I think it is very clear AUMN is committed to rapidly advance Velardena. This merger only makes sense if AUM wants to have a productive flagship mine in operation that can generate high profits to fund the rest of the growth plan for the company. And to make money they have determined that a much more intense development program must be completed to allow for a higher production regime. This means opening more stopes underground, and building a new mill near the mine, away from the town.
When I spoke with AUM management I had some specific questions ready, including who their metallurgical consultants will be, who was the mine engineering firm they would be using, where woudl the tailings pond be located, what parts of the existing resource would be selected for development, how much tonnage per day could they roll from deeper zones, etc. I had immediate answers for each question. These guys have already thought all of this through and have a plan, it is not just a resource grab or a raid to steal an underpriced asset.
And if anyone doubts what I say is true, then just stop to think why $15 million in cash is advanced as part of the deal. If they were not serious to hit the ground running with this project and make this mine into a profitable flagship to build a company around, they would never do a deal to put cash in the hands of the merging junior.
Anyone who talks about the 'high burn rate' for AUMN is looking at it from the wrong perspective. To advance an exploration property takes a lot of money. When I see AUMN raise a huge amount of cash to fund an aggressive growth plan, that is the kind of company I want to invest in. I know of a few juniors that sit tight on a pile of cash and do very little, which means they still burn money in admin and management expenses but have almost nothing to show for it in terms of what builds value for shareholders. I would much rather have a company that has consultants in place to plan a real operation, and has several drills running, and several projects underway. All of that costs money, but its the only way to grow into a sustained mining company.
The idea of establishing a deposit to have a takeover deal is nice, but not many big deals have happened in the last few years. Then what? I am happy to put my money on board with a serious mine developer and one that can get their hands on the money they need to make it happen.
Looks like a slow day ahead of the NFP data tomorrow so I guess we just pause and consolidate here. Next week should be fun.
cheers!
mike
