WMC 0.00% 20.5¢ wiluna mining corporation limited.

At best, if they meet their upper June quarter production target...

  1. 11,108 Posts.
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    At best, if they meet their upper June quarter production target then they will still be losing money in terms of total outlays versus revenue (without counting any repayment of loans). They can only continue doing that for a few quarters before they come back for a blood infusion.

    The issue is mining grade, assuming they can maintain current high gold recovery rate. Operating the mill at 1.5 or 1.6 g/t is not going to make them profitable.

    If they do not have enough oxide/transitional ore then their gold recovery rate will get hit.

    It is possible that HHL is not the one selling out to any great extent or they would have issued a change of substantial holders notice. Peter Hall make a great investment in SBM, but that was possible because he had previously played around with them and had an understanding of their operations. His investments in DRM, BLK and BDR have been poor.

    I would not read too much into today's announcement. What did people expect BLK to say? They were saying similar things last quarter until things got to far out of hand towards the end of that quarter. They were forced to open up a bit because of their presentation at a Hong Kong mining conference, otherwise we would have been in the dark until closer to the end of that quarter.

    But a near term share price bounce of some sort is possible.

    I am not sitting here salivating at the prospect of getting back in, since my whole view of what this company can achieve is now very different from before. The only thing that would change my mind would them finding a lot of higher grade oxide ore that they can mine in the near future.

    Basically I think their mine plan and costs for their reserve is likely to be pure fiction. Like CRB there will be heavy share dilution especially for the "expansions", even if the company can survive. In which case how does one value the company - you have to give it a huge discount.

    With a story like this its best to gamble when the sector as a whole is reaching some major bottom and the gold price is about to do a runner upwards. That may be in June or July (or never).

    loki
 
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