Firstly, I'm not here to defend the management of CAS. Along with everyone else, I'm fairly pissed off that a placement had to be done at 17 cents, when there appeared to be other avenues of funds available earlier, such as the Chairman getting a placement instead of him buying millions of dollars worth on market between 30 cents and low 40's last year. From memory, didn't he buy around $5 or $6 million worth at those prices? Very similar to the amount CAS is now raising.
So, as an example, CAS could have offered him a $5 mill placement at say 25 cents last year, if they had the vision of lower IO prices. Although, I'm sure we shareholders would have also been pissed off with that back them if the market price was 30 cents and he was offered them at 25 cents. Correct? Shares for the boys scenario?
I believe the current situation was to a fair degree out of managements hands and is mainly due to the falling IO price and less local demand. For now, we are primarily an IO producer and you just have to look at others in that sector to see how much has been taken out of their share price. Actually, the CAS price has dropped much less in percentage terms as probably most, if not all, IO miners.
Knowing that it hasn't dropped as much as other IO operations still doesn't comfort us when the price is sitting at current levels though.
So, where to from here? A higher IO price and stronger demand will help but it's hard to envisage strong pricing in the short term, imo. The IO price "appears" to be turning, but for me it's way too early to feel confident that price levels will rise considerably in the short/mid term.
So CAS have to find all means to cut running costs, as all other IO miners are doing, which they acknowledge they have been doing. Another cash avenue from Posse operations is through the treatment of the fines. Have they created a salable product? I believe so.
Eventually Posse will get to a "good as can get" situation, where it will be cashflow positive but any potential cream will only come from higher IO pricing.
Which leaves us with their next operational target and source of revenue.......gold production.
Some "chatter" I heard a month or so ago was to do with them becoming a gold producer in 2016 and from what we could ascertain, our conclusion was Borborema. I think the conclusion was wrong and after reading the Morgan report, I'm even more convinced that they are planning to produce at Jurueana. Small scale pit operations, with low capex and AISC.
As for Borborema, either JV or to be acquired, so that they can focus on Jurueana.
I will be very surprised......and I mean VERY surprised, if CAS don't come out within the next month or so with a more detailed plan of the future.
ps......GZ, the SPP is mot underwritten, so only holders can participate.
Cheers.
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