progress of deep hole, page-35

MickyD, you’ve had your work cut-out today! Hang around because I for one enjoy sceptics who intelligibly explain their case. My “share price hanging tough” statement is far-fetched I admit but the price did fall to 30c during Opes Prime and has been clinging by its fingernails while the WA goldies get killed due to cost concerns.

My “cash-flow” hero of the ASX gold juniors is Troy Resources (TRY). I bought them in the late 1990’s and their dividends have paid for my investment at least a couple of times over. They’ve remained debt-free, have not diluted the share registry, produced 400k oz over the past 4 yrs, and brought 5 mines to production over the past decade. Directors own 14% of the company so they’ve looked after shareholders.

There are more recent juniors like CTO that have raised some equity to move to small-time production, e.g. MUN (Brazil, Peru) and MML (Philippines). I own them because they have cash-flow to grow production and fund grander objectives in “elephant country”. Then there are other quartz miners like MCO (VIC) and HEG (NSW) that are running on an oily rag with trial mining generating cash to help fund production expansion after that.

So in my mind, what CTO is trying to achieve is possible and indeed probable. The lingering concerns are their unfulfilled promises made this decade, which your post highlights. The directors owning 15% is a positive and $9m spent on admin since 2005 seems OK to me out of a total $54m raised via equity and debt.

Debt shouldn’t necessarily be eschewed. Another gold developer I like, ATV needs debt/equity to move to production in Nova Scotia (Canada). See the ATV forum. Hedging is required but the debt can be knocked off after 1-2 yrs so no big deal. However, the Chairman told me a few weeks ago that financiers want to “rape them” so they have to be careful and have knocked back loads of “offers”.

Having options and being master of your own destiny is very important, which I think applies to CTO because they have cash-flow.

Rowingboat.