ROUND 2 - CLARIFIED BACK OF KNAPKIN
( cdn to usd = $1.34 ) $1850 usd gold
$1850 usd gold x 1.34
= $2479 cdn
9,500/oz per quarter ( from press )
x $2,479 cdn / oz
= $23,550,500 cdn
- $10,000,000 production cost
= $13,550,500
- $13,000,000 ( deficit ) oct 24 2022 - press.
= $550,500 ( remaining ) + $2,000,000 mil in cash.
If.... finacing was obtained by way of - share for finacing - then,
the suppposed creditors would be shareholders, not nessisarily creditors looking for interest
on cash owed debt - correct ? If strictly financing then yes, creditor would be looking for thier payment. As of yet, i have not probed enough to columb each.
So, is the debt wrapped in - shares, or creditor looking for monies based on, finaced funding ?
Again, i have not probed enough to know.
But based on - amount of shares out -
it would be logical to think - shares were offered for finacing.
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Issue with present run costs ?
9,500 oz = $23.5 mil gross ( minus ) $10 mil production cost + $13 mil deficit
running on near par.
throw in 728 mil shares out
and the odds of the stock rising due to high number of shares is, bleak,
even factoring the odds of spot gold remaining at present values.
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DOLLAR COST AVERAGING
Anglo and Sprott entered far higher in valuation
therefore they would need to lower thier averge buy in
If $.60 - $.80 cents ( hypothetical ) suppose $.60 cents
$.015 cents blend
= $.30 cents ( hypo )
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Yet.... what would it look like for another who decided to purches the gold mine ?
Majority OZ are measured with an additional inferred.
Near 2 million oz in the ground.
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$175.oz in situ ( i chose this number based on - current run costs + oz produced )
2,000,000 oz
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= $350,000,000 ( hypothetical purchase )
~ 728 mil shares out
= $0.48 cents share
Option #1
If another miner purchased it with - expendable cash from an other mine.
Paid it off, there would be no debt. This, would be the ideal scenerio.
Option #2
If another financed the mine operation
they'd owe $350/mil
Option #3
junior keeps status quo and improves all around on all fronts
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Let's probe - purchaser who has the - liquid cash
No financing -
Option #1 9,500 oz ( using present operation stats )
x $2,479 cdn / oz
= $23,550,500 cdn
- $10,000,000 per quarter production cost
= $13,550,500 cdn
x 4 quarter
= $54,202,000 cdn ( net ) this model places the project in the green.
Option #2 - another finances ( 2 forms below )
$350,000,000 mil - if amortorized over 48 months ( 4 yrs ) @ 10% - P + I = is as follows
| Total of 48 Loan Payments | $426,091,401.70 |
| Total Interest | $76,091,401.70 |
With a gross $23.5 mil per quarter
such is not feasable to meet the $8.8 mil monthly owed - creates another deficit
8.85 mil x 4 = #35.4 mil ot break even.
LINK -
https://www.calculator.net/amortization-calculator.html?cloanamount=350000000&cloanterm=4&cinterestrate=10&printit=0&x=75&y=23
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Financing with - flat rate - 10% same - $350 mil
INTEREST = $35,000,000 earned over - 4 years.
Not bad considering the markets, whereelse can one make
$35 mil over 4 yrs ?
$350 mil ~ 4 yrs = 87.5 mil ( principal ) owed each year )
+ $35 mil ~ 4 yrs = $8.75 mil ( interest owed each year )
$ 87.5 mil
+ 8.75 mil
= 96.25 mil per year (
exceeds avail yearly profits )
Still not enough.
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what i don't know is....
what is the 413 mil " deficit " comprised of ?
Debt or overrun costs ?
This is a important breakodwn - if debt, then, is it based on share debt, or, actual finacing debt ?
There is a difference ,and as so, what if it was a mere carry over costs inccurred to get to the stage of mining, like a carry over from former years accounting /?
While on the flip - what if it were - run cost deficit ?
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Some might say...
Increase the amount of amortized years for payback...
And my reply, most wouldn't want to risk the extended yrs.
Reducing the flat interest rate to 5 %
still wouldn't cut the mustard.
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Again... best odds thus far - point to a purchaser who has the avail free cash from another mine operation who simply walks in with the avail cash and purchses the entire mine with no upfront debt. = Instant profits due to no entry debt.
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IT WOULD NEED A PRICE TAG OF SOMEWHERE AROUND -
$100 mil to achieve the right economics if financing were implemented with a flat rate of 10%.
Such would not bode well for shareholders.
Especially if there's 2 mil oz in the ground with - spruced up mine plant + mine permit which are
mear impossible ot come by now a days.
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WHAT ABOUT - DRILL INTERCEPT vs COLOR ASSIGMENT TO GOLD GRAMS
As pointed out in my previous post, each engineering firm used same colors but assigned
a different gold gram to same colors - one high grade the other low grade.
If, by chance...
Pure gold was confusing the coloration assigned to gold grams, there could be a potential
in which gold gram recovery might increase from the current 4.5 g/t.
