Tuesday, December 11, 2012 12:13:25 PM
part three/part of company history; this is writer's respect to SAGD /\SAGD/12-10-12
writer Special Situation Newsletter #26 - July 8, 2011
mick chat to ceo yesterday!
this deal didn't workout due to mining changes in this area of claim!
Start-up South American Gold Corp. (SAGD.OB) offers an early bird adventure in going after three separate multi-million ounce gold plays in one of the least explored most promising gold development areas left on the planet.
Finance
As a development stage holding company, South American Gold has not generated any revenue because its initial Santacruz prospect is in the exploration, not development stage.
In a very difficult market for startups the good news is SAGD completed a private placement with all non U.S. investors last March. The bad news was SAGD hoped to raise $5 million but decided to settle for only $1.5 million to avoid excessive shareholder dilution because the offering price of each unit had to be halved.
Over 5.8 million units were bought at $0.25 where each unit contained a common share and a warrant to buy another share at $0.50. Options and warrants outstanding now total about 6.7 million units which could bring in another $3.5 million if exercised.
To conserve cash for developmental purposes, South American has stretched out paying for Kata's remaining interest in Santacruz by spreading another $3 million due in cash over 18 months.
Perhaps in response to the modest reception of the March private placement, SAGD bought its initial 25% of Kata for reduced terms of $1 million instead of $2 million plus one million shares of stock.
Since SAGD future payments will include $3 million in cash and 3 million additional shares of SAGD stock Kata's owners have every reason to cooperate the make the new enterprise successful.
Since De Motte has successfully listed his previous companies on various stock exchanges around the world, as SAGD matures he plans to seek dual listing of its stock. This hopefully will mean increased liquidity for investors and more visibility for SAGD.
Like any junior company not generating cash flow yet, SAGD will have to continuously go back to the markets to make the rest of its payments for its Santacruz interest.
Clearly, given the ambitious plans to develop this property into hopefully a multimillion oz deposit and also to make at least two other acquisitions, the company will need to raise millions more expansion funds as it goes along.
Raising at least another $3 million to $5 million over the next 12 to 18 months looks like a minimum.
Failure to raise capital in a timely fashion would set back development plans and could cause failure. Raising new capital at an unreasonably low price per share would cause excessive shareholder dilution.
Also, while there are numerous older small mines in the Santacruz Project area, SAGD must get its Santacruz property reclassified from the forest reserve to the mining category or it cannot be developed.
Fortunately, the presence of so many Columbian officials including Columbia's Minister of Mines and the Governor of the Department of Nariño in addition to two important Senators and the expressed desire of many other Columbian speakers at SAGD's Medellin March conference to see mining development and new jobs in this Nariño Department strongly increases the odds in favor of the needed reclassification.
Competition;
With increased safety, Colombia is experiencing a boom in mining investment, particularly in gold. As a result, the mining industry is becoming intensely competitive in all of its phases. Consequently, South American Gold Corp. faces strong competition from a growing number of companies which possess greater financial resources and personnel.
Major players include AngloGoldAshanti, Barrick, Greystar Resources and Rio Tinto. Competitors can also someday become buyers if the resources of the initial Santacruz property prove out after much more field work to be enticing enough to attract big buyers.
Because South American's strategy is to seek its first three acquisitions in areas which were formerly the most dangerous and least explored, they currently face less competition in their localities.
If the company is successful in locating multi-million oz gold resources, there will be no shortage of prospective acquirers, although current CEO Ray De Motte would prefer to develop SAGD as a standalone as long as is practical.
Risks
The depleted FARC still take refuge over the border in nearby Ecuador (as well as in Venezuela) to regroup and sometimes make shows of force. In a land where there is a vast gap between rich and poor the FARC remains hard to eliminate completely.
In some areas Columbian soldiers are more concerned about a new group of rebels without a cause. These modern daypirates sweep down to raid mines and steal processed gold before it is shipped.
Unlike so many gold start-ups, South American is fortunate to have an experienced management team and consultants in place who understand Columbia well.
