Yes, the announcement was not great news, but it seemed to have...

Yes, the announcement was not great news, but it seemed to have a more genuine tone.

1. Some trade creditors are still being paid out.

2. Almost 4 months for a fluid coupling for the crusher is not nice, this will put a lid on gold production, and discourage any new investors, and it may put further pressure on the stock price until the second half of this year.

3. Failure of the SAG Mill Motor is also not good. The motor has been sent to France, and it looks like at least 3 months before this one is returned and operating.

This announcement raises questions about the quality of the replacement parts, and whether any others are also of poor quality, and therefore likely to fail. NMG could see some further protracted purchasing and repairs in the near future, which are costly and time consuming.

It is increasingly looking like it will take well into the second half of this year to even permit a proper and full testing of all recommissioning parts. This is not going to be good for the stock price, and it won't do anything for the patience of investors.

The move to an owner operated mining fleet, while preferable, will also mean that the mining fleet's purchase, upgrade and maintenance costs will all now come directly on to NMG's financial accounts, which initially, is also likely to make them look even worse than they presently are. The next financial reports are therefore likely to look worse than better as a result.

It all points to a further capital raising, and NMG may need another $30 million or so before the end of 2013.

And what will the thorough mining review find, perhaps that there are less ounces than previously announced. This report is going to be very nervously waited for, because any downward estimates is going to be another severe blow. I note that the Coffey Mining geologist who did the estimates has long departed Coffey, yet NMG has been quoting his numbers for a long time since the departure, so I am not optimistic about any estimate reconciliation here. This could be ugly.

This is going to be a slow, painful process, but then, everyone knew that anyway.

NMG needs a new MD/CEO who is more like a General, someone who can take control, direct, punish and drive forward, they need a tough, gutsy, hard nosed, in-your-face Commander. Is there one out there?

So from today's after hours announcement, we have some truth, and as we know, the truth can be a bitter pill, and it gives some understanding as to why the stock price has plummeted down into the 4 cent range.

It's going to be a tough 6 months, let us hope that with Resolute's technical expertise, that NMG actually makes it, and the Administrators are not required.

Prospective investors will need to assess their instinct with this one. Which reminds me of the Ferengi quote from Star Trek Deep Space Nine -

"Instinct plus opportunity equals profit".
Rule 9: Ferengi Rules of Acquisition (Star Trek DS9)

Good luck, whatever you decide.

Gw