Hi RooBendigo,
I feel your frustration with Management here, and also, that was a brilliant post of yours back on the 23rd of Feb. It seems we have gone from an aggressive, perfectly-timed expansion of the high-grade resource (with booming share price), to raising what I felt was way too much cash (therefore heavy dilution) to restart the mine (obviously they had other plans), then to an extended break over XMAS and now, to some sort of lame duck crusade to build even more ounces, pushing first production out to 2027???? Let me just say, as much as I love this Company - and the achievements of Management up until the recent capital raise - THIS IS
NOT SPARTA! WTF has happened?
We spent much of the last two years proving up the tremendous high grade potential and
"de-risking" the project. Along with the great skill of the geos, we have been on the right side of fate in both delineating the ore bodies and the cracking move in the price of gold. The best teams in business and sport know when it's time to change gear, to push into overdrive and get the job done. The Spartans are retreating it would seem, who cares about making money, let's just push out production to whenever. Someone mentioned they need some engineers and builders in the mix, to help change the narrative. Maybe, they also need a finance guy/girl to teach them about the time value of money. $100 million in two years time is only worth about $86 million in today's money (discounted at 8%). This is why almost all prospective miners front load production schedules, the earlier they can get the money in their hot little hands, the more valuable it is. It would be an absolute abomination if we required a further capital raise to complete the plant and ramp up production, yet it seems this could actually happen and Simon doesn't seem concerned at all. Is this some weird play on the Lassonde curve; are they foolishly waiting on RMS to make a play (
@Joelstar - repurposing the idle RMS ball mill makes sense); are they just so confident now that they will find even more Peppers and Never Nevers and turn Dalgaranga into a bona fide Tier 1 mine, and sell to a major without ever producing an ounce of gold. It's really hard to know what's going through management's collective mind here. We may get some brilliant assays reported this week, or a hefty takeover offer, and all will be good with the Spartans once more. Who knows?
What, I think, most of us can observe, is that risks are no longer dissipating, they are, in fact, on the rise. The first reason is obvious - the price of gold. This is out of our control. A change in Trump policy could see money quickly pulled from the safe-haven assets and back into the greater stock market. If gold price begins to drop consistently, sentiment for gold stocks goes out the window so fast it's actually scary. The second reason is that delaying production raises questions. What management think is a brilliant strategy, from a different perspective becomes, "what are you hiding?".
As for the RMS takeover, I don't give them anywhere near the credit others have. I think they had a great opportunity, over many months, when they could have acquired the assets for little more than the replacement cost of the infrastructure already built. They could have taken the whole lot for under a dollar, with far less shares on issue than we have today. They would have soon discovered Pepper, and I'd hazard a guess, may even be already pumping out the gold bars. Their first belated investment in Spartan was more, "we better do something or else we're going to look real stupid if these guys keep building ounces or someone else takes them out before us". At this point, unless they have done their due diligence and can confirm everything Simon is saying about the discovery, it is arguably in their best interest to wait - Gina Rhinehart/LTR style - for the mine to go into production and prove up, once and for all, how much can be produced and at what cost.
Just to finish, this is still a big holding for me. I have been a vocal supporter of management and it remains to be seen how this all plays out. I'll give Simon and the team the benefit of any doubt at this point in time - this can change. I actually feel quite embarrassed challenging the views of
@Undaunted over the last year or so, but I don't think many of us could believe, after raising all that cash, that prioritizing the completion of the plant, with the gold price where it is, would not be foremost on the mind of management.
Good luck all, hopefully some good news this week.
(20min delay)