Robert: I weas under the impression that the attempt at producing the dore bar failed (lat news release). They shipped 450 tons to a separation facility in southern Arizona and they were unable to extract a comercially significant portion of the precious metal content. Since this was done under the direction of IPM's lab (BDC), maybe this lab does not know as much as GPGI's people do. The excuse that the BRX ores is mostly sand (80%) and the facility was designed to handle mostly rock, does not hold water. What does it take, after all, to sieve the 80% sand out and feed only the rocks? Of course, you would not feed the rocks to the separation facility if the sand bears most of the precious metal. But if that is the case, you should not be paid $3000 per day to try and seprate the precious metals from the fraction were it is not in (the rocks), and not spend money sending 450 tons to a facility that is not designed to do the job. Now, if the rocks contains as much preciuos metals as the sand, why not sieve the sand out of the ore and send 450 tons of the rocks to the facility? Then find a smart way to extract the precious metal from the sand fraction. Sieving aggregates, mind you, was exactly the way GPGI got to it's pile of concentrated ores, and sieving is a dirt cheap process (literally). Come on, I think those BDC guys have no clue how to extract the precious metals from the ore, and if IPM did not have a long term relationship arrangement or something like that (the annual report does not mention an obligation to work with BDC but they continue doing so in the face on continuous failures), they would have dumped them.
By the way, I have read the package from IMP and have not changed my conclusions stated earlier. They need three years (if everything goes well) to start mining and extraction. Their cash burn rate is in excess of $3,000,000 per year and that is about what they have on hand. They stated themselves that they have a year of operations before they need additional financing. Therefore they will need to go back to the well for more money.
Sure, they have a lot of precious stuff in the ground (so does GPGI), but if they run out of cash before they can bring it out, look below. You should also read Note 1 in theiir form 20-F, this statement in the US would usually be part of the auditor's report, but in Canada they do it somewhat differently.
This company has already gone through about $30,000,000 of "other people money" (i.e. people like you and I). They keep starting and deserting projects over their history. Now there is a new management team in place, and the burn rate (in 1993 and 1994 at about 1.3 and 1.8 $million) has gone up to $3.3 Million. I am not sure how to account for the increase in deferred mineral exploration expenditure ($3.5 Millions was'nt that cash?, was it for drilling the array? do they need to continue and spend that on the rest of the property before they can put a valuation on the property?), and assume this will not increase this year.
If I was in IPM's shoes, I would use the three to four million bucks they have on hand to get a small pilot plant running producing some metal or concentrates (unfortunately to get to about 1,500,000/year in metal value at 50% extraction rate they need 1000 tons per day and this is no longer a small plant!)
Good luck to all
Zeev |
