It's pretty simple. The more risk tolerant buy, the risk...

It's pretty simple. The more risk tolerant buy, the risk intolerant sell. It can work like this all the way down.

Maybe in the midst of all this it is prudent to reflect on the fact that BDR made a total comprehensive loss of ~$120 million for the year ended 31 December 2017 or 8cents per share, more than their current share value.

Also having a look at the Annual Report I noticed an additional potential liability of A$2.25 million (plus) that hasn't been accounted for on the balance sheet.

"In January 2018 the Amapá State Court ordered the Group to pay a fine of R$6 million plus interest and inflation to the State Environmental Fund. No liability has been recognised in relation to this decision based on legal advice received and as the Group intends to appeal."

It's also useful to read this note from the annual report.

"As announced in May 2017, the Group is undertaking a plant upgrade at Tucano for an estimated total capital cost of US$27.6 million. As at 31 December 2017, the remaining capital commitment in order to complete and commission the plant upgrade is estimated at US$18.495 million. The plant upgrade is expected to be completed and commissioned by mid 2018."

The remaining spend on the plant upgrade at 31 December 2017 was A$24.66 million and at that same date according to the annual report BDR had a net working capital deficit of $47.344 million. So at December 31, 2017 the company would have needed a total of ~$72 million to complete the Tucano plant upgrade and plug the working capital deficit.

The recent quarterly said they had spent A$9.5 million on sustaining capital which was attributed mainly to the plant upgrade and it also said that the company still had A$10.7 million in cash and bullion. So going on these figures the company at the 31 March 2018 still needed $51.8 million to finish the plant and plug the working capital deficit.

The current raising of US$23 million = A$30.66 million (if completed) still seems significantly short. By my rough estimates they'll need to make a $22 million profit this quarter to bring their working capital account into surplus, all this whilst tying to complete the merger with Golden Harp (which is due by mid-June) and commissioning a plant upgrade and running a mine.

It is not an understatement to say, if the management ever needed to perform it is now.

Remember also according to the Annual report

"As at 31 December 2017 the Group was in breach of a loan covenant on its Santander-Itau facility. The Group has not obtained a waiver for this breach from Santander-Itaú and has not been notified of a default under the terms of the agreement at the date of this report."

I don't recall seeing an update on the status of this breach in the quarterly.


Esh