The hope is the team will be able to move more efficiently not only on the Santacruz Project but in the other two acquisitions when they are finalized.
Aside from the risk every miner faces that discoveries can turn out to be less than anticipated, the major risk relates to the unpredictable direction of the volatile price of gold, recently around $1,544.
Remember the price of gold which has been generally going up, up, up, can just as quickly go down, down, down. Still with mining costs in Columbia, especially open pit mines, relatively low, the price of gold could fall to $1,000, which some majors use as their bottom target on which to base their internal projections or even to $600, and Columbian properties would still be economic.
The biggest generic risk normally in any little company like SAGD is the exploration risk. You do not always find what you expect when you start drilling.
Also capital markets windows for raising money can slam quickly closed without warning. If the price of gold went down sharply and much lower than experts believe possible, some potential new investors will lose their lust for gold and flee.
Above all, a start-up CEO must see their new enterprise does not run out of cash! The future is unknowable and anything can happen, including earthquakes. Still, veteran mining executive Ray De Motte and his team look like they have a good speculative shot at creating a big winner!
CONTACT INFORMATION
South American Gold Corp.
http://www.sagoldcorp.com
3645 East Main Street, Suite 119
Richmond, IN 47374
United States
Raymond De Motte, President
Phone: 1 (765) 356-9726
Fax: 1 (765) 356-9737
Email: info@sagoldcorp.com
Investor Relations
Atlanta Capital Partners, LLC
David Kugelman
Toll free 1 (888) 316-7549
Phone: 1 (404) 220-9950
Disclaimer and Safe Harbor Statements
==========================================================
[-chart]charts.stockscores.com/chart.asp?TickerSymbol=SAGD&TimeRange=180&Interval=d&Volume=1&ChartType=CandleStick&Stockscores=1&ChartWidth=830&ChartHeight=500&LogScale=None&Band=DC&avgType1=EMA&movAvg1=&avgType2=TMA&movAvg2=&Indicator1=MACD&Indicator2=StochRSI&Indicator3=SStoch&Indicator4=CVolatility&endDate=&CompareWith=[/chart]
writer Special Situation Newsletter #26 - July 8, 2011
mick chat to ceo yesterday!
this deal didn't workout due to mining changes in this area of claim!
Start-up South American Gold Corp. (SAGD.OB) offers an early bird adventure in going after three separate multi-million ounce gold plays in one of the least explored most promising gold development areas left on the planet.
Finance
As a development stage holding company, South American Gold has not generated any revenue because its initial Santacruz prospect is in the exploration, not development stage.
In a very difficult market for startups the good news is SAGD completed a private placement with all non U.S. investors last March. The bad news was SAGD hoped to raise $5 million but decided to settle for only $1.5 million to avoid excessive shareholder dilution because the offering price of each unit had to be halved.
Over 5.8 million units were bought at $0.25 where each unit contained a common share and a warrant to buy another share at $0.50. Options and warrants outstanding now total about 6.7 million units which could bring in another $3.5 million if exercised.
To conserve cash for developmental purposes, South American has stretched out paying for Kata's remaining interest in Santacruz by spreading another $3 million due in cash over 18 months.
Perhaps in response to the modest reception of the March private placement, SAGD bought its initial 25% of Kata for reduced terms of $1 million instead of $2 million plus one million shares of stock.
Since SAGD future payments will include $3 million in cash and 3 million additional shares of SAGD stock Kata's owners have every reason to cooperate the make the new enterprise successful.
Since De Motte has successfully listed his previous companies on various stock exchanges around the world, as SAGD matures he plans to seek dual listing of its stock. This hopefully will mean increased liquidity for investors and more visibility for SAGD.
Like any junior company not generating cash flow yet, SAGD will have to continuously go back to the markets to make the rest of its payments for its Santacruz interest.
Clearly, given the ambitious plans to develop this property into hopefully a multimillion oz deposit and also to make at least two other acquisitions, the company will need to raise millions more expansion funds as it goes along.
Raising at least another $3 million to $5 million over the next 12 to 18 months looks like a minimum.
