The dilution shouldn't be that much. Assuming the loan agreement...

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worzel1

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02/05/18

09:10

Post #: 32817739
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Originally posted by JID ↑

Hi Atomic, GermanPirat and all,

I hope things work out for you Atomic - you have certainly been a loyal supporter of BDR and this has been a hell-of-a tough investment for you.

Fingers crossed that they survive and then find a massive new deposit and you can eventually walk away with some decent gains at some point.

GermanPirat - capitalised stripping costs refers to work done to shift over burden by MACA et al and which BDR will have to pay $$ for as part of the normal invoicing cycle but which they are NOT accounting for as an expense against their current gold production, but are instead treating as an ASSET on their balance sheet.

In the short term, this makes the P&L look a LOT better than it really is in terms of costs per oz of gold mined.

If this stripping was treated as an expense in this Q it would raise the AISC by US$260 per oz and make the AISC figure look even worse than it currently is at US$1,204 per oz or what I think is the more accurate US$1,466 per oz (based on production not sales).

If the capitalised stripping cost was expensed it would raise the AISC to US$1,726 per oz produced for the Q on this oz produced basis.

In theory, this reverses itself when they access the gold associated with the already incurred stripping cost. From an accounting perspective, they reverse the capitalised stripping costs (ASSET) into the P&L (EXPENSE) and apply this as a cost of mining that gold.

From a cashflow perspective, the cost has already been incurred (and hopefully paid !) so the cashflows reflect that.

Personally, I really hate to see this type of accounting treatment at an active mine and, true to form, it speaks to BDR's previous smoke-and-mirrors. It points to SJ's profession (CFO/ accountancy) vs. mine engineering.

I think that at this point it is the Cashflow Statement that matters much more to BDR shareholders than the Profit & Loss Account.

If you're right Atomic about the CR at C$25m then, coupled with the Lundien investment and the likely huge number of options issued to Sprott as part of the debt deal (at least 360m options IMO*) and the dilution will see the upside gone for BDR ... but at this stage that is better than liquidation.

Cheers
John

* Sprott often does 1/2 attaching options. Thus $60m debt = $30m in options / 8.3c = 360m options.

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The dilution shouldn't be that much. Assuming the loan agreement hasn't been significantly altered during the on-going delay, the loan provides for warrants to the value of 3% of the facility amount, to be issued at a 30% premium to the lower of spot or 20 day vwap - ie. US$1.8M. This was from Craig Readhead the chairman.

BDR Price at posting: 8.3¢ Sentiment: None Disclosure: Held
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The dilution shouldn't be that much. Assuming the loan agreement...

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