IKN

Hereditary sloth instructs me

Very impressed with U.S. Silver & Gold’s (USA.to) accountancy skills

That Blasutti may not have a clue about how to run a mine but he sure knows how to put the best possible shine on those books of his.
As a slight aside, my fave line in the NR out yesterday was “If Small Mine Plan implementation costs were excluded, the Galena Complex would have made an operating profit of approximately $0.9 million in the second half of the year.” That’s because if those costs weren’t included, USA.to would still be fracturing cash at the old rate and would have made an even worse loss, so cool bit of tautology there.
But anyway, the real fun happens over in the financials and Drumlummon is the bit that catches the eye, because it’s the easy window on the orchestral qualities of the book-keeping. That’s because apparently, according to USA.to and all that, you can have a mine that’s fracturing cash to such an extent that it’s closed don on May 31st 2013 (sorry, it’s ‘put on care and maintenance’) but its goodwill value is left unchanged (USA insists it has a goodwill value of $12.78m, unchanged from YE2012, which could only be the goodwill of somebody like Eric Sprott) and its asset carrying value is cut by a mere $1.4m to $4.8m. In other words, a gold mine that was such a lossmaker when gold was priced at U$1,394/oz that is was closed down, is worth $4.8m today.
But anyway, here we are in 2014 and the company is now running its “Small Mine Plan” (which, surprise surprise and despite six months of hype, hasn’t seen it return a net profit after all). It’s a good bit of marketing and labelling (what do you expect from a CEO who was previously the investor relations guy at Barrick?) but it’s not much more than cutting $12m of necessary development costs and pretending they’re not needed any more, then cutting workers down to the number needed to mine the high grade zones of its mine. And you never know, in 2014 the company might just be ab le to break even, but never mind that it’s fucking over its resource for future years. Then people in this sector wonder why the rest of the business world avoids mining companies as long-term growth opportunities. 

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