Core Gold DMMIF

RE:RE:RE:Its dire but there is opportunity

[edx]

Well the work stoppage at this point limits Bob's options. I don't think he has a choice but to take anything that protects his investment (seeing as he owns 30%). In a way it's not a terrible thing if you think management cannot make Zaruma work, because the longer they try (and fail) the more debt they're going to accrue. I'm not confident they can get Zaruma to work without a significant capital investment (time to learn how to do this thing right, bring in outsiders with expertise in narrow vein mining, etc), but I am confident DGF would be easy. They literally dig up the rocks from the surface and start milling them.

Assets must be sold, the question is, will they be able to sell the entire company or select properties? Or none at all and let it go to auction? I think auction might be interesting to be quite honest, because it could result in a higher salvage value than Bob would be able to negotiate given people are in vulture mode and he might be feeling pressure/get desperate. I think at auction we would see quite a few major miners + investment firms show up to bid. And the Chinese... who are desperate to buy overseas assets as a mechanism for capital flight which is increasingly being restricted by the government. .

But yeah, don't expect a take out in the next few weeks. Due diligence takes time. I think we'll probably see the Ecuadorian subsidiaries go into creditor protection while they look for buyers given the work stoppage has basically completely shut off the revenue stream.

Best case scenario from my standpoint? If they can raise $30 million or more from asset sales while retaining core Zaruma and DGF assets, they can pay down all liabilities and start up DGF quickly while leaving themselves some working capital. For those willing to wait, the long-term value we all saw here could still mostly be realized. No, I don't really know how likely $30 million for non-core Zaruma concessions/Copper Duke/Jerusalem is... there are too many intangibles like how any potential buyer feels about Ecuador or the future price of gold.

Second best case scenario from my standpoint? They just sell the entire company. Any long shareholder that averaged down in the past 6 months ought to do OK. New shareholders will make out like bandits (too bad for us longs, but that's how this game works). Bob won't starve.