Ann: Paulsens Gold Operation - Refurbishment Update, page-12

They have about $30m in cash now. The debt will be used as needed. I assume they may go for more debt than they would need in order to have a buffer. That is usually what management would do so you don't come back to the market. These guys know how this all works. The bulk of the toll treatment cash flow hits next year as the contractor gets their cash first. Paulsens real cash flow hits earlier. This has allowed bc8 to be free carried. It also exposes the underground when it ends. That's a fat bonus. Kal East has 1.3m ounces of gold, and this toll treatment is based on a fraction of their gold. Its 52k ounces out of 1.3m ounces at Kal East. They are looking at making $30m on that 52k ounces at $3500 gold next year. That profit on 52k ounces is the equivalent of paying out all the debt on its own.
The longer term profitability of this company is completely under appreciated across the board imo. The sector remains cheap. I think if the US falls into a recession (looks like it’s already started) then the FED can really only drop rates and print. That's great for gold. The equity market will get volatile of course.
The expected cash flow from Paulsens will also wipe the debt out very quickly. I would expect that bc8 would pay a premium for the debt as it’s going to be paid back quickly and lenders tend to want excessive mine life. I've seen this before. It’s all very normal. We will find out soon enough. The interesting thing about bc8 is that these mines are very high-grade with large margins. The debt is nothing more than reducing dilution to me. The previous China deal would have had a lot more stock on issue with debt. The original studies were done at $2500, now they were upgraded to $3500. Gold is now $3750. The increased margins should allow the company to destroy the debt next year imo. If all goes as they have stated, then bc8 should have zero debt and a pile of cash with 2 profitable mines spraying money next year. That's when things get interesting when you make peer comparisons.
Bc8 is now set, regardless of the loonie toon market. They are funded and building. Having 3 permitted mines in WA is a fantastic achievement when you think about it. Govts don't make permitting easy at any level. They tend to get in the way and make companies consume resources to pay for their involvement. The red and green tape is ridiculous these days. Govt is an enormous strain on business and people.
I think many wannabe mines will remain shelved. The costs, permits, time tables, dilution, grade and appetite isn't there for a majority of companies.
The current market correction wont stop them mining. If we get lucky with this gold price direction, then its going to do very well imo. Day to day is anyone guess. I'm here for the much bigger pay off next year. I am super happy this is funded now, it takes away that risk. Dyor.