I collected your main gripes, did some investigation, and provide the following:
The first $10m has been used up productively, but the next $15m is now fully available, so there are no cash problems whatsoever.
The 4B is a cash report and not a Profit and Loss report. The following is what the figures say and corrects the misinformation.
The gold production is making money (profits) - during the Quarter Citigold had revenues gold sales of $4.8m (1.1) and Production expenses of $1.16m (1.2c), so they are making money on gold production. The Administration costs of $1.2m (1.2d) also includes mine site administration not just corporate costs. After these they still making money from gold mining. An informed reader would know that there are timing differences re production and other work done and receipt of cash and so rarely equal. The 4B also says that at 3.1 the Loan was available, of $15 million, and had not been used at end December.
The Development, the Other fixed assets and a lot of the Exploration and evaluation are the capital growth works that are being undertake ahead of growing gold output. The Finance report stated that a new jumbo and truck were acquired, being most of the $3.5m (1.8c) other fixed assets and offset to that was the receipt of $2.97m (1.16) that is the finance. Like when you are making construction extensions to a building those expenses are not costs of the other part of the building that is bringing in the revenue. The new capital works is an asset and gets depreciated over time. The work on the decline of 782 metres parallel to ore body would cost say $5000 (or more) per metre to drill and blast the tunnel so there would be $4m of the expenditure. Huge fans, power substations, machinery, etc are being installed to expand the mine.
The gold output for the last several quarters has been approx 2500-4000 ounces so the current is not unusual before ramping starts up.
In September 08 there were several restrictions lifted re power etc and those restrictions had prevented the company doing the capital works to grow production. Also funds were received through the deal to do the works. The works that have to be done are extensive as indicated by the $35m deal. That takes time. The declines have to be lengthened, access tunnels to the various 15 metre levels put in and development tunnels in the ore before stoping can begin.
Citigold compared to some peers has always been a frugal spender of shareholders money. With shareholder capital invested of say $120 million since inception and have acquired the 10m oz gold deposit, built the process plant, tailings dam, major underground and surface works in the City and at Warrior, large drilling programs, environmental permits, mining licences, power, water, machinery and equipment fleets etc the company and shareholders have a lot of assets for modest, in mining terms, expenditure. Citigold as a company has bought more value than possibly any other company. If it grows to its planned size of 300,000 ounces a year it should earn a profit/surplus equal to the issued capital of the company, wow that would be impressive.
The 'family' not caring is an illogical statement as they have a large investment in the company and are the ones who have maintained the frugal expenditure so that all shareholders benefit. They have possibly spent money too slow in the past but are making a big effort to grow the mine so that over the next few years the higher gold prices are received as revenue. During the last few years as costs spiralled some companies just threw money at projects and are now stuck with expensive projects that have high costs. Citigold is fortunate to have frugal management. Looking at some peer company comparisons from other company annual reports Citigold senior management is paid about 30% less than others. Regardless of what opinions have of directors, the overall management team is very strong, with the likes of Chris Towsey and Garry Foord.
The directors also buys economy class for all domestic and international travel. This has been the policy always since company was formed.
CTO Price at posting:
22.5¢ Sentiment: Buy Disclosure: Held
(20min delay)