RE: RNS12 Feb 2019 07:48
I’ve seen some posts saying there is little risk with this new venture and funding is minimal.
A few observations.
If the prelimary work does not show favourable results then although we don’t commit any more money, we would have spent $100K for nothing.
If we do move on to exploration work then that is up to an additional $400K committed over 18 months but with risk, as there is no guarantee that this will result in production and therefore in extra income. It may all work out brilliantly
but there is no certainty exploration means production.
If it does work out, then this income stream would be at least a year away. Mining exploration is high risk and this is why CB keeps, rightly, emphasising we are a PRODUCER at manica, not explorer.
Our cash balance can't be much above $500k at the moment so alot of this money will have to come from income. The $400K exploration costs work out, on average, at circa $22K a month (18 months exploration). Ordinarily it’s reasonable to say that this is not much. But it’s all relative, and that is an additional $22K a month that, at current income levels, we don’t have. We know we are meeting alluvial operational costs but, at the moment, not meeting all group costs so we are already making a loss, at group level, before we spend another $22K a month.
I am assuming CB is confident that income will increase over next few months to support this extra cost. If we don’t get good news soon re increased income levels, then this project would IMHO be a very high risk venture.
I think we should all just trust that CB knows what he’s doing and that all will be fine. After all, It’s not as if other projects havn't worked out as planned :)
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