Fair assessment.

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Bortgm

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24/05/17

11:27

Post #: 24879021
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Originally posted by rumbai12 ↑

Reality unfortunately is different to what they are pitching.

The company had $35m in cash at April 30 but has $39m in debt.

They had cash costs of $1265 per oz. after capital expenditure of 10m on prestrip and exploration it blew out to $2000+.

If there are no more capital expenditures, then a profit of $400/oz is possible.

On 65,000 oz per year, that is 25m ebitda.

However, one feels that there will be more capital needed for development and with the MD and his ego wanting to be a 200,000 oz per year producer, they will be looking at raising more and more capital.

Another aspect to this is that the current debt will need to be repaid or refinanced. There may be debt covenants that could be breached due to current market cap.

In my view all drilling and development has to be suspended.

Credibility of management is an issue. There needs to be an MD who has experience in actual gold operations not just accounting.

There needs to be a plan to regularly produce 7500 - 10,000 oz per month.

There will be a capital raise no doubt in the next few months. Anyone putting money in will want a steep discount.

The market will give credit on performance and production.

Company needs to stop drilling and wasting money on expansion studies. Just produce regularly and people will support you. If not, then it is going to be an uphill battle going forward.

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Fair assessment.

BLK Price at posting: 27.0¢ Sentiment: Hold Disclosure: Held
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Fair assessment.

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