RE: Mike hoffman talks with jay t.thx for that...
sounds to me like play_n_lay was right with his valuation
"1) Production was not down from June to July it was up slightly. "DuringJune 2010, the first month of commercial production, Crocodile Goldmilled 174,000 tonnes of ore at a head grade of 1.57 g/t and a recoveryrate of 90.1% to produce 7,913 ounces.Gold poured during the month ofJune was 8,697 ounces. The difference between produced and poured ounceswas due to movement in the gold in circuit inventory" There we haveproduction of 8200 oz in July vs. 7913 in June. An improvement.
2) "Thecash costs for the month of June were $1,051 per ounce on 8,902 ouncesof gold sold. The cash costs were higher than expected due to theprocessing of the higher cost pre-commercial production ounces inopening inventory at the beginning of the month and lower millthroughput and lower head grade. The cash costs of $1,051 per ounceincluded an inventory write-down of $77 per ounce." Realistically 15% ofthe inventory sold in june was from previous months. This means thatcash costs are not as bad as percieved however they are definetly notinline with forecasted. To me they are trying to hide the true costwhich is probably somewhere around $900 for june. Why they where so highI don't konw, but it would be nice if they gave us a breakdown of whatmakes up tehre costs like alot of other mininig companies.
3)"Development of the Tom's Gully underground mine commenced in the firstquarter of 2010 and as at the end of June 2010, a total of 682 metres ofcapital development had been completed and over 3,500 tonnes of ore atan average grade of 4.84 g/t had been stoped and stockpiled on surface.Work has commenced on the refurbishment and recommissioning of the Tom'sGully mill with 3,000 tonnes of low grade ore already crushed inadvance of the commissioning of the plant. " Can anyone tell me if thiswork would be realized in the current June production costs or would itbe carried forward to match the sales of the ore. To me it seems like aprepaid expense on future revenue but they don't seem to realize it assuch. If this is the case I think they are actually trying to makeresults look worse then they where.
4) "In reviewing the currentavailable ore stockpiles, development progress and remaining capitalrequirements to restart Tom's Gully, Crocodile Gold has decided it isprudent, based on mine development results to date, to defer thereopening of Tom's Gully from late 3rd quarter of 2010 to later in the 1sthalf of 2011." They want to avoid having to do another privateplacement, and fund the capital expenditures required to start the minewith profit. This is a double edged sword as it is what led to reducedproduction this year. Its to bad there are no other mines in the area orthey could have sold the pile of ore.
5)"As a result ofrescheduling the medium term mine plan for Howley, North Point andPrincess Louise open pit mines in order to minimize disruptions causedby the monsoonal wet season commencing in November, lower grades inthese areas are forecasted to year end." This is definetly a managmentoversight. Monsoon season occurs at the same time every year. I thinkthis has to do with point 4 but they are passing it off as a weatherissue.
6)"Based on the extensive and widespread positive drillresults from the first half of 2010, the Company has reduced the amountof exploration drilling going forward to allow the drill resultscollected to be properly analyzed and evaluated." Again trying topreserve capital.
Basically they are in a holding pattern, tryingto prevent further shareholder dilution, and fund capital expendituresfrom operational profitability. They probably want to see a higher SPbefore considering another PP or got push back from cannacord on aproposed PP. The quarterly announcement was somewhat disapointinghowever I think this is pretty much factored into the current SP.
CompareAVR and CRK. Two bharti companies. They both now have 2010 productionof 85,000oz's. CRK's market cap is 15% more at current levels but theyhave have 5 million ounces m&I +infered vs avr at 3.9million. Theyalso are in a more politically stable country, have to spend very littlemoney to get to 200,000oz (avion has to spend 60-80million to get to200,000oz), they have numerous mills and mines vs avion which has only 1mill and 2 mines. Anyways overall, there may be some SP pullback butinstituions have already factored in disapointment into the price."