Latest / Investor Exchange / Wilton Resources Corporation Half Year 2025 Sees A Shock Profit Jump Amid Huge Debt Talks

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Wilton Resources Corporation Half Year 2025 Sees A Shock Profit Jump Amid Huge Debt Talks · Investor Exchange

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  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
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  Welcome to the Deep Dive, where we take these massive financial reports and
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  really boil them down to what you actually need to know.
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  Today, we're jumping into the interim financial statements for Wilton Resources
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  Corporation Limited, or WRC.
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  That's for the first half of fiscal year 2025.
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  And our mission here is to really get under the hood of this company's health.
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  WRC is a Singapore-listed gold miner operating mainly in Indonesia,
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  and its numbers, well, they tell a fascinating story.
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  They really do. It's a story of huge potential that's just shackled by some
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  crippling debt and, you know, real-world operational problem. Exactly.
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  We're looking at a fundamental paradox here. How does a company see its revenue
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  and operations grow so impressively, but at the same time, dig itself into an
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  even deeper financial hole?
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  That's the core tension, isn't it? Because if you just glance at the numbers,
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  you'd think WRC had a decent half year. I mean, they shrank their total comprehensive loss.
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  They did by about 9.7%. It went from roughly RP 75.7 billion down to RP 68.3 billion.
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  On paper, that's an improvement. But then you look at the balance sheet.
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  And that's where the story completely flips.
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  In that same period, the company's total net liabilities, and that means its
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  debts are just way bigger than its assets, nearly doubled.
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  They were already in a bad spot, and now it's, well, it's much worse.
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  Okay, let's unpack this. How on earth can the bottom line look a little bit
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  better while the entire foundation of the company is, you know, crumbling?
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  Was this just a bit of financial luck?
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  That is the essential question. We have to separate what was real operational
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  success from what was, frankly, just good fortune on the accounting side.
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  So where should we start? Let's start with the good news, because the revenue
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  explosion is the real headline here. It's impossible to ignore. It is massive.
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  I mean, revenue jumped from just RP $136 million in the first half of 24,
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  all the way to RP $926 million in the first half of 25.
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  And the gross profit. Oh, the gross profit absolutely soared.
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  It went from a tiny RP3 million to RP440 million.
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  So that's proof that something is working, right?
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  They're finally generating some real cash flow for operations.
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  And that success is driven by two very simple things, volume and price.
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  On the volume side, they actually sold 0.6 kilograms of gold door.
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  Which is the unrefined gold. Exactly.
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  Now, 0.6 kilos might not sound like a lot, but it's a five-fold increase from
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  the 0.1 kilograms they sold the year before.
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  They're moving more product. And the market gave them a huge reward for it.
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  This is where WRC got that massive tailwind that just blew up the gross profit number. Absolutely.
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  Their timing was phenomenal. The average price they got for their gold spiked dramatically.
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  It went from about U.S. $1,995 an ounce in HY 2024 to an incredible U.S.
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  $3,110 an ounce in HY 2025.
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  Wow. Because when you increase your output by five times and sell it for over 50% more.
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  You get that stellar gross profit. Okay, so revenue and gross profit look great,
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  mostly thanks to these sky-high gold prices.
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  But if performance was that strong, why are they still reporting a net loss
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  at all, even a smaller one?
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  Let's dig into the costs. Right, because a lot of that shrinking loss was, like you said, luck.
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  It came from technical accounting gains and some one-time relief.
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  Okay, what's the biggest one? The first major boost came under other income.
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  It spiked from almost nothing, RP 0.7 billion to RP 7.1 billion.
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  And the reason why is that a vendor just gave them a waiver.
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  A discount on outstanding liabilities worth Rp 6.5 billion.
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  So a debt just vanished. Essentially, yes.
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  Which looks great on the income statement for that period, but it's not repeatable. It's artificial.
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  Okay, so that's a huge break. Yeah. But it won't happen again.
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  What else helped them out? They also got a big lift from foreign exchange movements.
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  Their other expenses dropped from Rp 22.8 billion down to Rp 8.7 billion.
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  And that was just currency fluctuation. Mostly, yeah.
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  The biggest piece was a RP 14.1 billion decrease in foreign exchange losses.
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  The Indonesia rupiah got weaker against the U.S. and Singapore dollars,
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  so their debts in those currencies looked smaller on the books when reported in rupiah.
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  So again, luck, not core business efficiency.
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  Pure luck, driven by global currency markets.
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  Okay, so that's over RP $20 billion in benefits from a one-off discount in currency
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  moves. That's some serious financial luck. But they did make some real cuts too, right?
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  Oh, they definitely tried to run lean. They cut other operating expenses by
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  RP $5.9 billion. And this was the direct result of targeted,
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  painful cuts. Like what?
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  Reducing the number of employees on site, cutting back on heavy equipment rentals,
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  professional fees, office expenses, the kind of stuff you do when you're just trying to survive.
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  But those savings were wiped out, or at least partly by increases somewhere else.
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  The general and administrative costs, the GNA, they surged. They did.
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  GNA expenses jumped by RP $15.5 billion to land at RP $37.8 billion.
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  That's a huge increase. And what was behind that? Almost all of it.
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  RP 19.6 billion to be exact was spent on mining management services. So consultants.
