"Why would we forward sale at $1600 now to raise funds when there is a good chance by this time next year we will selling at $2000."
1) Because gold could go down again, too?
2) Because Tomingley is DWARFED by the DZP. Long term our SP won't depend on Tomingley, but on the amount of money we make with the DZP and the amount of shares outstanding. Selling shares below $2,50 for Tomingley now is simply madness imO.
Lets take your example of gold going to $ 2000. Yes, in that case (unhedged) we could have made not 30 mio profit per year but say 40-50 mio. So what? DZP profits will be somerwhere between 250 and 500 mio / year, depending on prices for zirconium and HREEs (and recovery rates). Tomingley is PEANUTS in comparison. What we need Tomingley for is assuring enough cashflow to cover overhead without dilution (sic!) and move all the other projects to the point where we can decide whether it makes sense to develop them or not.
3) Also, the forward sale would only cover the first few years. If gold is at 2000 next year, we can sell forward another year or two worth of (50% of) production.
4) Finally we still got the Orange JV and 3 other projects to profit from higher gold prices.
ALK Price at posting:
99.0¢ Sentiment: Buy Disclosure: Held
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