Question One: Do you believe the Syama UG project is over budget?......If you don't believe it's over budget how do you explain the disappearance of the $150M raised in 2016 for the development of Ravenswood that didn't happen, the disappearance of the free cashflow that was supposed to cover the development of the mine, and the need for a further US$150M in debt finance still without the completion of the initial mine development?
Question Two: If you accept that there has been a large budget overspend where do you you think that overspend has gone?
I do believe there has been a significant overspend and I do want to understand where the money has gone. These are two very big questions and there has been little explanation from the company. When sufficient explanation has NOT been provided, to hold the view that we should take the managements reports on face value is just not good enough if you have a considerable amount or money invested in the company........And my raising of the development meters reporting was an example of what may have been an early indicator of problems if you question changes of behavior in reporting rather than just reading the words of the report and taking them at face value..... It was my response to what I believe to be an irresponsible statement that 'announcements should be taken at face value'. The change in development meter reporting actually happened over 6 months ago and here we are with significant unexpected debt, a strongly declining price in a very supportive gold environment, and board members selling significant numbers of shares..........
......And regarding the development of the mine, if you re-read the DFS your will see that the development of the mine isn't finished.....not even close. Development progress in terms of mine meters don't even peak until next year and then continue at around current levels until 2024...... My view is that problems have been encountered that have significantly slowed the mine development advance. We have no company announced information on this, but it does fit with recent events and market reaction. So NO we haven't moved into production.... and any problems that may exist in the development operations could have a long and significant impact on costs going forward.
So again considering question two above, if the overspend isn't a result of problems encountered with Development what is the cause of the overspend?....
If you have another explanation that makes sense then please share as I would be back buying more shares like a shot, but as things stand this is the best explanation I can come up. Risk management is a major factor when investing in gold shares, and for me recent events show risks have gone up. The potential here is obvious and I do want to increase my investment, but until the company actually explains what the problems are, or until it becomes self evident that they were just expensive teething problems and no more funding is required the risks are too high..........Is it really a coincidence that insiders are selling significant numbers of shares.
RSG Price at posting:
$1.07 Sentiment: None Disclosure: Held
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