we are above planned levels).
In the short-term, what I would prefer to see is Century not access the remaining funds in escrow. With ounces already delivered coupled with not accessing the remaining escrow funds, it might leave us with 42,000 left to deliver (the original amount was close to 62,000 ounces).
Again, I don`t know what the rules are. I don`t know if we are fully committed to removing all of the money or if the balance in escrow is optional. If the Bedard Dyke and the North Wall delivers big time for us, and delivers early, (and the share price takes off or at least stays strong) then the situation might give management some options with regards to rethinking the need for the remaining escrow cash.
Mr. Anonymous, use a consistent posting name or your posts will be deleted.
Clearly Production was talking about the current gold price - not the average to date for this quarter.
Yes Sir, keeping all our powder, give a gigantic push to our organic mine fronts and grap a nice mine or two to aggragate output to a total of 300,000oz near term must be slivating! No reason why this is not a solid move. If the price of gold does cooperate and delivers $2000 within 18 months as frequently forcasted in the resourse- investing community, then the ensuring exponential effect, as you had put it, will certainly make the print of this baby's foot deep and recognisable. Cheers!
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