Hello Eddy , Goalie and All.
A few thoughts on Q2 and going forward:
1. Clearly , the McKay write-off and the amortization of the Randgold payment had a dramatic affect on EPS ; unless Marsfontein proves out a longer life (it will - CJ told me he thought 10 years and we should know the drilling results in August - only question is "when" for accounting purposes) , this amortization charge will continue to depress EPS ; doubtful we'll see another significant exploration write-off this year - all the properties with accumulated costs in the AR are still "active". FWIW , I believe it's a little premature to measure SUF as a function of EPS .IMO , CFPS - i.e. does the co. have the cash to feed the engine without having to access the public markets is far more significant a measure at this stage.
2. CFPS for Q2 was lower than Q1. This really surprised me because a measurement of Q2 vs. Q1 looked like this:
a) Q2 - 277K carats X $114/carat = 35 CFPS.
b) Q1 - 200K carats X $121/carat = 37 CFPS.
I spoke with the co. about this - apparently , SUF received payment for its last Q2 produced parcel on July 2 - i.e. it will be reflected in Q3.
3. The direction of the analysts' questions on the conference call , and echoed in FM's comment in today's FP story , was whether SUF can generate sufficient cash flow post M1 to fuel the exploration /development engine without having to go to the market/dilute. (Strangely Teevee, there does not appear to be any market concern whatsoever that SA is going to fall off the face of the earth/spiral into an abyss/implode - ;-)). I thought the co.'s response was bang-on - assuming no new Marsfontein pipes/blows , the co. feels that even under conservative projections , it will be more than able to bridge the CFPS drop post M1 until Klipspringer fissures are ramped up/ Camafuca and Messina kick into production.
4. I really respect these guys for the conservative approach they take - while given the share price I am sure there must be some temptation to hype/overstate , they resist it and focus on building the co.
5. The next 3 - 4 months are going to be exciting/telling - Marsfontein/Klipspringer exploration/reserves will become clearer , Camafuca bulk sample complete (hopefully in a climate that increasingly looks like it may be peaceful) , Messina done/financed and who knows - NWT/Brazil exploration advanced ?.
Regards and a good weekend to All. |
