Ann: Toronto Listing Update, page-34

Hi John,

The annual report had write-downs on the low grade stockpiles for the CY2017 of $63.8 million. I don't know how much material this actually represents (maybe someone else has that figure) but from a layman's perspective they had a lot of ore sitting on their books which in the final analysis was actually waste. Do you know if the $63.8 million write-down was made progressively throughout the 2017CY or were shareholders hit with this at the end of the CY?

I'll just re-post my post from May.

https://hotcopper.com.au/threads/ann-us-23-million-capital-raising.4176166/page-62?post_id=32941897

with an extract of my post from May (below in bold)

It's also useful to read this note from the annual report.

"As announced in May 2017, the Group is undertaking a plant upgrade at Tucano for an estimated total capital cost of US$27.6 million. As at 31 December 2017, the remaining capital commitment in order to complete and commission the plant upgrade is estimated at US$18.495 million. The plant upgrade is expected to be completed and commissioned by mid 2018."

The remaining spend on the plant upgrade at 31 December 2017 was A$24.66 million and at that same date according to the annual report BDR had a net working capital deficit of $47.344 million. So at December 31, 2017 the company would have needed a total of ~$72 million to complete the Tucano plant upgrade and plug the working capital deficit.

The recent quarterly said they had spent A$9.5 million on sustaining capital which was attributed mainly to the plant upgrade and it also said that the company still had A$10.7 million in cash and bullion. So going on these figures the company at the 31 March 2018 still needed $51.8 million to finish the plant and plug the working capital deficit.

The current raising of US$23 million = A$30.66 million (if completed) still seems significantly short. By my rough estimates they'll need to make a $22 million profit this quarter to bring their working capital account into surplus, all this whilst tying to complete the merger with Golden Harp (which is due by mid-June) and commissioning a plant upgrade and running a mine.

It is not an understatement to say, if the management ever needed to perform it is now.

That $22 million profit that I estimated BDR will need to make (in the June 2018 quarter) to bring their working capital account into surplus does not include the $7 million from the SPP (as that doesn't look like it will be raised during the quarter).

If they don't make $22 million this quarter, by my sums (which could be wrong....please do your own research) the company will still have a working capital deficit at the end of the quarter.

Given MACA are terminating their services immediately and the company needs to transition from owner miner plus Brazilian onsite contractor to a single Brazilian contactor one would imagine there will also be some potential down time and costs associated with this transition, meaning not only will the company need to have produced a sizable profit in the June quarter but will also need to follow that up in the September quarter.

and by the way, weren't MACA brought in to replace the underperforming Brazilians in the first place.

Not long now before the quarterly results come out. By the above account the results must be good as the company hasn't folded yet. Esh