BYR vs BSR, page-4

Hi jignesh12003
In order to help with your query regarding BSR v BYR I have put together some notes.

I do not know anything about you and your investment strategy so please do not read anything into this message other than that it is intended only to assist and provide food for thought - you may know far more than I – and at the end of the day it is your money that you are thinking of investing and you and you only should make that decision.

So; What bases need to be covered?

The most important things to me are:
The company must have sound management covering financial and technical skills
The company must have an excellent “story” – highly prospective opportunities
The opportunity must be realised in a reasonable period of time

In my case I also do not invest in Gold companies that are pure Explorers. In this sector I only invest in companies that I consider have been de-risked.
I also take particular note of the detail in the Feasibility study – I will not invest if there is not a Feasibility study that shows good, prompt cash flow generation with a short pay-back period
I also note whether directors of the company have a reasonable holding in the company and whether they are increasing their holdings.
As a company moves into development I also note whether larger institutions/strategic investors enter or increase their holdings.
For me, management is the most important criteria – it is no good having a very good opportunity if the management of the company do not have a track record of realising opportunities and of looking after the interests of shareholders.
The story must be a very good one and backed up by the Feasibility study
It is not just resource potential – what is the initial Reserve and how easy is it to get into production and at what cost. Is the gold Oxide or Sulphide or both – what does the metallurgy say.
(Oxides are free milling – minimal processing) – Sulphides require additional processing to separate the gold.
Then there is the cost of development and proximity to infrastructure.
So out of all of that you then arrive at the NPV and the cost of producing the gold. (and I have left out many steps)
Then, as we know with BSR, comes the Environmental Impact Studies and conversion from exploration to production permitting – these requirements can take many years – and they do not start until the Feasibility study has been done which shows the potential.

So in your example case comparing BSR with BYR it is not only potential resources and how many shares outstanding each company has – they are at vastly different stages of their journey’s and though they are both in West Africa the 2 countries cannot be compared on an equal footing. When BSR was at the same stage as BYR there were far less shares outstanding

So it is very difficult to make a comparison between the 2.
BSR has gone through all it has during a massive downturn in the sector (so it may be an easier journey for BYR if the gold sector does continue to come back into favour).

For me the points of difference - and why I prefer BSR, are:
BSR has a very good Feasibility study with gold production under US700, and an exceptional IRR (this is more relevant in the early times – at the end it is how much gold can be extracted for what profit).
BSR has been through the environmental process and the production permit appears to be imminent.
BSR requires very little additional funding to go into production US12 Million
BSR has significant additional resource potential
BSR operates in what is considered one of the safer jurisdictions to do business in West Africa (this is from my research and from work colleagues who have worked there)
For me, BSR is better poised to take advantage of the direction in the gold price in the near to mid term (2 to 5 years) due to where it is in the development timeline

This is only my opinion – others may know a lot more about BYR and investments in the DRC ( and everyone must make their own choice – I do not want this to be considered advice of any sort – other than being very careful and investigating everything thoroughly before making investment decisions.

I expect there will be other investors who know far more than I about investments in the DRC

General notes:
Investors will always say that risk management is the most important part of investing – it is more important to keep what you started out with than to add whatever gains you can to your initial funds.

Therefore, unless there is a very compelling reason to invest heavily immediately, I also scale in to investments – usually investing 1 third of intended capital in the first instance.

I then do a time test – I review the decision all over again when it comes time to invest more funds and verify if all the criteria that I used as the basis for the investment the first time are all still valid.

Also I do not look at an investment just because of 1 particularly good criteria – all of my criteria must achieve a good pass mark – if not I just do not invest – there are always more opportunities – I would much rather miss out on an opportunity than find myself in one which has gone bad that I would want to get out of but would only be able to do so at a loss.

I hope this is helpful

Good luck with whatever you do
Interested Onlooker