Barclays Bk PLC iPath Dow JonesUBS Platinum Subindex Total Return ETN Exp 24th Jun 2038 V.PGM

CEO.ca post

[catf7rider]

Post taken from CEO.ca



@shogun_nemesis Good morning everyone. The recent interviews have been extremely useful in tying together all the bits and pieces we have been collecting over the past few months. The most useful bit of information is that the reserve stopes are matching the mine plan (7.8 gpt). This is a huge relief. The main challenge has been driving tonnage to the mill (this in itself is a common issue faced with new mines, so forgivable in my opinion...what is not forgivable is the management leaving us in the dark). Basically, due to the lack of stopes available, the company had to blend the low grade ore from the commissioning period with the higher grades from the mine plan. This diluted the head grades that we saw earlier in the year. The company raised money to open up the East Ramp to add additional headings for stoping; some of these areas only became available to be mined in July. I believe the company had started with two low grade stopes initially, but has since moved up to mining actively from 5 stopes as of November. In the first quarter, there was also the overbreak from stopes outside the reserve plan - they were basically desperate to grab whatever ore they could to feed the mill. These were new discoveries with insufficient geological information so dilution was high. But since then, the company has increased drill rigs from one to four. This will allow the management to schedule the mine plan ahead of mining; initially it will mean the company will be able to plan and predict production two months in advance and eventually to six months ahead. The four rigs are now running and producing 600 samples a day for assaying on site - effectively allowing them to plan and execute in real time with Maryse leading the charge. She is the perfect person for the job as she has also served as SVP of Technical Services at the adjacent Red Lake Mine which has essentially the same geology. Not only are these drills providing much needed geological data, but also adding ounces that were never part of the original mineral resource. For example, the stope being developed and extracted from the East Ramp this month is THREE times larger than the size anticipated in the feasibility study! In effect, the drills are paying for themselves. Mines face different sorts of risks; jurisdictional, geological, operational, capital, and construction related. Fortuna Silver Mines lost 30% in a day due to jurisdictional risks. Argonaut similarly dropped due to construction risks. Rubicon fell victim to geology. In lieu of the above updates, I believe the operations are headed in the right direction now. The big risk remaining is capital; will the company run out of money and dilute us again? Based on the math I posted a few weeks ago, it doesn’t seem like it. Sources on the ground say bills are being paid on time. Plus, they have reduced several costs associated with operations. The company expects to be cash flow neutral in February, and then positive from there on. My math had pitted them at slightly negative in December, but as I have not crunched the numbers for the next two months, I can only parrot what the company has said. If we had seen significant insider buying at these levels, I would have assumed capital risk is no longer a major issue. So there is risk, but it is low. The 12 year mine life will definitely increase as the drills are showing additional gold around the ore body. This will become even more significant as they go deeper. Plus, there is 50,000 meters of drill data that will become part of the mine plan in the second half. The drilling to 8 Zone will begin in the second half of the year funded with positive cash flows. Which, as I have said in the past, is a relief since capital is the key risk at the moment. So what do I think of the picture painted above? I am far more optimistic now than I was two months ago. If in two more months the company can indeed stop bleeding cash, there is a good chance the company could 3X through to the end of 2022 (mine performance + mineral resource update + continuous assay results from 8 Zone).