By end of this month, DMM will have repaid $300K of $600K on bank loan.  Likely DMM could refinance for the $600K again, netting $300K.  At this point in time, I estimate DMM cash need is very modest (DMM net cash from operations is about breakeven @ $1400 gold, and should actually be positive now if they are mining from 2 good vein systems).  

 

And there is no good reason to significantly ramp up production above 500 tpd when gold price is this low, better to keep it in the ground and wait for higher gold price.  That said, I wish DMM would temporarily ramp up production enough or high grade to get say $3+ million cash in its bank account, to build a nice cash cushion, if this were possible...

 

In any event, assuming 500tpd run rate, $1,400 gold price, $8.74M ALL in costs for 1Q13 plus 25% variable costs, I show net cash flow profit before tax of $2.9M, and DMM has sufficient tax loss carryforward to ensure it does not pay tax for a few quarters.  We shall see, 500tpd could be a bit optimistic for 2Q, but easily achieved for 3Q13, IMO.

 

Avg TPD for Quarter 500.00 (A)    
         
Average Grade Average  (B) Normal Matalanga Historical
Grams per tonne   13.9 19.87 3.4
Production Feed %   45% 5% 50%
Grade Before Dilution 8.9485 6.255 0.9935 1.7
         
Tonnes per Day Avg 500.00 (A)    
Grams per tonne 8.9485 (B)    
Dilution (C) -2.237 25%    
Gpt after dilution 6.711      
Grams Produced per day 3,356      
Convert to ounces 0.03215      
Ounces Per Day 107.9      
Gold Recovery (D) 90.0%      
Ounces for 2Q13 8,836      
         
Gold Price $1,400      
Revenue-1Q14 $12,370,422      
Cash Out Expenses $9,424,585 **    
Royalties @ 4.5% $556,669      
Net Cash Flow B4 Tax $2,389,168      
Tax @ 47% $1,122,909 *50% - 3% Royalty  
Net Cash Flow After Tax $1,266,259