BDR Substance

My friend ask me to post this. These are his ideas not mine.

"Posting in response to no one in particular but it seems no one is actually talking too much substance when looking at BDR.
The balance sheet and revenue profile is actually quite strong.
Posting that this company will go into administration is inflammatory nonsense.
Particularly when bleating about one number…”closing cash balance” as though this was static and the company magically misappropriated 20m.

I have spoken to the company CEO on the phone a few days ago.

The “missing millions” was indeed for paying forward trade creditors….ie ordinary course of business.
To me there is no difference in seeing end cash of 33m with 20m in creditors and end cash of 13m with nil creditors…. Or at least the creditor balance less 20m. I think people need to get over this. It is a moot point. The company has revenue just as surely as it has expenses.

I was advised the first MACA payment received on 1st of November is 25m not 20m (for some reason – I had just assumed it would be half-half). Either way to me that is neither here nor there. Take it as 20m.

I took pains to discuss guidance or sales vs. production and whilst in my opinion the CEO is generally underwhelming, I accept in principal sales/production guidance over a long enough period should even out. From now one suffice to say guidance will be advised in sales not production.

I was advised that production would be in the region of 70,000 ounces and sales would be 75,000 ounces. I queried the difference and was advised a whole lot of technical talk I do not profess to understand about gold in CIL circuits etc etc and reprocessing other tailings…(don’t quite me on this part….my area is finance not gold mining)

We do however have enough to hazard an educated guestimate of the company’s cash profile for the end of the quarter and I would do it on the basis of sales of 70,000 ounces

Opening Balance: 13m
Receipts from MACA 20m
Sales/Production (70k ounces @ USD$1200)

Less:
Cash costs USD $1000 (last quarter cash costs $956 per ounce)
Margin $100 USD per ounce or USD 14m @ AUD 87c that’s 16m

Closing cash: - in the region of 49m for end of December.

A few other points.

-When you have trade creditors you also have debtors too. It’s called running a business.
-Closing cash as at end December was 9.8m….I don’t remember anyone screaming call in the administrator.
- Just a quick look at the chart….and to pay homage since I guess it is relevant. Gold was below USD $1200 exactly a month ago….3rd of October. Basically where it is today. BDR share price was about 41c.
- The fact is, companies of all descriptions get punished when results disappoint, are not what was expected or when they miss guidance. That coupled with softness in the Gold price and there you have 24c.

The share price alone as one factor is not necessarily suggestive of anything in particular. Most of you here from my readings are day traders (e.g. one comment from a poster on Friday about not staying in BDR over the weekend). That’s trading not investing. Totally fine. But volatility works both ways. When a stock only goes up, it’s not volatile and therefore of no use to a trader….in general I guess.

BDR isn’t going to be making $500 an ounce just yet….not sure what people were expecting…but the revenue and expense profile looks reasonable and the balance sheet is robust. Suggesting otherwise on the basis of the evidence before us is a little disingenuous."