tommoc... close to spot on...at least 2 years before they start penny's and then if they achieve royalty of 8mill it would be over life of mine possibly 4 years, giving cash to spend/waste(?) on the 3 base metal prospects and directors fees but little else. not to mention the inherant risks with underground mines.
remember they started dewatering penny's about 6 years ago and had a joint venturer lined up with an underground mining plan. and who can forget the preceeding open pit...$30million in gold sold for a slim profit of about$1.5mill thanks to a better than expected gold price..no surprise that erl where keen to get out of it with the present royalty deal.
they say they are looking at other jv possibilities to buy into, and who wouldn't in this climate, what every mining company would like right now is a quick turnover open pit that can return 5 to 10million in 6mths. i read that predictions for the $aus exchange rate is 74c by christmas, the $aus is under valued and these record aus prices wont last forever... at least they have borrowing power to get a start on some lucrative new project, particularly with mr who has previously loaned 1.5mill. and probably has access to more given the aborted sop deal
but even good numbers on open pits can be problematic...take a look at a few other quick open pit mining deals...(a)...rez collected $3.75 for a joint venture with bml, the "profit" was gone on inside costs within 18 months...(b), auric boasted about their massive windfall profits on their jv with bml at jeffery's find, yet still made an overall company loss for the year. these type of small ventures do little more than provide running capital to delay capital raises...in practical terms, breaking even, or loss.
mr was close but not close enough with the sop deal, he has a similar situation here with erl and maybe some fellow investors who this time understand gold better than they do sop...so where's the company maker deal?
ERL Price at posting:
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