RE:RE:1.58The weakness in the stock price/support makes it all the more critical that we not do another financing and pinch every penny until we are producing more than we're spending (and even then to keep the belt tight until a contingency reserve is established, etc). So long as we don't go looking for more money, the day to day fluctuations don't really bother me even though I'm shocked that people are willing to sell this low even if it's pretty low volume. There's always that lingering little doubt that maybe someone knows something we don't but again with low volume it's really hard to imagine it being anything so terrible.
I think the major obstacle we still face is the reward for CN. What a tragedy that this mine has cost us so much and is still incapable of even producing anything. I don't know how it's possible that we're on the hook for a drought but somebody should be paying for that mistake. We should at least be contesting that, but I'm glad that the money is in reserve. So long as we are able to get to commercial levels of production on the timeline (i.e. end of this month or Jan) then we should be okay without additional financing or at least that's my understanding of it. The MD&A mentions the financing that was placed, but I don't believe they can use that in their numbers which are supposed to be up to the end of the quarter. They can't cherry pick one number from Q4 to throw in with the other Q3 data.
Obviously there's still some risk with the ramp up, but it sounds like the main bottleneck has been dealt with as well as a redundant system installed. There will probably be another issue yet before the ramp up is done, but I hope not. There is some risk of dropping V prices and demand which we can't do much about, but the price would have a long way to go before we can't sustain the mine operation.
On the plus side, Glencore still has to buy from us even if they don't have a customer lined up. One of the reasons I invested here (although I learned some very painful lessons in the last 3-4 years) is that we are a low-cost producer. We are THE low-cost primary producer. The prices can drop and probably will, but other producers will drop out while we're still making money and that should serve to give us a floor at a level where we can remain profitable. At current prices and at about half our phase 1 production target, we are already near to generating positive cash flow.
Some one-time costs like the reward for the tungsten customer(s) hurt, and we had to get financing for it, or we would be in much better shape now. If the reward is able to be reduced, settled, or appealed, that could be extra cash in the bank and/or a contingency reserve. If the PGM discovery looks profitable, upside and diversification, and it should be funded from Maracas profits if not now then when things recover.
For now, we just stay the course, pilot the ship carefully and efficiently, and I believe we'll all be fine. I would never in a million years have expected to be producing and at the price level we're at now, but if markets were sane and logical and accurate in forecasting the future, there'd be no money to be made above prevailing interest rates.