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  • Silver Lake Resources' Mount Monger Generates Cashflow Of $61M 0 comments
    Sep 1, 2014 12:13 AM

    Silver Lake Resources (ASX:SLR) has reported that its Mount Monger Operations near Kalgoorlie, Western Australia, have generated positive cashflow of $61 million.

    This was achieved on the back of full year gold sales of 172,838 ounces at an all in sustaining cash cost of $1,070 per ounce.

    It also repeated gold sales guidance for the 2015 financial year of 125,000 to 135,000 ounces of gold.

    However, this may be reviewed in late 2014 depending on the outcome of evaluations of several projects that are currently underway.

    These are focused on asset quality to maximise cash generation and may lead to these projects displacing lower grade stockpile feed in the second half of FY2015.

    Gold sales for FY2014 was 217,348 ounces, up from 151,060 ounces in FY2013, resulting in a 44% increase in revenue to $309.7 million.

    EBITDA excluding significant items was down to $26.3 million from $41.5 million while net operating cash flows fell to $24.5 million from $53.9 million due primarily to the poor performance from the Murchison Gold Operations.

    "Our financial performance in FY2014 needs to be taken in context now that the Murchison Gold Operation and the Lakewood mill have been placed on care and maintenance," managing director Les Davis said.

    "Going forward the company is mainly focused on the Mount Monger Operations which recorded another strong annual result.

    "Mount Monger Operations generated a positive cashflow, after sustaining capital, of $61.0 million on the back of full year gold sales of 172,838 ounces at an all in sustaining cash cost of $1,070/oz."

    The company is in a strong financial position with $34 million in cash and bullion, no debt and investments in ASX-listed entities of $9.8 million.

    Results

    Silver Lake recorded a net loss after tax for the year of $170.4 million impacted by:

    - A lower average gold price for the year;
    - $91.2 million of asset and inventory impairments;
    - An operating loss of $31.5 million from the Murchison Gold Operations, which have now been placed on care and maintenance; and
    - A tax expense of $53.1 million relating to de-recognition of deferred tax assets.

    The Murchison Gold Operation and the Lakewood mill have been placed on care & maintenance.

    Mount Monger Operations continued to perform strongly with EBITDA of $58.1 million and positive cash flows of $61 million.

    During FY2014, the company raised $85.9 million of capital to repay bank debt.

    Looking Ahead

    Ore feed in FY2015 at Mount Monger Operations for the Randalls 1.2mtpa mill consists of the Daisy Complex & Cock-eyed Bob underground mines, the Wombola Dam open pit and surface stockpiles.

    Several projects are currently being evaluated at Mount Monger Operations to displace lower grade stockpile feed in H2 FY2015. Depending on the outcomes of these evaluations, guidance may be reviewed in late 2014.

    These evaluations are focusing on asset quality to maximise cash generation.

    The company had previously noted that short term production options under evaluation are Rumbles and Lucky Bay while medium term options include:

    - Developing Majestic and Imperial deposits;
    - Developing the Maxwells underground mine; and
    - Advancing the Magic deposit.

    Exploration will also be carried out on Daisy Upper; West and East of Daisy Complex; Lorna Doone; Majestic/Imperial; Randalls BIF; and Aldiss.

    Notably, there provide a steady pipeline to enhance projects within the Mount Monger Operation.

    Silver Lake also plans to finalise the expression of interest campaign in relation to the Lakewood Mill with a result expected to be announced in the first half of FY2015.

    Mount Monger has Ore Reserves of 0.6 million ounces of gold with total Resources of 3.7Moz.

    Analysis

    Evaluations are underway on several projects at Mount Monger in Western Australia that have the potential to displace lower grade stockpile feed in the second half of FY2015.

    This could revise Silver Lake Resources' FY2015 gold sales guidance of 125,000 to 135,000 ounces of gold.

    Silver Lake Resources had a very healthy $34.0 million of cash & bullion, no bank debt and investments in ASX-listed entities of $9.8 million at June 30, 2014 year end.

    Notably, Mount Monger Operations which recorded another strong annual result and generated a positive cashflow, after sustaining capital, of $61.0 million.

    Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.

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