Post by
blackgold14 on Jun 02, 2021 4:23pm
Strong Drill Results Should Lead to Higher Gold Production
The recent drilling results are very strong. There are a number of very long intersections returning substantially higher than expected grades. Processing of this material by a restarted mine should lead to higher than expeced gold production at the planned output of 2 million tonnes a year. The company's corporate presentation targets annual gold production of 100,000 ounces at that planned output level. We could see a lot higher annual production given these better than anticipated drilling results, perhaps as high as 120,000 ounces a year. While I remain extremely disappointed in "management" doing the obscenely dilutive financing earlier this year, the stock is still a bargain at these levels. Given how easily the stock price has appreciated in response to an upcoming announced restart, it was a monumental error to do a highly dilutive financing at 5 cents with just as many warrants exercisable at 5 cents. They could have easily done a $1 million financing at 5 cents to fund the drilling program and then done the next financing to fund the restart at 8 cents and so on. Unfortunately, the highly dilutive financing does limit the upside potential of the stock in a big way. Forget about getting a 20-30 bagger out of this deal even at annual production of 120,000 ounces. Fully diliuted, there are close to a BILLION shares. "Management destroyed future appreciation potential by doing the highly dilutive financing. Assuming gold remains at US$1,900, and a full year of production, the stock may rise to the 50 cent mark by the end of next year. Too many shares is the only reason.