start here

start here

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

I say things on Twitter

4/15/09

Nadagold (NG) reports

rick!
RICK!

I love these Nadagold (NG) guys and you should, too. The perfect example of the slick, positively spun but ultimately meaningless press release. We can all learn from them how to be all that we want to be in this fine 21st century world that rewards BS more than honesty. Here's the link so go read yourself, but once you wade through the guff and style at the top you start getting to the substance at the bottom. This is the bit I like:

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

The Company's three material projects are the Donlin Creek, Rock Creek and Galore Creek projects. The Company's remaining share of the 2009 budget at the Donlin Creek project is approximately US$10 million, part of which will be incurred completing the feasibility study and the remainder is planned to be used for permitting activities at the project. The Rock Creek project is in care and maintenance, pending a review of whether to recommence start-up at the project. The current remaining care and maintenance budget at Rock Creek for 2009 is approximately US$7 million. The budget for care and maintenance and optimization studies activities at the Galore Creek Project for 2009 is $16 million, however, NovaGold is not required under its revised agreement with Teck to fund any of those costs.

The Company does not plan to commence development or construction at its Donlin Creek and Galore Creek projects in 2009, nor does it currently plan to recommence the start-up process at the Rock Creek project. However, the Company will need external financing to develop and construct its major properties and to fund the exploration and development of its other mineral properties in future years. Sources of external financing may include bank borrowings and future debt and equity offerings. There can be no assurance that financing will be available on acceptable terms, or at all. The failure to obtain financing could have a material adverse effect on the Company's growth strategy and or results of operations and financial condition. Development of the mineral properties would require significant capital expenditures. There can be no assurance that the Company will be able to secure the financing necessary to retain its rights to, or to begin or sustain production at, any of its mineral properties.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Because it's now clear that NG isn't going to re-start Rock Creek anytime soon despite all the hopeful noises made earlier this year. Instead it's going to spend another $7m on care and maintenance there. Whether that expense includes paying back the $15m or so the company still owes to its suppliers in Nome is not made totally clear.

We also get a budget for the rest of the year. Add em up and divide by three (the first quarter is done) and we see that NG needs to spend $5.66m per quarter to keep its project expenses on track in 2009. I suggest you make a mental note of that number and compare it to the loss NG reports in the second quarter as it'll give you some idea of just how much cash is wasted in non-core stuff such as office space, Martini lunches, photocopiers, executive jets etc. Why follow this number? Because according to filings, expenditures on the three 'material projects' were $4m in 1q09 and the net result at the company was a $28.5m loss. Hopefully $15m went to pay off those previously mentioned and very patient suppliers in Nome, but as for the other $9.5m minimum it's anyone's guess. Seriously, that's at least $100,000 a day in non-core expenses for a company whose only income is a few hundred thousand a quarter selling gravel.

Or in other words, shareholders in NG are perfectly matched to the management team: More money than sense. DYODD.