季报也不是很差，刚break even, 正现金流，average cost below 600/oz, beat estimated 625/oz,
其中3.8 Million in Stock Based Compensation，比较费解，不知道是一次性的，还是连续的 。
Most of the stock option granted this quarter vested immediately. Therefore, the majority of the 3.8 million should be a one time charge unless more stock options are granted.
I have been investing in Avion since November of last year. I feel that the market is over reacting to the quarterly results today however I do feel that there is some justification. Can you please answer the following questions for me.
1) In detail, can you please outline why the general and administrative expensive increased so significantly? I know this question was asked during the conference call however the answer was as clear as I would have like it to be. What are the forecasted general and administrative expenses for next year?
2) Please do not take offense to this question, but how do you justify 3.8million in expenses on corporate bonuses(warrants) at the expense of the share holders? The organization has been underperforming, and subsequently because of the warrants the earnings forecast was missed. It would be nice to meet or beat a quarterly forecast. I imagine you have some logical accounting explanation that justifies it so if you could please explain that would be great.
3) On the conference call you indicated that there has not been any unexpected production issues in the month of August. Can you please elaborate on what the expected production issues where for me?
Overall, I was very happy to see your cash costs come down in line with stabilization of production. I am very excited for difoulanud (however you spell it) to come on line in October. I just hope that all the investors (not just management) can get rich off the hard work of your team.
Answers
1. The short answer is that G&A included some annual bonus salary amounts in the second quarter that will not be included for the rest of the year. Going forward, G&A should be around it should be around $150K-$200K per month.
2. The options were given as compensation to retain and attract talent. These options were granted under a plan approved by shareholders and were issue in may before the AGM. A new plan was adopted and passed at the AGM lowering and capping the number of options able to be granted. The timing of recognizing the expense for the options is that you have to report it when you grant them……thus, we issued them in the second quarter and we have to recognize it as an expense in the second quarter. The dollar amount is based on the “Black-Scholes” model….a well known and expected method of calculating the implied value. These options were issued at
.60 per share and are currently valueless to the company and the grantees. Note that Avion cash flowed $6.7 million dollars on revenues of $27 million or approximately 25%. That is a pretty big operating margin. The options were granted in May under the approved stock option plan. If we never issued any options, we would not have had the “non-cash” expense which hampered the earnings report, (but did not impair cash flow). The granting is a onetime event and will not happen again this year.
3. What they were referring to with productions issues is onetime events such as an unforeseen lubrication and bal bearing issue that affected our secondary crusher in Q1 and caused downtime. So all he was saying is that there was nothing unforeseen that went on in Q2. Expected issues would be down time for scheduled maintenance, downtime for blasting, etc.
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