RE:RE:RE:RE:RE:Civil Strike Officially Over>> your response and your contributions to this BB are very much appreciated. <<
That idiot clicking one star on every one of my posts doesn't want me to say anything. He clicked one star on you too lol, anybody who would agree with me. Ever since I told him reverse splits were meaningless, it is other companies need for cash that causes their share price to drop, not reverse split. But he refuses to admit the truth and is scarred for life. Forever angry.
To answer your question, for their big investment in Marmato, it will reduce their tax if and when they make a large profit in the future from Marmato. Their profit from Marmato is currently small, so there isn't a chance to use up that large investment to reduce income tax.
For their investments in Segovia, they are indeed benefitting from a reductiion in income tax. Their financial statement doesn't explicitly say it, but It is the Depreciation, depletion, and amortization that reduces their income tax. This depreciation is spread out over the producing life of the mine, so you don't immediately subtract income tax down to zero.
The depreciation number is hidden in the Cost of sales. It makes the Cost of sales number higher, and subtracting that from Revenue makes the income lower, thereby paying less tax on a smaller income. The depreciation is non-cash. Even though the net income is lower, they still have that cash available. They are re-investing cash into modernizing their mine and reducing debt, and previously to pay down their payables.
The same occurs for the debenture accretion cost. It is a non-cash cost that increases their Finance cost every quarter, which reduces their net income (sometimes making it negative), but they aren't actually using cash to pay it.
These are the large capital expenditures. The non-capital losses they had would be small in comparison, and any non-capital loss that the government might have allowed to be carried forward would have been used when they started making a profit (i'm not an accountant).
The price of gold has gone up so much now that it is starting to make the production from the Marmato mine turn from a small profit to a good profit. Expanding the Marmato mine would be good.
GCM must be one of the most leveraged profitable gold mines out there. The more the gold price rises, the more rapid their debt is paid down.
baystock1 wrote: ts9222, your response and your contributions to this BB are very much appreciated. A follow up question if I may: after investments exceeding several hundreds of millions in marmato and segovia over the last 10+ years by both Gran Colombia and the company it merged with (Medoro), with very little profits to show for it, why is the company having to pay any taxes at all before it has recouped all its invested capital ? The tax reduction was before the agreement. From the MDA
"Under the December 2016 tax reform, the corporate tax rate (including surcharge) in Colombia is 40% in 2017, 37% in 2018 and 33% thereafter."
Since income tax is the largest cash usage, a permanent 7% drop in tax is a good addition to free cash.