GREY:CLGRF - Post by User
Post by
oddykogon Feb 16, 2007 10:24am
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Post# 12249723
Financing
FinancingAs I read it they got only about $4 million out of the royalty agreement (the fee) because the entire royalty payment was passed on to a financial institution to provide the interest income to actually pay the royalty over the years. Nonetheless $4 million should allow them to keep running without much in the way of financing. I believe the cost of de-watering Madsen is the responsibility of GG and the drilling itself should not be a major step-up for a company that has been drilling quite a bit already at Seabee, particularly since it is all surface drilling for the time being.
So I don't think there is going to be a major escalation of exploration cost in 2007 and what there is should be taken care of by extra cash-flow from a) higher C$ prices for gold; b)higher gold production.
As far as the oil&gas is concerned, I think $40 million is not unreasonable. Let's not forget that every year we get closer to having met the old royalty agreement (which maxes out at a total of $140 million, if I remember it correctly) and thereafter the cash flow to Claude steps up big time. However, I expect they will use that value to actually build a deep mine shaft at Madsen or at any rate a drift at depth if they find the gold at depth, as they expect.
If that gold is truly there this company will be valued at $300 million, not $120 million