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SUPPOSE THERE WAS AN ISSUE WITH MATCHING COLORATION TO GOLD GRAMS
WHAT IF PURE GOLD IRONED THIS OUT...
WHAT WOULD 7 GRAMS RING IN AT WITH SAME TONNAGE ?
750 T / day
x 7 grams
= 5250 grams ~ 31.1 ( conversion to oz )
= 168.8 oz / day
x 30 days
= 5,064 oz per month
x $2,479 cdn oz
$12,603,236
x 4 months ( 20,256 oz quarterly )
= $50,412,944 / cdn / quater
- $10 mil production costs
- #13 mil deficit ) this figure i find very odd - it must involve debt finacing ?
= $27,412,944 cdn / quarter
x 4 quarters
=
$109, 651, 776 ( BOOM ) better gold grams ( most knew this ) fixes everything.
Suddenly the economcs work very nicely.
With a grade increase.
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HOW ELSE COULD ONE FIX MATTERS ? Double the ore tonnage proccessed.
750 tonnes per day to
1500 tonnes per day.
Guess what ? In an article i read... Pure Gold said it applied for a permit - to increase ore tonnage.
This... statement... is why i bought some stock.
Hoping, it's now bene a few months and just maybe the - new tonnage permmit is in hand.
crossed fingers.
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ARE MINE WORKERS CONTRACTED ? Whose the contractor, and do they also have contracts with other mines ?
What are the mine names ?
Any contracts with mines in same vicinity as Pure Gold ?
If there is - what are their run cost per oz ?
Did pure gold recieve lemon workers ? ( sorry, have to factor all parameters )
9500 oz over 4 months with a deficit of $13 mil ontop of run costs
= each oz of gold pulled is equal is almost same cost of production + deficit. ( par )
SUMIT UP ? - high grade coloration indifferences between two firms affecting high grade results ?
- over staffed ? contracted ? make comparision of contracted with other miner ?
- too low of tonnage pulled per day
- targeting 2 gram zones - looking for mass bulk - blended with high grade could improve things
- buyer with cash in hand - no finacing is best option. begin anew, with no debt model.
- present junior would need double amount of ore milled with 4.5 grams to impress
- present junor might solve the issue of higher success of pulling higher grades out
- 728 mil shares out will forever affect the valuation - for both common and larger interests
- larger holders could blend thier buy in average to accommodate a decent buyout, allowing for
lower purchase price and less cost to purchaser.
- selling does fix lots - take private - if purchaser has the free cash from other opertaion -
- walks in day 1 - makes money - based on no carry of debt. ( 13 mil )
- junior's current track record - no laid tracks for proof of doubling tonnage would be consistent,
- nor a ressolve of, grade vs coloration between 2 engineering firms.
- absorbtion into another listed producer
- 2 mil ounces in the ground.
- shares racked up to too quick, too high.
- i didn't even factor warrants
- spruced up mine operation - equipt definitely worth something
- other lands - undrilled - potential future resources
- are there other mineral credits not factored ?
- old gov't records reveal the Madsen has other minerals ,copper, zinc, is there ?
- what about former tailings - could there be economical zinc or copper to enrich profits ?
- ready to mill from former tailings ?
Red Lake, is indeed a hot spot,
other larger players nearby need the extra gold ounces to increase their mine life,
longevity in the area.
just what exactly is the perfect resolve where,
both larger holders and shareholders are pleased and appeased ?
doubling the mill feed would in no doubt fix lots.
but... the high shares out negates valuation.
- could some of the debt be paid off in chash to cancel out shares ?
- thus reducing the sharecount to facilitate a better valuation going forward ?
What's the humdinger ?
A junior who has just a resource measure but... no mine equipt no permit
is valued higher than a producer.
The valuation methods of using shares out vs debt vs worth vs profit and production is in my opinion a very unfair model.
Larger players who've many years in the industry had far higher valuations years ago.
Thus allowing a far greater cushion to grow and expand with less shares expended.
What i feel is needed in the industry is, original shares that were used to drll out and prove resource ( tohugh still on the books ) should be escrowed in a off sheet accounting manner.
Separated away from the shares used to go into production.
Seaparating the drilling shares from production shares and minusing the drilling shares would only leave production shares assigned to mine profits.
( providng there was no outstanding debt owed for drilling ) and only shares used for drilling.
such would increase a juniors valuation and inturn, maintain a higher valuation
thus, reducing the number of shares needed to operate.
Or... assign a base minimum value for the project based on ,
in situ metal value in the ground.
the cheat happens when no in situ foundation is given.
if a foundation minimum was given, many juniors could move forward with less shares expended and less odds of failure. The current system of shares out - works against junior and shareholder.
Also, was this stock overly shorted ?
New here... haven't yet researched enough.
Just ideas....
Please chime in and correct.... if i've errored.
Thanks in advance.
Had to clean up the former post -
some of my words were missing and some i did write but erased yet, showed up.
Very odd - but none the less, hopefully this post is easier to understand.