We still have a chance, in about 70 days from now, of pulling the C$9.0 million (US$8.5M) prepaid gold sales cash amount from the escrow holding account.
I wouldn`t be so quick to discard June from the mix.
To pull the next C$9.0 million from escrow, we have to generate production of 70,000 ounces (on an annualized run rate basis). We are allowed to count both Lamaque and San Juan ounces within the 70,000 run rate. We need to do it for 4 consecutive months, based on the average of the sum of the 4 months. This means that some of the months can be low (i.e. June) and others high, just as long as the annualized run rate of the total ounces produced within the 4 months meets the requirement.
Let`s assume 20,000 run rate ounces for San Juan. It would mean Lamaque would need to generate ounces at a rate of 50,000, of the 70,000 total.
50,000 / 12 months * 4 months = 16,667 ounces
Lamaque needs to deliver 16,667 ounces over a consecutive 4 month period (regardless of breakdown by month).
June`s Lamaque production was 1,870 ounces.
Let`s say that Lamaque`s tpd averages 900 in Jul, 1,100 in Aug and also 1,100 in Sept, with 4.76 g/t grade and 96% recovery for all 3 of those months.
It means 15,533 ounces for Lamaque from June to September. It might be close enough to the 16,667 ounces required from the Lamaque portion of the target to allow us to access the C$9.0 million (similar to what occurred with Performance Hurdle A, where we were able to amend the target slightly, in order to access the $US5.0 million cash in late April). Failing that, management could try to push more of the 20,000 BD bulk sample tonnes through (quicker) coupled with driving out more short-term ounces from Peru (and perhaps contributions from the North Wall, if they can get it into the mix quick enough), in order to make up the difference. The key is to find a way to use June (as one of the 4 consecutive months) in order to gain the quickest access to the C$9.0M cash.
It would be good if management can get this to happen for the end of September (about 70 days from now). It would likely mean that we would have a lot of cash on hand at that point. We would have this C$9.0 million injection from escrow, plus good cash from both ramped up Lamaque gold sales and ongoing San Juan gold sales.
This would be a great position to be in. It would allow us to move aggressively forward with both development and exploration. It would speed up the process of getting to 2,000 tpd or 100,000 – 110,000 ounces from Lamaque. It would make us somewhat cash loaded again.
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