Considering the outcome of the first phase of production after four years and the elaborate hoax that the company has entered into in presenting material losses which could not possibly exist, since you have to make that kind of money to lose that kind of money, and that they have no accounts receivable, the following series of articles suffices to explain the approach taken:

Tax Deferred Assets

A mining company is very similar to construction companies, their balance sheets aught to be similar. The following article describes how depreciation on the balance sheet is a tax deferred method that advantages the company. But this requires two sets of books. One set of books, the public one, is presented to the tax-man. The other set is presented to lenders:

http://www.forconstructionpros.com/article/10857425/keep-two-sets-of-books-for-taxes-and-borrowing-purposes

You have to wonder how, in an annual audited financial report where the auditor swears on a stack of bibles that whatever is presented to shareholders represents the material fact, when the company could not possibly exist with the numbers presented. They are not legally misrepresenting if there is a second set of books, where the asset-liability mismatch reconciles.

http://blogs.cfainstitute.org/insideinvesting/2012/10/02/is-it-ok-to-keep-two-sets-of-books-a-primer-on-deferred-tax-assets/

Instead of calling that deferred tax assets, I would call them deferred tax liabilities, or where taxes are prepaid, assets are carried off balance sheet.

http://www.investopedia.com/terms/d/deferredtaxasset.asp

But the company pre-pays all expenses, so the amounts claimed, such as a $71m loss with no obvious source for the loss, except clumsily and hastily cobbled liabilities for the next year made to look as if it was last years' loss, this $71m represents the prepaid tax liability of a deferred asset. (expenses have been in the $40m range, so if expenses are now $71m, there has been a major expansion. The $71 prepaid tax liability has to be differentiated from a forward prepaid expense, which is the same number.)

.35 1/X is 2.86

2.86 X $71m = ~$202m.

The taxes prepaid on the asset represents a capital raise of ~$202m.

Similarily, the 31k oz. 'bought' by Waterton represents that tax liability of the rest of the ounces sold, 69koz, which presumably represents a capital raise of ~$96m @ $1400/oz. CDN

Together, these assets represent enough money after taxes to pay for growth. The taxes are themselves deferred, as the tax on development is much lower but would be claimed in fiscal 2015. Very highly likely the company is into a construction phase since the end of fiscal 2014, meaning the end of April. The mill is also running at full tilt, where they claimed a shut-down. The reason why they 'need' people to believe the mill is shut down means they are escrowing all production, drawing from voluminous stockpiles that were already depreciated over four years, and could supply the mill for a year.

If you use $1400/oz for a gold price, you get ~145k oz. of production that was escrowed for two years to satisfy the Level 1 Marketable Security(reported in Q3). So you can presume production of 75k oz. over and above claimed on the balance sheet, 'poured at the mill,' but not drawn from the escrow acccount. Any production reported is obviously drawn out of escrow, not necessarily poured at the mill. 25koz. of expenses and 75koz. of escrowed production.

Reported grades are a fraction of the actual grades, representing perhaps a quarter of production.

A Deferred Tax Asset(really, in this instance you would be calling it an asset where taxes are a prepaid expense) is used in the next fiscal period.

Don't worry, even a corporate CFA would have difficulty with this.

-F6