I understand there is just $2M is due in Dec qtr. The milling plant is still running and processing the stockpile of low grade ores. There will be at least some positive cashflow to the tune of : 2700000/4(per qtr processed ore)*0.6(ore grade g/t)/31.1(g to oz conversion)*0.9(recovery rate)*(2500-2000)(per oz profit margin) i.e. $5.9M or more per quarter.
The above is on the assumption that there is no further better quality ores being mined.
By Dec qtr, there will be at last ~$12M of net cash. I simply can't understand why there is a need to "raise" capital from GMD unless the intention is to allow GMD to hold a big stake of DCN shareholding at a cheap price to force the issue of a hostile takeover and this is obvious.
Clearly the BOD is not doing the DCN shareholders any favor.
I am not a fan of LJ, but if DCN is going to be saved from the raiders and colluders, he needs to return to keep the company running to at least ensure that DCN will continue as a functioning business entity. However now that GMD holds >16% of DCN shares, this is an unlikely event.
On the other hand, I am in agreeance with @timbin4 that if the offer is 0.15 GMD share per 1 DCN share, then the takeover is at least less than fair but give DCN shareholders the chance of recovering the loss when POG turns good. At 0.843 GMD share, the chance of recovery is almost impossible.
DCN Price at posting:
11.5¢ Sentiment: Hold Disclosure: Held
