I believe this is a rather good Quarterly report. the reasons are:
1. they still have 40m cash plus 8mil TD for environment bond.
2. they should have 1,000,000 CYL shares while waiting for their decision. that worth $0.5m. if CYL wants the plant, that's $6M cash, if not, still can be used for Dargues Reef.
3. they holds 34% goldstone, they worth about $5M now, but trade at record low. I dont think the sp has reflect their recent resource update in Africa, which is fair enough as it's only early stage.
so in total, their cash backed sp should be around 12.5c.
the upsides are:
1. the fact they only produce 7000 ounce for the Q at higher cost, but still forcast full year production at 45-55k at higher spot gold price sounds really positive to me. the gold still buried there, just worth more money now. if they can update us in the intrim regard 2Q production and costs on target, we will see sp above 15c in no time.
2. if this no premium merger finally take place, that's another 3-5c in the wallet. that's because CRC currently cap of $26m is based on a cap raising of $40M (over 150% of current market cap, so market doesnt believe the production will come any sooner) to fund the Dargues Reef. now they have us, so the project is fully funded without cap raising, therefore, the original credit facility can be more favoured.
3. if finally 100k production comes 80% true. we will see sp over 30s.
the downsides are: 1. UML's henty mine doesnt support next two years production, or costs become permanently high. 2. Dargue Reef resource prove not supporting 5 yrs production at initial low costs. then we are f*cked.
3.
UML Price at posting:
12.5¢ Sentiment: Buy Disclosure: Held
