"..You’ve got to have a company with a significant project and cash for it already in the bank to move it forward at least to the next significant level, and a tight share structure and a smart management team. Prior to this, cash in the bank was not that important because a company could easily finance the next round of funding. That is not the case today. They’re not going to be able to simply go out and say, “Hey, we need 2.5 million more dollars to do our next set of drilling.” The money is just not going to be there; they have to have the money already in hand.
It’s a financing problem. And it’s a terrible problem because these are not operating companies. The only way they advance is by working in the field, which either can be by drilling, or induced polarization or magnetometer work, etc. Something has to be done on the geology or the geophysics to move the property forward, and that takes cash and capital. If they’re not generating capital internally through cash flow, then they have to raise the money in the stock market; if they can’t raise the money in the stock market, they’re dead. Their stock is just going to keep going down, and they’re going to have to sell their property to a stronger, better company, or they’re going to have to joint venture it with a major on what would have been considered unreasonable terms. Something like that is their only way out.
On the other hand, a company with a great property and $5 million in the bank, with $2.5 million worth of drilling over the next months, will probably be just fine..."
Full article at http://www.kitco.com/ind/GoldReport/aug202008.html
Comment:
We can all see clearly now what a blunder it was for PRE not to raise four million or so when they were trading around 6 cents earlier in the year.
PRE Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