Failure to raise capital in a timely fashion would set back development plans and could cause failure. Raising new capital at an unreasonably low price per share would cause excessive shareholder dilution.
Also, while there are numerous older small mines in the Santacruz Project area, SAGD must get its Santacruz property reclassified from the forest reserve to the mining category or it cannot be developed.
Fortunately, the presence of so many Columbian officials including Columbia's Minister of Mines and the Governor of the Department of Nariño in addition to two important Senators and the expressed desire of many other Columbian speakers at SAGD's Medellin March conference to see mining development and new jobs in this Nariño Department strongly increases the odds in favor of the needed reclassification.
Competition;
With increased safety, Colombia is experiencing a boom in mining investment, particularly in gold. As a result, the mining industry is becoming intensely competitive in all of its phases. Consequently, South American Gold Corp. faces strong competition from a growing number of companies which possess greater financial resources and personnel.
Major players include AngloGoldAshanti, Barrick, Greystar Resources and Rio Tinto. Competitors can also someday become buyers if the resources of the initial Santacruz property prove out after much more field work to be enticing enough to attract big buyers.
Because South American's strategy is to seek its first three acquisitions in areas which were formerly the most dangerous and least explored, they currently face less competition in their localities.
If the company is successful in locating multi-million oz gold resources, there will be no shortage of prospective acquirers, although current CEO Ray De Motte would prefer to develop SAGD as a standalone as long as is practical.
Risks
The depleted FARC still take refuge over the border in nearby Ecuador (as well as in Venezuela) to regroup and sometimes make shows of force. In a land where there is a vast gap between rich and poor the FARC remains hard to eliminate completely.
In some areas Columbian soldiers are more concerned about a new group of rebels without a cause. These modern daypirates sweep down to raid mines and steal processed gold before it is shipped.
Unlike so many gold start-ups, South American is fortunate to have an experienced management team and consultants in place who understand Columbia well.
The hope is the team will be able to move more efficiently not only on the Santacruz Project but in the other two acquisitions when they are finalized.
Aside from the risk every miner faces that discoveries can turn out to be less than anticipated, the major risk relates to the unpredictable direction of the volatile price of gold, recently around $1,544.
Remember the price of gold which has been generally going up, up, up, can just as quickly go down, down, down. Still with mining costs in Columbia, especially open pit mines, relatively low, the price of gold could fall to $1,000, which some majors use as their bottom target on which to base their internal projections or even to $600, and Columbian properties would still be economic.
The biggest generic risk normally in any little company like SAGD is the exploration risk. You do not always find what you expect when you start drilling.
Also capital markets windows for raising money can slam quickly closed without warning. If the price of gold went down sharply and much lower than experts believe possible, some potential new investors will lose their lust for gold and flee.
Above all, a start-up CEO must see their new enterprise does not run out of cash! The future is unknowable and anything can happen, including earthquakes. Still, veteran mining executive Ray De Motte and his team look like they have a good speculative shot at creating a big winner!
CONTACT INFORMATION
South American Gold Corp.
http://www.sagoldcorp.com
3645 East Main Street, Suite 119
Richmond, IN 47374
United States
Raymond De Motte, President
Phone: 1 (765) 356-9726
Fax: 1 (765) 356-9737
Email: info@sagoldcorp.com
Investor Relations
Atlanta Capital Partners, LLC
David Kugelman
Toll free 1 (888) 316-7549
Phone: 1 (404) 220-9950
Disclaimer and Safe Harbor Statements
==========================================================
[-chart]charts.stockscores.com/chart.asp?TickerSymbol=SAGD&TimeRange=180&Interval=d&Volume=1&ChartType=CandleStick&Stockscores=1&ChartWidth=830&ChartHeight=500&LogScale=None&Band=DC&avgType1=EMA&movAvg1=&avgType2=TMA&movAvg2=&Indicator1=MACD&Indicator2=StochRSI&Indicator3=SStoch&Indicator4=CVolatility&endDate=&CompareWith=[/chart]
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