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  It suggests they had to spend heavily to outsource expertise probably to get the mine back online.
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  So they saved on-site staff but spent a fortune on management overhead.
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  And then there's the big one, finance costs. They just keep climbing.
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  Relentlessly. They increased by another RPO 4.0 billion to RP 20.6 billion for the half year.
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  And this points us directly to the elephant in the room. The colossal structural
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  debt issue that's hanging over this whole company.
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  This is where we leave the income statement, which was saved by luck,
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  and look at the balance sheet, which, frankly, terrifying.
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  The key number is the working capital deficit, right? It's the most critical marker.
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  Yeah. The group's current liabilities
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  exceed its current assets by an overwhelming RP $729.8 billion.
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  And that deficit got worse by RP $55.4 billion in just six months.
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  Let's just translate that. A deficit that big means you can't pay your bills.
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  You are structurally upside down.
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  Exactly. And that weakness is made worse by what's happening on the ground.
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  The same as gold project. Right. The cash generating engine itself is stalled.
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  The project was hit hard by Lenina. We're talking flash floods,
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  landslides, power outages.
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  The power is back, but the processing facility is still suspended.
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  It's just not safe to restart.
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  And if they can't process the ore, they can't sell it. They can't take advantage
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  of this high gold prices.
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  Precisely. So with this huge deficit, a shutdown mine...
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  How can the directors possibly say they can continue operating?
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  This going concern assumption seems optimistic.
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  It's crucial. If the auditors don't accept that, the company basically has to liquidate.
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  So the directors have to present a believable survival plan. And what is that plan?
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  It's based on three things, really. First, they have a working capital loan
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  facility, but there's only RP $12.0 billion left to draw down.
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  Wait, their deficit is over $700 billion, and they're relying on a $12 billion facility.
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  That's like using a Band-Aid on a gaping wound. It shows you how desperate the situation is.
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  Their other two points are about kicking the can down the road.
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  They're negotiating with vendors to pay bills over time, and they're keeping costs at rock bottom.
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  So the plan is basically stay alive on credit and hope for good weather. Pretty much.
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  Hope they can restart the facility. And that facility is tied to their single
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  biggest debt, right? The Carl Hoffman liability?
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  That thing is now at Rp 500.6 billion. It is. This whole debt saga is critical.
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  It started back in 2017 as a U.S. $13.5 million loan to build that exact facility.
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  But the relationship with the lender just fell apart. Which led to all those
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  statutory demands that made the debt balloon.
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  It ended with a termination demand for U.S. $23.6 million.
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  The whole thing had to be restructured. And the New Deal. The outstanding amount was revised to U.S.
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  $25.6 million, plus a very heavy 9% annual interest. That's why the finance costs are surging.
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  That 9% interest added Rp18.8 billion to the debt in just the first half of 2025.
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  This debt is accelerating. And the company says they're trying to resolve it amicably.
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  But in the meantime, the interest is just crushing them. So what's the path
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  forward? What's the plan?
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  The plan is very, very focused. It's all about maintenance and relaunch.
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  Right now, they're just doing maintenance work, trying to guarantee stable electricity
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  and safety. Is there a timeline?
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  There is a key one. They're aiming to start processing the easier open pit oxide
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  ores in the fourth quarter of 2025.
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  So 4QFY25. Yeah. Then they'll move on to the harder stuff. So the next few months
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  are absolutely make a break. Completely.
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  And you see it in the budget. Their working capital budget for that crucial
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  Q4 period is a tiny RP $2.4 billion. And what's that for?
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  The report says it's mainly to settle outstanding liabilities.
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  They're not budgeting for growth. They're budgeting to survive and get the lights back on.
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  There is one massive wildcard here.
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  The one reason anyone is still watching this company, the gold market.
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  The market tailwind is extraordinary.
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  If, and it's a big if, they can actually execute that Q4 restart,
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  they will walk into a euphoric gold market. How good is it? It's astonishing.
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  Gold prices were already up 47% from January 2025 to mid-November 2025.
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  They went from around US $2,800 an ounce to over US $4,100.
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  And looking forward. The projections are even more dramatic.
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  Gold futures are projected to go past US $4,969 an ounce within the next 70 months.
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  If WRC can get stable production going, the revenue per ounce will be at historic highs.
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  The value of the gold itself might just be what saves them. It might be the only thing that can.
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  So that really sums it up, doesn't it? The income statement for the first half
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  was rescued by a combination of high gold prices and, let's be honest,
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  a lot of financial luck. A huge amount of luck.
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  But the balance sheet is sinking fast. The mine is shut down because of the
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  Lenina rains, and more importantly, that massive interest accruing Karl Hoffman
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  debt is an anchor. So what's the final analysis?
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  I think the entire future of this company hinges on two things.
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  First, can management actually pull off the Q4 2025 restart plan?
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  And second, can they find a real final resolution for that colossal debt?
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  Without both of those, it doesn't matter what the price of gold is.
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  Which brings us to our final thought for you to take away.
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  Given where gold prices might be heading, potentially over U.S.
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  $4,969 an ounce, Does the sheer incredible value of that metal outweigh the
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  mountain of debt and the operational risk?
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  Is the potential windfall so big that the gamble on a Q4 restart is a bet worth
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  watching? Thank you for joining us on this deep dive.