Expenditures, Financing, & Share PriceThe long term growth of Lakeshore is nothing short of impressive, however, I fear our upside could be muted in the short term (i.e. 6 months) for cash flow reasons as shown:
Cash at end Q3 2011: $47.6 million + $30 million credit (undrawn)
Expenditures Q4 2011: $32 million (from Nov. 10 presentation)
Cash at end Q4 2011: $15.6 million + $30 million credit
Expenditures Q1 2012: $32 million (straight line extrapolation)
Cash at end Q1 2012:
+ $13.6 million credit
This assumes no net cash flow from gold production which is reasonable as Q3 2011 had small loss but with somewhat improved ore grades in Q4 will probably net flat or slightly positive.
The problem is we will have to do a financing by the end of Q1 2012.
And with the last 3 quarters of 2012 requiring:
i) $42 million to complete the Bell Mill expansion
ii) $20 million for exploration (conservative estimate), plus
iii) $50 million for other project work (estimate);
We will need to raise about $120 million for the rest of 2012.
And you know the MM are going to try to keep the stock price low to force a cheap financing that would be significantly dilutive and harm our long term prospects. Just look at the volume of trading going on here – its not investing – they’re playing with us.
The question is - can a:
1) 6-8 million oz resource;
2) operating costs under $800.00/oz; and,
3) $2000.00 oz gold (I think we will get there)
by Q1 2012 overwhelm the forces trying to keep us down and give us a $3.00 - $5.00 financing? I’m hopeful.
What does bother me at this time is I could not get through on the conference call and my e-mails have not been answered regarding the 2 important questions:
What do you expect your gold production to be in 2012? and,
How do you plan to fund your activities in 2012?
Why won’t they answer? How come their outlook can’t see past the end of 2011? – that’s less than 2 months away – talk about short-sighted.
Comments welcome. I’m a long term holder of a core position but also play the trading game of those toying with us.
Greg