You need to compound these losses...if you take $20m from the asset base of shareholders now, it will take something like 20 years to reach a break-even point!
You also need to add in the extra costs in borrowing now, the impact of added dilution to future value, etc...a DCF model will spit out more than 20 years to recover this short-term money grab!
"...there will be no need for the rail and ports as noone will be using them!"
This is the sort of poorly informed, city-based insular view I am talking about....most roads in the outback are the result of the mining industry...anyone and everyone uses them, from pastoralists to tourists, and the rails/ports service far more than just the mining giants, with all manner of industry piggy-backing these sorts of major infrastructure spends.
Build it and they will come!
According to your view, everyone should live in the city...lol...be careful what you wish for!
Let me ask you a simple question...if you had $10m and had two choices...
1. You could risk it all on maybe finding something in the ground, only then to spending 10 times that amount again to bring it to feasibility stage...then perhaps 5 times that again to finally get it to mining, always mindful of course that due to the long-lead times it takes to go mining, that the commodity cycle could render your mine sub-economic by the time it actually gets to production.
Meanwhile, you have borrowed, issued shares to dilute holders...and must service the debt you keep building along the way.
Finally, you spend 2 years bringing the mine up to nameplate production and start making a profit!
You have invested $1b all up and generating $200m profit after production expenses...but prior depreciation, amortisation, and paying down interest on borrowings, etc.
So...you have $100m left in profit...a sizable sum...and now you are slugged 40% to wlak away with the grand sum of $60m left.
At this rate it will take 30 years to get back the initial investment, and interest on borrowings...oh, and of course shareholders are also waiting 20 years to reach break-even on the loss of asset value.
Shareholders lose money now...and future shareholders have significantly reduced expectations of making money.
2. Or...you can invest your $1m in the bank and ear a guaranteed 6% based on the bond rate!
Which would you chose?
Before you answer, be aware that for about every 250 exploration programs, less than 1 "potentially" economically exploitable discovery will be made...and for every "potentially" economically exploitable discovery made, less than 1 in 10 will ever become a mine within the following 20 years!
The maths here alone suggests on average, you will need to spend your $1m exploration money 250 times before you make a discovery that MIGHT one day become a profitable mine.
