Canada budget extends tax credit for junior mining firms

"The accelerated capital cost allowance for capital assets used in new mines and major mine expansions will be phased out. And the deduction rate for pre-production mine development expenses will be reduced," it said."

http://ca.reuters.com/article/businessNews/idCABRE92K15R20130321

What this means is you can dillute your shares to any extent that you like, but you can't raise capital on the markets and expect a tax break for expansion. The conservatives are the bankers best buddy.

GBN.V by contrast has stockpiled ore grade glacial till from the EP Zone, and given a certain gold price, it can serve as a capital expenditure pool as if it were money saved for a rainy day. There is enough in the stockpile to run the mill for more than a year full tilt.

All of the below cut-off grade development material from several sources, which is generally not considered ore, was processed instead during the gold price correction.

My assumptions would be that the mill requires no upgrade of any sort to operate at full capacity, which is in actual matter of fact, 1000tpd. The small capital expenditure to achieve this rate would be upgrading the mine road to the Golden Heart location. What they managed t hide from you is that the EP Zone ore, stockpiled by the mill, is available for processed the minute they decide that they want to proceed.

@1000tpd, and using 12g/t stockpiled ore-grade glacial till from the EP Zone, the company can generate enough capital in one year to pay for an upsized mill at virtually no cost, since ore depletion was already counted as earnings depreciation in prior quarters. They can pay for it all with a $1600/oz. average gold price. MEANING RIGHT NOW.

In order that they produce free cash flow over and above mill CAPEX, without massively stockpiling ore at a breakneck pace, the gold price would have to be $1750/oz. + and they can pay out a 10¢ dividend per year. (2.5¢ per quarter)

IF 2013 budget changes means that 35% taxes must be paid regardless of whether you use CAPEX on development, then you would expect that the company will continue to aggressively stockpile ore, operate at a loss, but with no benefit whatsoever to shareholders and no likelihood that share prices advance.

-F6