Claude Res Inc CLGRF

Claude in the short term

[oddykog]

It is great for the company that they did the secondary offering in April and now have plenty of cash, however the sad story is that they will need every penny. They said that exploration expenditure this year will possibly reach $14 million, what with both Madsen and Seabee and the unhappy fact is that costs at Seabee are likely to look ugly. In Q1 their C$ costs were $559/ounce. One could have hoped that with more production in subsequent quarters that number would drop. The accident has probably ruined that hope for Q2 at least, both because costs associated with the accident will be high and because they lost at least a week of production. What is more, the rise of the C$ during Q2 is reducing the price they get for their gold. With today's gold price of US$644/ounce the C$ equivalent is only C$685/ounce or so. I doubt whether Seabee can be profitable at these prices and production volumes and it will not produce much in the way of cash flow to finance exploration there - let alone at Madsen. To me it suggests that there will be more secondaries in our future -if not in 2007, then early in 2008. I think Madsen is still a wonderful opportunity, but the strong Canadian dollar is making Seabee ever more marginal even at today's (high) US$ prices for gold. Meanwhile, with nearly 100 million shares issued their market cap at around $140 million is nearly double what it was when I bought in a few years ago!