I know a lot of people here are convinced that debt = bad. That is a naive viewpoint. It's overly simplistic, and it's wrong.

Sadly, it's also obviously the viewpoint of AUMN management. I guess they've been so badly shaken by their experiences in their last venture that went bankrupt, they just have lost the guts to do what's right.

This duliton will amount to about 10.3 million shares (offering plus private placement plus warrants).

Before this abusive dilution, if you assumed that all options/warrants would have been excercised (let's pretend that Velardenas is very successful and stock price has increased enough to cause all warrants to be converted to common) there would have been something in the area of 38 million shares for AUMN.

Also assume that AUMN can produce 2M ag eq oz at a net profit of $20/oz, including depreciation.

Further assume AUMN could have gotten a $40M loan @ 10%. I suspect that AUMN could have gotten something closer to 7% if they'd been willing to secure it with Velardenas as collateral, but regardless I'll assume 10%.

Per share earnings of velardenas w/ 10% $40M loan @ 2M oz production: $0.95.

Per share earnings of velardenas w/ dilution @ 2M oz production: $0.83

That's a 13% reduction in earnings compared to a 10% loan.

Let's look at how it looks if they get the mine up to 4M oz?

Assume 4M ag eq oz @ $22/oz net profit (higher volume lowering the unit cost of operations).

Per share earnings of velardenas w/ 10% $40M loan: $2.21

Per share earnings of velardenas w/ dilution: $1.82

That's an 18% reduction in earnings compared to a 10% loan.

Granted, the warrants, if excercised, would bring in another $29M, however by that point Velardenas should be providing significant cash flow to AUMN which A) would reduce the need for this cash in the first place and B) make it easier to get even cheaper debt financing anyway.

This equity financing was a terrible terrible deal for shareholders.