start here

start here

The Daily IKN email digest, get all daily posts sent to you next day (& no ads)

1/31/17

A couple of New Gold (NGD) balance sheet charts and the boring reasons behind this disaster stock

I was playing around with the model last night. Here's the one at the business end of the current SNAFU, working capital:


It beggars belief that an operating gold mining company could dive into negative working cap (i.e. cash crunch coming) after all this time and gold at U$1,200/oz, but here we are. There's no a lot of talking about NGD raising cash via an equity placement (I've head U$200m and U$300m numbers bandied about this morning) but even so, that kind of dilution will only be a BandAid compared to the true long-term problem at this screw-up, its liabilities position.

That near U$800 in financial debt isn't going anywhere. It all reminds me of the stupidities that now ex-Head Honcho Randall Oliphant spouted on BNN last year, all that about how the IRR wasn't so important because a lot of the capex was now embedded at Rainy River. That's just dumbtalk for the peanut gallery (aka the shareholders tending to their wounds this morning), the ones that believe any old soft soap silliness from mining executives. Because cash spent or not, balance sheets matter people. Boring but true.