Personally, I do believe they will be back trading and operating.
The new CEO was a good move.
The new reserves statement and mine plan was well done, and prudent, and necessary.
The only problem they have is a debt repayment, but these can be renegotiated, particularly if the lenders want to see the company survive, rather than want it to go under, and then have the creditor take the mine for themselves as part of the debt settlement - it can go either way, and is largely up to the creditor(s).
It does also sometimes depend on how the debt contracts were written up, and what was put up by the company as the key guarantees for the loan.
For instance, a struggling Canadian company I own, put up their entire project and all infrastructure and equipment as a guarantee for a $30 million loan. The value of all their assets, and the spending on developing all those assets over the past 3 years amounts to $400 million. So they were desperate for the loan. But the creditors are now actually more than happy for the company to fail, to go into receivership and be liquidated, because they get $400 million dollars worth of project for just their $30 million investment - a great return. So the creditors actually have very little interest in seeing the company survive and flourish, in fact, quite the opposite. This is a proven methodology, for example, often practiced by the Russians, like Pala Investments.
I'm not sure what DCN has put up as guarantee for the loans. Was it the whole project and mine and all gold held and all infrastructure and everything else, in other words, did they mortgage their soul for these loans ? I hope not, because if they did, then the reason for the delay may be the creditors playing hard ball, because they may want to be given the project and mine for their compensation, rather than see it flourish and succeed.
Altura Mining was recently in a similar situation, however they have a very good relationship with their creditors, and they did not mortgage the whole project and mine and infrastructure for their loans, so the creditors actually want to see the project succeed. The creditors agreed to forgo immediate loan repayments, and stretch the remaining payments out over an additional 3 years. This allowed Altura Mining to survive, albeit at a higher cost, because they will end up paying more to the creditors, but they have an additional 3 years to do so.
Sometimes, for a good project, in difficult global economic circumstances, buying Time is the best thing a company can do, especially when it's very survival is at stake.
I'm hoping, and I tend to believe (though not having read the DCN original loan and legal agreements) that a similar thing may happen here, with the creditors giving DCN more time over a longer period to repay the loans, but probably at a greater value over that time. If survival is threatened, then this type of agreement is preferable to all others that are likely at the moment, except perhaps for a takeover at a premium by a large and well funded gold company.
We wait, and wish for better times.
Gw
DCN Price at posting:
$1.40 Sentiment: None Disclosure: Held
