Bullet Payment OptionsI agrree with you Sherm. The company has quite a few options to deal with the cash crunch that comes with those bullet payments. The company has a massive jewel of an asset with such a significant land position. Companies don't typically own an entire Regional play... Its like owning all of Val d'or... almost unimaginable.
The company can do any one of combination of the following:
1) Renegotiate the debt terms/payments
2) Issue additional stock
3) Convert debt to stock
4) Issue new debt to retire old debt
5) Sell a portion of future production for a cash payment (streaming)
What the company needs to do is to restructure the balance sheet before the situaton of covenants of the debt are violated. I don't think the situation requires a "going concern" note qualifying the audited statements. Whatever route they choose to take to deal with this issue, Investors want to see that it is effective. A company doesn't want to keep revisiting the same crisis time and time again as it will make investors feel uncomfortable.
Management must keep one eye on the ball (operations, milling rate, recoveries) and one on the horizon (balance sheet, POG). I think they are doing both reasonably well.
The starting and stopping of the production circuit really hurt them last quarter. Even though it was a rcord quarter, I would'nt term it as a good quarter. The company is struggling to retrofit the plant with the appropriate equipment to get recovery rates up to mine plan (>90%). Obviously the original design was flawed, but investors need to realize these issues are solvable. Managment is aware of the issues and is dealing with them. I am confident they will prevail. It just take the wind out of your sales each time they disclose hicups in production.
It is challenging to install additional equipment while production continues, more likley then not, the company must stop the production line when installing the upgraded equipment. If investors dump stock on a disappointing quarter because of a few bumps in the road then that creates a good buying opportunity for "strong hands" to pick up stock.
Here is a good managment phrase for this situation "Never waste the opportunity created by a good crisis!"
The biggest risk to the company is the risk of the POG continuing to drop. But remember... it POG is dropping because the US$ is getting stronger... then it is not so bad as long as the US$ is strngthening comparatively to the Canadian $ as well. The mines costs are predominately denominated in Canadian $.
In summary, the company has a great asset. They just need to solve the operational issues which they are actively doing. I will try to buy on dips as long as I don't see a big retreat coming in the Price of Gold (POG).