OTCQX:DMMIF - Post by User
Post by
mtsuiton Oct 16, 2015 9:07am
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Post# 24197095
Sprott or Vertex
Sprott or VertexI am less concerned about what happens to Sprott's shares than whetherDMM is now making $500k/month to pay the debt.
If the debt is paid then we own an operating high grade mine, a nearby high grade open pit project, and a large operational mill. If the debt is not paid then those belong to Vertex.
Some guesses:
1) Breakeven monthly cash cost has been reduced to $2mm. The surge in headcount was required for the recent surge in development tunneling, but staffing can be normalized wihtout impacting regualr production. Also, costs for consumables are down.
2) Mill feed grade of 7 gpt is temporary. My guess is that the company has been working through backfill from old mining operations. As that is being cleared, the feed grade will gradually rise towards the projected 9-10 gpt.
3) the price of gold is $1184/oz
400 tpd + 7 gpt + $1184 POG + $2mm/month costs = $1.8mm of after tax cash flow in 4Q. And 1Q16 will be better with rising grades and tonnage. So it looks tight, but manageable.