Of course AISC can be used. You are completely missing the point of the balance I am making. It is obvious that sustaining capital does not scale with ounces produced, and the more you produce, the lower that portion of AISC will be per ounce. I am certainly aware of that. But you are acting as if I started from an AISC seen for X ounces produced, and extrapolated to Y ounces with no change. I did the reverse. I started with an expected production figure for the whole year (based on management's expectations), and THEN estimated as reasonably as possible what the total cost of outputting each one of those ounces would be, based on current information. It is completely reasonable to estimate that it will cost 750$+/oz for Banro to mine 120,000 ounces at Twangiza in one year.
I could have presented things differently, separating cash costs and sustaining capital, but chose to bundle everything up in a single number for the sake of simplicity. I could have presented things as follows:
Twangiza will produce 120,000 ounces at an average cash cost of 650 $/oz, and spend about 12M on sustaining capital throughout the year. The result is the exact same, it means the company will have to spend $750 for each ounce of gold mined at Twangiza, on average. What this calculation does is exemplify in clear terms why under current circumstances, this company has virtually zero chance of generating any free cash flow, contrary to what most folks are thinking. They believe due to the low cash costs, the company will make money even if gold goes down to 1000/oz. They fail to project the impact of the Namoya stream and Twangiza forward sales, and that is what I wanted to illustrate.
Now on to your next objections. The fact that I chose to make a balance for a full year is a conscious choice that is designed to avoid the quarterly fluctuations in production (I can't pretend to predict the weather, etc.) and also makes it easier to account for interest payments, dividend, etc, which are not due every quarter, but the amounts of which, for a whole year, are exactly determined. Also, this is the entire time runway the company has to accumulate cash before the next impending massive challenge the market will turn its focus to: 2017 bond repayment.
Next: you are saying, even if they run out of cash, they can stop paying their suppliers and they won't say anything because they won't have a choice. You know, when debtors stop paying, usually you don't react by extending more credit to them, you simply stop supplying them until they pay you what they already owe. Also, is that a good investment? Investing in a company because, when it comes to that, they can simply stop honoring their obligations and paying their creditors?
Finally: fuel costs? Maybe a tiny bit of help there, but fuel prices were already extremely low in H1. Won't have much effect.
And African currencies weakening against the USD??? Seriously? Another huge factual error on your part. Are you aware that the Congolese Franc is pegged at ~920/dollar by the central bank? So tell me, what savings do you think BAA will have on their costs due to the USD bull market?
Regarding bonds, it is delusional to think BAA will have better terms on refinancing those. They are insolvent, practically out of cash, and still cash flow negative, outside of financing operations. They have zero chance of refinancing their bonds right now, otherwise, it is obvious they would have already done so.
You object that I cannot pretend to predict costs, production, etc, for a whole year that much in advance and extrapolate numbers. On the contrary, extrapolating and using your sense of analysis to try to predict future outcomes based on the current information at hand is the essence of evaluating a decision to invest in a stock. Why are you in the stock market if you don't think you can analyze or predict, extrapolate anything? That's the whole point. To make money, you need to know or see something that the rest of the market has not anticipated yet, and which gives you an edge. Otherwise, you are a gambler, not an investor.
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