The book value of Bumbat represents a capitalization of all expenditures on the project. It doesn't mean that this is what it is worth.
Some of the funds were spent on exploration and used to confirm and add reserves....therefor, the ounces in the ground cost $x (say US$15).
Some of the funds were spent to buy a 1995 Caterpillar D8 Dozer, 1995 Caterpillar 988 Loader, 1994 Cat Excavator, Grader, Joy 950 Compressors, GD drills, Kratz Trucks etc. This mobile equipment will depreciate (15% or so, straight line/declining balance, etc.) It has a current value less than original value. However, it is real and relatively liquid.
Some of the funds were invested in construction, engineering, permitting, and general and administrative costs. This is a cost that can be recovered through production or sale as is. It can't be hauled off to sell elsewhere.
MGR will proceed on its other properties by JV where possible, and by itself where required. The Bumbat issues will be resolved fairly quickly as an offer to purchase has been submitted to our partner. We wish to clairify some terms and conditions of this sale (General Provisions) contract before we decide whether we wish to exercise our first right of refusal.
Dave |
