RE:RE:MND Jan 2019 Investor Presentation on Web Site Sherry35,
Yes, I think that Cerro Bayo will get restarted but not before a thorough risk assessment, safety review, and maybe even a second look at their tailings dam. IMHO, there is no room for a second black swan event. So, Mandalay Resources should keep this mine on care and maintenance until they have all the permits in hand to restart, and after they have done their own safety and risk assessment.
Second factor is the silver price. Back in 2016, I did an estimate of the quarterly profit per mine in a precious metals price environment where silver was at $100 USD per ounce and gold was at $4000 USD/oz or a ratio of 40 to 1 for gold and silver which is the reversion to the mean.
Guess what? Under those price conditions Cerro Bayo generates over half the profit of $200 million dollars per quarter or 33 cents per share and the revenue fraction contributed by Cerro Bayo at those metal prices would be more than half of total Mandalay Resources Revenue.
So yes they should reopen the mine but at the right silver price!
Third factor is the dividend calculation. Mandalay Resources has had a policy of paying 6 percent of the previous quarters revenue in dividends
So $10,000 USD invested in MNDJF would give you 83,333 shares at the current 12 cent stock price. The estimated per share dividend at $100 USD silver and $4000 USD gold would be 3.37 cents per share or $2800 USD in dividends per quarter on a current investment of $10,000 USD. That dividend yield works out to 28 oercent per quarter.
That calculation was done based on the 2016 production numbers at the three mines and does not include the anticipated production growth at Costerfield and Bjorkdal in the next 3 years, so IMHO the above calculation underestimates the future dividend growth potential assuming the dividend policy is reinstated.
So future dividend payouts would be the third reason to invest in MNDJF.
Fourth factor, because of Cerro Bayo's fairly short mine life of 2 to 4 years, who is going to buy it from Mandalay Resources? Plus if Mandalay Resources decides to shut it down, the
there is the $12 million dollar closure cost over a 4 year time period. Given the current financial situation, I dont see Mandalay Resources disposing of the mine.
With the expected future value of silver in the ground, it should stay in the ground until Mandalay Resources can safety make a decent profit on it. So I think that Cerro Bayo will remain on care and maintenance, and eventually go back into production.