Good post. I have been wondering recently why BLK has come off...

Good post.

I have been wondering recently why BLK has come off from its highs of $1.15.

I have tried to take an emotion free picture of BLK.

It has 6M OZ resource. AISC $1150/oz.

Current gold price is 1150 USD/ 1550 AUD.

Therefore theoretically a $400/oz profit. With 100,000 oz pa that is $40M EBITDA.

On 7x earnings that is $300M market cap.

There is $30M in debt, but that is 1 year earnings and should not be an issue.

To me, the market must be discounting the following factors:

1. Liquidity - ability to raise more funds
2. Production & Delivery risk - Can BLK deliver 100,000 oz per year?
3. Price of Gold - Will the POG go down so much that it becomes uneconomic to produce gold and that BLK will be unable to pay back debt
4. Ore Body- Is the grade sufficient or are there complications with the ore?

To my knowledge and someone please correct me, there should be no problems with the above.

I am really surprised that big players are not circling for a Takeover.

Even if they paid $200M or 70 cents a share. That is the current profit on 500,000 oz of gold. Therefore you would be free carried on balance of 5.5M oz.

It will be interesting too see what production costs are actually occurring vs budgeted.

Time will tell.