RE: Prospects9 Jun 2021 21:26
@setanta I understand your concern, but smaller explorers without revenue need to sell their shares to raise capital to fund exploration. No one really likes it but that is the deal with Juniors and because of this raising a lot of capital is very challenging at anything approaching a decent rate so discounts to the prevailing SP of around 10-15% are fairly typical as are the associated warrants.
In my view GWMO has done well with limited funds over the last 18 months or so and shown that their prospects are worth pursuing especially as there are so many historic mines in the area with such high grades at very shallow depths by todays standards. In that respect I believe they have a very sound strategy as modern tech has a good chance of identifying good targets in such a scenario ... as always no guarantees as this is exploration after all !
As a rule of thumb I would expect an annual exploration budget to come in at 10-20% of MCap as anything else is just too expensive or impractical to raise cash without destabilising the SP unless sentiment and prior results support it. Given that GWMO had circa £2m cash and raised an additional £1m vs. an £8m MCap they are very well funded for their size, but at a cost of high dilution for existing PIs (I used to hold circa 1.2% but now under 1%).
My view is simple, if they hit something decent all will be forgiven as the likelihood is it will be shallow, high-grade gold/silver as history may not repeat but it certainly tends to rhyme. We know the metallurgy is straightforward and a goodly portion of the metal can be extracted by cheap gravity separation plant. Once underway and generating free cashflow the funds can then be reinvested in updated plant to extract a higher %metal as it becomes economic to do so.
Junior explorers with a revenue stream are all high risk high reward plays whatever anyone says
AIMHO ATB APR
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