One More Kick At The Can

One more stab at trying to figure out how production could have covered the Level 1 Marketable Security that was settled at the close of 2013 calendar year, Q3 fiscal 2014.

You will need some $5.00 in quarters to lay this scheme out in front of you.

For fiscal 2010 the end of 2009 calendar year saw a certain amount of production which was held in escrow and did not count towards cash flow. They stated that four months of production preceded commercial production, but I believe it to have been two quarters, or six months.

Probably about 25k oz. was held in escrow and 'produced' out of the escrow account to prepay costs for calendar 2010. By the end of fiscal 2010, April 30, 2010, another 25k oz. was escrowed, and 'produced' out of the account to further handle costs for the declaration of commercial production at the beginning of fiscal 2011.

Empty a space on a table in front of you and lay two quarters down at the top of the space. You have 50k oz. in escrow.

Now move them down, vertically aligned, producing them out of escrow to cover costs for the next year.

Above these two quarters, at the top of the space on the table, vertically align four quarters above the original two quarters, leaving a space.

Take one quarter from the recently placed four quarters, and move it down beside the orginal two quarters as costs for the next fiscal year. You should have three quarters at the top of the space on the table, below it two quarters that were costs covered at the bottom, and another quarter beside the original two quarters as costs for the next fiscal year.

Above this single quarter, at the top of the table where you already have three quarters in escrow, you place another four quarters vertically aligned, each representing 25k oz. of gold poured at the mill, which were then escrowed immediately. Take one quarter out of the recently placed four quarters and place it at the bottom of the table, beside costs from previous fiscal years.

We are at the end of fiscal 2012 with six quarters held in escrow, and a prepaid bridge financing deal with Waterton, worth four of those quarters, but are not meant to be paid until the close of fiscal 2014.

Now place four quarters above the cost for fiscal 2013, and take one down and place it at the bottom of the table, beside costs for previous fiscal years. Now place another four quarters at the top of the table.

You should have four vertically aligned rows of quarters, representing the costs to mine, and the total gold held in escrow with no cash flow despite commercial production being declared.

You also have enough gold held in specie as dore bars to cover both payment-in-kind towards the Waterton Bridge Facility, and the Level 1 Marketable Securities, that was closed at the end of 2013 calendar year and reported in the Q3 fiscal 2014 financials.

Conclusion: The Waterton Prepaid Bridge Facility does not appear to have served any purpose other than as a legal construct.

At the close of May 5, 2014, the $CAD gold price was ~$1406/oz. That would mean that this deal, which did not appear to serve any purpose except as a legal construct was worth some ~$130m. CAD. The Level 1 Marketable Security settled at the close of calendar 2013 was possibly worth ~$280m. These sums must be reported by law in financials at the end of fiscal 2014 report in August.

If all of this capital was used in development, the after-tax reportable income would be ~$359m. The anti-mining Conservative government imposed a development surtax in the worst example of resource nationalism, resembling the now-defunct Parti Quebecois xenophobia against mining.

The company also utterly fabricated events during the four years of production represented by stacking quarters on the table, including reporting mill shutdowns when none had occurred. None of the dore bars held in escrow were reported as assets, but were instead reported as liabilities. Each single quarter laid out on the table counted for all the rest during that fiscal year.

There was an unreported extensive drill programme on both the Komis deposit and the expanding Roy Lloyd mine. The company reported production out of the Komis deposit, but really came from the EP Zone. Thus the EP Zone is really the Komis deposit, making the Komis deposit substantially much larger than reported.

$CAD dollar gold price

http://scharts.co/17HxjtG

Bing Maps aerial photo of the Komis deposit, May, 2013.

http://binged.it/V2uNhp

-F6