End of April...and wow...a lot has really changed since the last analysis. Clarity on cash on hand came to the different and was clearly different then my first analysis.
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Operating cost for Renard:
Guidance:
"For FY2019, cash operating costs are estimated at $120 to $130 million, representing $47 to $54 per tonne processed or $57 to $72 per carat recovered. FY2019 capital expenditures are estimated at $70 to $80 million, principally related to the development of the underground mine at Renard."
Capital costs of CAD$70 million...that will continue every year as the ramp develops to the bottom of the current reserve base. Maybe less in future years? Assume CAD$70 million 2019 and $35 million after per year.
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Cash and Receivables:
"As at December 31, 2018, cash and cash equivalents stood at $35.8 million. This amount excludes $13.7 million of restricted cash deposits related to debt service reserve accounts. "
Now? We need to look at the first quarter revenue and cost.
They had 2 tenders in the first quarter.
Here is SWY's hare after the stream (before any taxes or royalties)
(68102 x CAD$20) + (0.8 x 361,404 x 127) + (361,404 * 0.2 * (0.4*127))
Equals -- 1.36 million + 36.7 million + 3.68 million = CAD$41.7 million
Operating costs and capital costs are a bit harder to figure out....but lets give it a shot.
Operating costs are between CAD$57 to $72 per carat recovered for 2019 (estimate). Assume CAD$65. So....costs for first quarter for diamonds actually sold = 429,509*CAD65 equals CAD$27.9 million.
Capital costs -- For 2019, on average, they are going to spend about CAD$6.5 million per month.
So, for the first quarter -- CAD$19.5 million.
Without taxes/royalties (but with stream included).
The cash flow so far = 41.7 - 27.9 - 19.5 million = Negative CAD5.7 million
Various Debt Payments due on March 31st -- CAD$1.4 million
On a conservative basis (no government royalties/taxes), we are looking at a cash burn of CAD$7.1 million in the first quarter.
So, cash as of April 1st, 2019 estimated to be around CAD$28.1 million.
On June 30th, they have roughly CAD$5 million debt payment...and the burn rate for the quarter will probably still be about CAD$6 million.
So, in theory, July 1st, they will be down to CAD$17.1 million.
Stornoway has about CAD$12.1 million in debt payments due on Dec. 31st. It is tough to find a scenario where they will have that amount of cash to service that debt at that time.
" Solvency is the ability of a company to meet its long-term debts and financial obligations. Solvency is essential to staying in business as it demonstrates a company's ability to continue operations into the foreseeable future."
The balance is quickly slipping to the other side of solvency.
