Allen Palmiere: No. You don’t – in theory, we could initiate it now. We would need to do some additional detailed engineering around water and design work around our tailings management and the waste storage facilities. That would be a cost of directionally $1 million to $2 million, and then we could begin the process of permitting. But we have not committed to doing that in the short term.
Unidentified Analyst: Do you have any plan when you are going to start this process?
Allen Palmiere: It’s a function of availability of cash. I would like to – what we produced a couple of the last week or the week before was a preliminary economic analysis. However, the amount of engineering that went into it far surpassed what is normal for a study of that type. And we believe that we could upgrade that study to a preliminary feasibility study, a prefeasibility study, I should say, for about $1 million to $1.5 million. And if we decide to spend money on Back Forty next year, it would be to take it up to that pre-feas level, after which we would begin the permitting process because then I would have all of the engineering complete to support the permit applications.
Unidentified Analyst: I understand.
Allen Palmiere: Does that address your question?
Unidentified Analyst: Yes. No question has a perfect answer. I’m just trying to figure out the direction. Yes, so this comes back to my first general question is, and the way I see the company is – has great assets but I don’t understand how the company is going to generate enough cash flow to finance the Back Forty Project and everything else. Am I missing something in the bigger picture about the current mines that could you enough cash flow? According to your – to the last report at the Back Forty Project, so $320 million, $330 million just to open up a facility over there. I understand it’s – you don’t know the answer but for a company with a market capital of $35 million and generate $330 million, that seems like something almost impossible.
Allen Palmiere: I agree. Keep in mind that…
Unidentified Analyst: What’s the big picture for the company? That’s my big question.
Allen Palmiere: Well, you heard my closing comments. We’ve engaged a financial adviser to evaluate those alternatives. Two years ago, when we acquired the Back Forty, we had a market capitalization of directionally $200 million. It was feasible for us at that time to contemplate putting it in production, raising the money and putting it into production. Off the back of a $35 million or $36 million market cap, in today’s capital markets, it’s not practical. And we recognize that it’s not practical so we’re exploring alternatives, and it may be we merge with somebody else to create a larger company, That, I think, is one possible outcome. A larger company will get more attention in the marketplace and create an environment where the Back Forty becomes viable to finance. And that’s really one of the drivers between the – behind the appointment of a financial adviser.
Unidentified Analyst: Yes, yes. I understand all that. I’m looking at everything from an investor’s perspective, and I’m thinking like what could the company do? So issuing shares is out of the question. Taking on debt doesn’t seem very reasonable. So at least mainly the absence of selling growth for merging, whatever all these different kinds of things. So my question is, in the current situation, is the company planning on pursuing all these different options right now while you all continue to work on the DDGM? Or it’s just like putting it aside for who knows when? So it’s a huge question.
Allen Palmiere: No, no. Thanks for that question because I need to clarify this. Everything that I talked about at DDGM is proceeding. We are not compromising on spending money there. We are moving forward to try and enhance the profitability of that mine to the greatest extent possible. We have no certainty that this process will result in anything. And it is a process. We felt it was necessary to explore alternatives. But I’m not making the assumption that we’re going to do anything. We need to make Don David generate very substantial cash flow, and that is our focus. It’s not being put on the back burner. Historically, Don David has generated anywhere from $20 million to $40 million in a year. Different commodity environment, different exchange rate environment, different inflationary environment.
But you know as well as I know, economic times change, and there’s nothing to preclude Don David from going back and generating those kind of cash flows. We have to spend the money and time to get it ready to take advantage of a different economic environment. What happens with the strategic review is totally separate. That’s going on in the background. It may or may not result in anything, but it’s not related to what we’re focused on with Don David.
Unidentified Analyst: Okay, okay. Thank you very much, everything. You clarified a lot of things for me. Thank you very much.
Allen Palmiere: Thank you. I appreciate your questions.
Operator: Your next question comes from [Ron Hart with Ron Heart Investments]. Please go ahead.
Unidentified Analyst: Yes. Hi how’re you doing? Obviously, the key is to stop the bleeding of the cash, which you answered in the last few couple of calls. And to maintain the cash, as we’ve seen from $30 million down to what you said, $6 million there, besides the $14 million that you have to utilize. So your response is obviously something that we must do but something that we must reconsider what to do is the share price, that we should not have a reverse split because once you have the reverse split, that’s the kiss of death. No matter what, even if it has to be delisted, the reverse split is over in everybody’s interest. So that’s something that you have to describe now.
Allen Palmiere: Ron, we will not consider a reverse split.
Unidentified Analyst: Beautiful, beautiful. I appreciate your response and everything else that you’ve said.
Allen Palmiere: No. Don’t worry about that. You’re right. A reverse split is the kiss of death. It’s value destructive. It never achieves any kind of real objective. So – and I’ve been in the industry long enough and been involved in the capital markets long enough to know that it is not something that should ever be considered.
Unidentified Analyst: 100%. Okay, and we’ll go along with your plan for next year as your confidence is well respected. And I would assume that you know better as I’m not in that field, in the investment field. And let’s hope the share price reflects everything that you said and takes that into consideration. And I do believe that you’re – and willingness to combine your company with another and to strengthen the company’s assets in that respect would do us a great favor. I really appreciate that.
