The MillOk - let's take a look at the prospects of the "maybe" mill. Lion obviously told the authors of the recent report that they were intending to build a mill. First a 300TPD - for the first three years and then ramping up to a 1000TPD. How are you going to finance it? Quote: " a C$40MM equity financing at C$1.50/sh during 2020."
The authors wouldn't have made this up - it's what they were told. I argue it would be a big mistake to do a PP. Much better to do a debt financing with the cash flow this mill would be throwing off. Another PP this year may be a bridge too far causing shares to be stagnate. For 150ish the market price would have to be 1.90+ if history is our guide.
Let's look at the table from the report:
https://ibb.co/yR8dJ8K
Well my first thought is these authors don't believe in gold if they think the price of gold is going to be 1500 out to 2031 although I get they have to be conservative.
Let's make an adjustment to the year 2024. I say the price of gold will be 2000.
OK - the revenue increases from 43.1 million to 57.5 million. Now that's not free cash flow but you get the picture. One can do the steps to get free cash flow.
Any debt will be paid out in no time.
How about year 2025 with our 1000TPD plant with again 2000 gold ( I think it could be higher) gives you 191.1 million instead of their 143.9 million of revenue at 1500.
If we ever make it there we will be throwing off a lot of cash. Think about if gold is even higher.
So my conclusion is a mill should be a priority if financed by debt. Money has never been so cheap. Lion could expand the resource without always doing another PP through free cash flow.
Now the big question. Will a mill be built or is this just the ramblings of...............well you know. Having lived through two financing deals to build a mill with "both" never acted on - the reason never explained to shareholders - put me on the "show me the money" team. Lion has always slipped into this "take for ever to make a decision" mode. Indecision has ruled supreme and I can back that up with endless examples. Will they slip into old habits again?
Time will tell.