Ann: Trading Halt, page-353

Kempeman

I think talking with management is very useful if one knows which questions to ask and are able to correctly interpret what they are saying. It has helped me many times in the past.

Taking with BDR recently confirmed how tight things were after the release of the December quarterly report and that implied to me that a capital raising was a reasonable possibility to get the company over until the revenue from Duckhead came in. It also became apparent that there were some more significant costs in completing the stripping of Duckhead - significant in the sense that given their funding constraints, they would be struggling badly to meet all their commitments in the next 6-7 months without some sort of restructuring of debt.

The presentations by BDR were are a red flag that management was likely to be seeking funds, as noted by several posters. The other concern was the low grade of the ROM ore - just 0.8 g/t, which meant lower production and hence lower operating margins as costs are going to be spread over fewer ounces.

I thought the higher gold price would save the need for a capital raising if they simply hedged 50-60% of production at current prices for 12 months. Except for that thought and possible debt restructuring I never took much notice of peoples claims that BDR's management would be able to make it to end September without a capital raising without Duckhead revenue, which I thought they might raise $10-15m.

JID's copy of the Hartley report is interesting - it indicates a need to spend $20m to upgrade the plant. I guess that is why they have gone the whole hog and are raising $50m.

BDR badly needs to fix up its mining operations so that the mill feed is closer to the average reserve grade.

We will see how wisely the money is used. Given the sum being raised there can be no excuses by management in the future. Hopefully in 18-24 months time BDR will be producing 200k ounces per annum at under USD800/ounce, perhaps as low as USD750. In the meantime I will continue to take their presentations with lots of salt.

loki