Hi Ormond,With a MC of $5.15m (FD for options and unquoted...

Hi Ormond,

With a MC of $5.15m (FD for options and unquoted shares ie 77m soi assumed at $0.067), the EV is closer to $4.1m, as going on the last quarterly spending would likely leave a Jun 30 cash position of around $1.05m.

Having said that, it's still a very low EV!

The elephant in the room is the need for CR for working cap as well as equity finance for project.

At $23.4m capital cost (including pre-production), given the relatively low risk, I would imagine that BNR can debt finance at least 60% of the cost, if not 70%. Assuming 70%, that still leaves $7m in equity finance required. Assuming say $1.5m for admin expenses pre-production and continued drilling exploration for ongoing resource development, I think BNR is going to need to raise around $9m (assuming raising cost around $500k). That is around 180% of current MC - a massive ask in the current environment, and I don't think they can wait forever to do it.

As has been mentioned before on the BNR thread, a cashed-up gold producer would be a good start - say $1m at 0.06-0.07 to take a 19.9% cornerstone stake. NST is a 2% holder on the register from memory, so they might be a possible option. I think BNR needs to secure debt financing, secure a cornerstone investor with $1m+ placement, and bring a few instos along for the ride.

I think BNR has a lot of followers (I am one), but everyone is waiting for the financing to play out this Q before getting on board. I think the gold price is going to be key, as with a $1030/oz cost, these guys are one of the most leveraged to an upside breakout. The inflation-adjusted all time high would be around $2300 from memory, if a breakout pushed through the most recent high. But there's plenty of people thinking a breakdown of support could take us back to $1100 (I would note that from what I can see, US gold traders seem to be selling on client order accounts, buying positions on their own accounts, and looks oversold as per late 08 which supported the last breakout IMO).

I hope these guys can pull it off, as it would be a likely solid multibagger if they can ($500/oz or so EBIT on 30k oz for $15m EBIT? They are earning more that the MC for around 3 years after payback). Put it on a P/E x 5 in production and you'd be fairly happy in 2014.

There are some good stories in recent times that have started this way - short life small scale project, relatively high production cost. If they can increase grades and expand resources, the world can open up from that starting position.

And little sovereign risk at Halls Gap - IAU have a potentially amazing resource in Indo if they can hold on to it, but I bet they are looking at NST at Paulsens a little longingly right now.

For me I find it hard to go past IDC drill results, given West Africa has been completely smashed, but with the finance question mapped out, I'd be willing to go in on BNR, as I believe would a lot of watchers.

GLTA