>>23725263Forgive me burger-kun, I didn't know you had game like that
>>23725280>Typical FCF margin is probably around a juicy $1500/oz right now.At $4k/oz yeah I think that's on the right track
>riskFor sure can't deny that jurisdictional risks have materialized in West Africa. Countries have been ramping up royalties and social spending requirements. Mali has been the most stark example since they also demanded back taxes on top of increasing royalties by 5 percentage points. Security risks are also higher but those have continued to be marginal financially speaking.
>Between royalty, tax, and the state's mandatory ownership of a mine I doubt anyone is taking more than $1000/oz out of that country, probably significantly less.We can do the math on that. Their new maximum royalty rate is 10.5%, and corporate tax is 30%. Let's look at Barrick's Loulo-Gounkoto complex since that one is probably the most economic mine in the country. That mine's average cash cost prior to royalty payments in 2024 before it was closed was $691/oz. After royalties (with an average $2,386/oz gold price in 2024), cash cost was $847/oz. The mine's average AISC in 2024 was $1,442/oz, and the total capex was $383M.
If we assume that cash costs prior to royalties grow to $1,000/oz (almost +50%) and add on the 10.5% royalty, at $4k/oz the cash cost would be $1,420/oz. If we assume capex will grow to $500M on average annually and Barrick's 80% attributable production will average 500koz (almost -15% compared to 578koz in 2024) — AISC should then be $2,420/oz. Annual depreciation should be about $250M
($4,000/oz - $2,420/oz) * 0.7 tax = $1,106/oz, and this is before depreciation which will offset some of the taxes
