Minera Andes (MAI.to) hasn't reported full figures for 3q08 yet, but tonight it released production and sales guidance figures for its 49% owned San José mine in Argentina (the 51% majority partner is Hochschild (HOC.L)).
While nobody was expecting a repeat of the $63m sales in 2q08 (because in 2q08 San José sold over double its production of gold and silver due to previous stockpiling), the $18.5m in total sales for 3q08 is somewhat disappointing. The mitigating factor is that some metals produced are staying on inventory until 4q08. Those inventory metals look like around 2,580 oz gold and 144,000 oz silver. Using the average selling prices for 3q08 ($861/oz Au & $12.37/oz Ag) that's about U$4m in unsold production (so about $2m for MAI.to).
So we'll likely see $4m or so put in the current assets column, but a sale is a sale. As for net revenue projections, interestingly MAI.to "forgot" to tell us the cash cost per ounce of its gold and silver co-product this quarter. But let's assume the same numbers as 2q08 for the moment ($6.16/oz Ag and $322/oz Au). According to my casio this would leave a little under $8m in the EBIT column. So one the rest of the calculations are done and through I'm expecting MAI.to to announce an EPS of around 1.5c to 2c for the quarter, this assuming they haven't broken the bank on capex at the Los Azules copper project and spent a heap of those earnings.
So all in all I'm not expecting a sparkling result for MAI.to. A profit yes, but a blockbuster quarter no. The places to look for variations are with cash cost (assuming the 2q08 figures is a necessarily rough estimate for the moment) and with final net earnings (how much will be diverted towards capex?). The share price will probably move on guidance more than the filed numbers, so let's see what management have to say for themselves come the filings day.
Remember that earnings are one thing, but propects are quite another. For sure it'd be nice to see MAI.to earning a whole heap of money and stashing it in the bank, but right now the important thing is that the company is self-sufficient in cash and can get on with the job of proving up its potentially enormous Los Azules copper project (JV with Xstrata) without having to beg and scrape to the crunched financial sector. IMHO Los Azules alone makes MAI.to worth more than its current PPS (we're talking 11Bn lbs Cu and rising there), but then again I see a future for copper and the market now seems to think that nobody will ever need the metal again.
I'll leave you with the recent share price chart. 189.7m shares out at the current $0.73 puts market cap at $138.48m FWIW.
While nobody was expecting a repeat of the $63m sales in 2q08 (because in 2q08 San José sold over double its production of gold and silver due to previous stockpiling), the $18.5m in total sales for 3q08 is somewhat disappointing. The mitigating factor is that some metals produced are staying on inventory until 4q08. Those inventory metals look like around 2,580 oz gold and 144,000 oz silver. Using the average selling prices for 3q08 ($861/oz Au & $12.37/oz Ag) that's about U$4m in unsold production (so about $2m for MAI.to).
So we'll likely see $4m or so put in the current assets column, but a sale is a sale. As for net revenue projections, interestingly MAI.to "forgot" to tell us the cash cost per ounce of its gold and silver co-product this quarter. But let's assume the same numbers as 2q08 for the moment ($6.16/oz Ag and $322/oz Au). According to my casio this would leave a little under $8m in the EBIT column. So one the rest of the calculations are done and through I'm expecting MAI.to to announce an EPS of around 1.5c to 2c for the quarter, this assuming they haven't broken the bank on capex at the Los Azules copper project and spent a heap of those earnings.
So all in all I'm not expecting a sparkling result for MAI.to. A profit yes, but a blockbuster quarter no. The places to look for variations are with cash cost (assuming the 2q08 figures is a necessarily rough estimate for the moment) and with final net earnings (how much will be diverted towards capex?). The share price will probably move on guidance more than the filed numbers, so let's see what management have to say for themselves come the filings day.
Remember that earnings are one thing, but propects are quite another. For sure it'd be nice to see MAI.to earning a whole heap of money and stashing it in the bank, but right now the important thing is that the company is self-sufficient in cash and can get on with the job of proving up its potentially enormous Los Azules copper project (JV with Xstrata) without having to beg and scrape to the crunched financial sector. IMHO Los Azules alone makes MAI.to worth more than its current PPS (we're talking 11Bn lbs Cu and rising there), but then again I see a future for copper and the market now seems to think that nobody will ever need the metal again.
I'll leave you with the recent share price chart. 189.7m shares out at the current $0.73 puts market cap at $138.48m FWIW.
