In your best judgement, what outcomes could occur with EXS if the company proves up 1.5 to 2.0 million oz and runs out of money? Does EXS continue to issue more shares and continue drilling? Do you have any insight into what occurred with the CA agreement that was signed that we never hear anything about?
Firstly, the expense associated with the establishment of "1.5 to 2.0 million oz" virtually guarantees that they will "run out of money" or more appropriately, will be required to come back to the public market for additional capital. Dupont is acutely aware of the burn rate and will be back to the trough long before the funds are expended. On a positive note, the investors in the last financing will be forced to protect their investment by continuing to invest in Explor and that is good. However, it also guarantees further dilution so where the rubber meets the road is in the pricing of that next financing. If markets are bubbling, and EXSFF can do another round north of $.50, and adds another 20m units (30m with warrants) then the undiluted capital is at 168m with the f.d. capital at 207mm. And that will then required an even great number of ounces than "1.5 to 2.0 million oz" to justify the price.
As for Agnico, it is really quite simple. Majors do not act quickly; they are tortoises. However, you can rest assured that they have every imaginable piece of data pertaining to Timmins P. West and as of this date, are NOT joint-ventured with EXSFF. The danger of a CA when everyone knows about it is that if time goes on and nothing happens, the market perceives it as negative because "they didn't like what the CA allowed them to see" (which is actually BS) but nonetheless the reality.
The stock is now priced as a "dead money" investment; this is usually an decent entry point. The risks remain that your assumption of the ounces that are coming actually do materialize and that the market can live with the share structure.
Hope this answers your queries, Tom.
