Thanks.
The drop stems from issues at its mine. It began commercial production at Magino last June, but in an operational update, the company said the mine site is experiencing higher than expected dilution rates due to difficulties in selectively mining the high-grade areas of the deposit. As a result of the higher dilution, the company said it expects the average grade to the mill will be 5%-10% lower than forecast in the technical report over the next 2-3 years, although it believes life-of-mine grades and ounces will not be affected. Investors never like 'problems' with a mine, and often view one problem as emblematic of more. Considering the company's very high debt level ($300M), small market cap, weak momentum and mine concenrs, we think this may be dead money at best for a period of time. Analysts expect no earnings despite high revenue in the next two years. We think the sell off is justified and would be fine moving on and selling.