I lean (slightly) towards continuation with capital injection to develop the first underground mine. Five reasons:
1) when they halted development last year they were just a few weeks from accessing the ore; 2) their balance sheet was a mess back then, which only became truly apparent when the financial report was released. The balance sheet will be looking much better now; 3) the gold price was plummeting, which has since bottomed, stabilised and rising (cross fingers); 4) gold stocks have been performing much better, with capital flooding into the sector of late. And I'm assuming Davis is in Florida this week attending BMO; 5) all-in sustaining costs for Murchison were projected to be $A 1100/oz in presentations last year, and eight of the 14 open pits have either been developed or being developed, which would've inflated costs in the last 6 months.
Of course, this is a rose-tinted view. Perhaps Murch is in worse shape and needs yet a higher and more stable $A gold price. Or perhaps they've decided to use precious free cash flow to focus on various Mt Monger developments instead... we shall see.
SLR Price at posting:
68.0¢ Sentiment: Hold Disclosure: Held
