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- Consolidated Zinc’s (CZL) second-quarter report reveals the company has just one-and-a-bit quarters of cash left, despite only just completing a capital raise
- The company’s operating costs totalled US$540,000 (around A$750,520), while its cash in the bank sat at US$745,000 (about A$1.04 million) at the end of the quarter
- Consolidated says the government-led COVID-19 shutdown meant it was only able to carry out production at its Plomasas mine in Mexico over 15 days in the June quarter
- However, it maintains operating metrics have all improved since work recommenced
- Consolidated Zinc also undertook a capital raising during the June period, allowing for the repayment of a convertible note
- The company also updated its mineral resource
- Today, CZL shares finished the session 12.5 per cent lower at 0.4 cents
Consolidated Zinc’s (CZL) second-quarter report reveals the company has just one-and-a-bit quarters of cash left, despite only just completing a capital raise.
Financials
Over the June quarter, CZL burnt US$540,000 (around A$750,520) on operating activities.
A large chunk of the cash burn was offset by US$737,000 (around A$1.02 million) in customer receipts, however, over US$700,000 (about A$972,900) in operating costs and US$474,000 (approximately A$658,790) in staff, admin and corporate expenses kept the quarterly cashflow totals in the red.
In the year-to-date figures, CZL burnt US$1.01 million (around A$1.4 million) on operations.
Beginning the June quarter with just US$298,000 (roughly A$414,180) in the bank, Consolidated Zinc boosted its bottom line and brought its balance up to US$745,000 (about A$1.04 million) by the end of the period.
The added cash primarily came from CZL’s entitlement offer, which netted the company US$1.28 million (approximately A$1.78 million). In addition, CZL reports it has over A$1.2 million in available financing facilities at the end of the quarter.
However, those facilities haven’t been counted as part of Consolidated Zinc estimated cash balance in its June cashflow report — meaning the company believes it only has enough funding to get through one-and-a-bit quarters, despite the recent cap raise.
Accordingly, CZL estimates its operating cashflow balance will improve in the current quarter, thanks to a ramp-up of operations now that the COVID-19 shutdown has concluded. In addition, the company believes the price of core commodities like zinc and lead will continue to improve and decrease its cashflow costs.
Activity
Consolidated says the government-led COVID-19 shutdown meant it was only able to carry out production at its Plomasas mine in Mexico over 15 days in the June quarter. However, it maintains operating metrics have all improved since work recommenced.
Direct operating costs over the period were 84 cents per payable pound of zinc sold — 20 per cent lower than the previous quarter.
However, the lockdowns in Mexico and time taken to remobilise teams to site translated to less ore being mined and processed over the period.
2575 tonnes of ore were mined at Plomosas and 2201 tonnes of ore were processed. This had an average grade of 16.6 per cent zinc, 9.2 per cent lead and 64 grams of silver per tonne. However, this is a substantial decrease from last quarter’s 9987 tonnes mined.
On a positive note, exploration activities contributed to an updated mineral resource, which now sits at 964,000 tonnes grading 13.2 per cent zinc and 3.5 per cent lead with an estimated 161,000 tonnes of contained metal.
Consolidated Zinc also completed a A$1.725 million entitlement issue and $570,000 placement, allowing for the repayment of a $200,000 convertible note and interest.
Shares finished the session 12.5 per cent lower at 0.4 cents.
