Post by
materialsgirl on Sep 04, 2014 10:56am
No need to read the tea leaves
Irrational dreaming can sometimes prop up the share price of a company for months or even years.
No president in her right mind would agree to take over DM even if Anto sold its share at a 70% discount from their $220m sunk cost. Let us say that a buyer paid $125m to $150m to buy out Anto and the takeover of 100% of DM.
What happens then?
More and more money would be spent each year for permitting and engineering even before major capital investments were made.
The earliest that there would be positive cash flow is about 8 years into the future. So the soonest a president could look good is 8 years away.
Looking bad can happen each day over this same time period with risks to permitting, engineering options, geology etc.
The question then becomes "who in their right mind would expose themselves to trouble for 8 years in the hope that there would be gold at the end of the 8 year rainbow". The short answer is "nobody"
This circumstance alone makes the outlook grim. Add in the need to raise lots of money via equity and it gets worse. Debt is out of the question.
Doing simple math can show losses at current commodity prices. Just sub current prices into the Prefeasibility study optimistic numbers. You should add 10% to projected costs because history shows us that even successful mines opened over the past 5 years experience costs that are 10% to 20% over feasibility numbers.
Frankly, current investors are looking a gift horse in the mouth. To be able to sell shares now for 25+ cents is a gift in my opinion. A complete collapse is almost certain this calendar year.
mat
Comment by
hme on Sep 04, 2014 11:16am
When did you start shorting DM and who do you work for? You might get burn if DM succeeds with a buyer or a new supporter...Looks like you are one of the CIBC's apostols .....????
Comment by
rocdic on Sep 04, 2014 11:33am
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Comment by
rocdic on Sep 04, 2014 12:03pm
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Comment by
Nazarbaz on Sep 04, 2014 12:56pm
You see every mine one day was a developement project. A natural extension of your logic is that no mine can be built, which means that no mining company even exists. Unless you are a mathematician you better check the result of your logic with the external world.