TGR: In your newsletter, you suggest that Golden Predator Corp. (GPD:TSX) could become a producer sooner than expected. How would that happen?

JB: Its flagship project, Brewery Creek, is a fully permitted mine with two leach pads in place holding 120,000 oz (120 Koz) of gold, 30% of which the company thinks may be recoverable. In the ground, it has an NI 43-101 resource estimate of about 288 Koz gold, half Indicated, half Inferred, some of it in the Proven and Probable category at a grade of about 1.6 grams per ton in near-surface oxides. That estimate will probably grow to 1 million ounces (Moz) once it publishes its updated NI 43-101 in the next few months.

If the leach pads on the property still work, the capital expense (capex) required to fund the project to production should be less than $20 million (M), more if it has to build new leach pads. Golden Predator has a strong balance sheet; it will not have to issue a trillion shares just to get up and running. That is one reason it makes sense to start up with a resource as small as 1 Moz.

Management tells us they are targeting commercial production and positive cash flow within 14 months, starting with small-scale production of 30 Koz/year. Management will use the cash flow to expand over two years to a processing rate of 140 Koz/year.

Its royalty portfolio is strong, with more than a $30M net present value (NPV) in our opinion and a lot of non-core assets it can monetize. It is also looking at debt financing rather than equity.

TGR: Why debt financing?

JB: I do not know, but we are supportive. We would rather see debt financing than dilutive equity financing at this point. Too many of the juniors are stuck having to do heavily dilutive equity financing at the bottom of the market.

http://www.theaureport.com/pub/na/12910