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Cash flow from operations

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Cash flow from operations


Postby GoSeigen » August 9th, 2018, 4:22 pm

A mining company produces gold profitably and is simultaneously in an extended phase of capital investment. During the several recent quarters of this phase operations are strongly cash generative.

Suddenly one quarter, without any obvious change to profitability, costs and revenue, cash flow from operations turns negative -- so worse than previous quarters and the year-ago quarter.

I note that inventories are up, trade and tax payables down, but receivables up. I presume all of these B/S entries are related to operations (even the tax?) and perhaps account for the suddenly decreased cash flow.

In the context of a mining company are they cause for alarm? Or are these items expected to be so lumpy? Why would the company have suddenly paid its suppliers and the taxman, built up a bit of inventory and not collected payments for its sales? I'm not aware of any events that would have strongly affected operations. Gold price is down a bit but that didn't impact revenues much compared to earlier quarters.

Any ideas?


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