This company's San Bernardino project is still in the early stage of restarting a previously producing mine. The NI 43-101 report dated December 6, 2013 reveals a large but low-grade resource estimate. The reported average Au grades, both indicated and inferred, are far below typical discoveries that later prove economical. The size of an ore body can make up for lack of grade if the market price of a metal remains high. Assuming a long term gold price of $1300/oz is a far higher estimate than gold's long term historical average price. That is a serious risk.
The 43-101 report estimates a drill program for further exploration will cost CAD$3.32M. Always remember that a company has to fully fund its estimated drill program to have any chance of establishing an enterprise valuation. Searching SEDAR reveals Castle Mountain Mining's annual financial report for the years ended December 31, 2013 and 2012 (publication date April 17, 2014). That report showed they had cash on hand of CAD$4.76M at the end of 2013. How about that, they had the cash to fund the program, even after subtracting current liabilities. The bad news is that their annual loss in 2013 was -CAD$9.4M. I'm guessing that burn rate can sustain their drill program for less than half a year; they will need to stay focused and keep other expenses down to further de-risk their project. This means no side projects or financial engineering.
The company's stock has been trading on the Toronto exchange for almost four years. Anyone who bought in at $0.45 back in April 2010 is still ahead, with the shares trading at $0.86 today. I cannot rule out the possibility that they will have to raise more capital and dilute existing shareholders. It is too early in the life of Castle Mountain Mining for me to invest but their chances for success will increase if they focus their burn on their Phase I drill program.
Full disclosure: No position in CMM.V at this time.