perkyPerky, good questions. I'll do my best here.
The company has no relationship with Goldcorp, except for the fact that we bought the mine from them. They also financed us by way of the hedge. As soon as we give them all of the gold we owe them, they're done with us. They're no help, but have no lasting claim on any profits either. Of course the hedge benefits them. They gave us cash so we could acquire the mine, but we owe them the agreed amounts of gold. We sell it for $730, they get the difference between that and spot price. A tidy little profit for them currently.
Is Starcore set up to fail? Well, let's just say that the hedge and debt has killed us over the past years, in addition to the fact that the report regarding reserves and average grades that we based our purchasing decisions on was hugely flawed. Add to that the fact that we also have done a poor job in executing at the mine and you see why we are as low as we are. We were supposed to be producing a lot more gold, which would mean that only a portion of our production would be hedged and we could sell some at full prices. Unfortunately, we're barely meeting the hedge requirements, so we get little to no gravy on top of our Goldcorp sales.
Having said all of this, if you review my last few posts you'll see that there is some potential light at the end of the tunnel. Is it a train coming? I don't think so. We have a new guy managing the mine and there's some signs that he's increasing production a little bit. We don't have a lot of cash on hand, but if we improve a little more, I see no need for further dilution. At worst, a small financing would be necessary to help make ends meet until 2013. After that, its full value for all of our product. As for the reverse split you mentioned, I see no need. The company has less than 100 million shares out, so the share structure is still reasonable.
Why aren't we earning more attention? Dogs stay in the doghouse longer than you'd expect after a turnaround, but some aren't sure if the turnaround is even happening yet. IMO, the main reason is that any significant cashflow is still 2 years away and people want to make money in the meantime. There's a lot of hot plays out there right now with drills turning. Dead money comes to mind currently. However, that'll likely change in a year or so as profits begin to near.
This truly has been a DOG, but management realizes that survival is the priority right now and have committed to playing things cautiously until they have the money in their hand to become more aggressive. You might fall asleep waiting, but when you wake up, you could be happy.
Again, just my opinion.