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It would be great if supporters and detractors stick to the issues in my opinion, rather than try to put each other down. Whether we all agree we can learn, I know I have. I appreciate Les' posts, I may not always agree but he sticks to the issues. People dont like dilution nor reverse splits, no one does, but if all the trends are there why shoot the people who point this out ? Please show me any company in this situaton that is securing bank financing these days, or any broker than can raise money in a PPM for a stock in this price range with a DTC chill and convertibles right left and center.
Maybe CFO can get customers to front money for mill or find a JV partner ut $3 million to activate the mill pishes stock past 1 billion shares fast- unless mill permit stops teh stock price slide.
Those are valid points , maybe you dont agree but instead of saying people a joke, why not present alternative and more probable scenarios, and not call people names.
That sounds perfectly logical if that is the way the market will respond. I woud have thought absent a budget for IR, and in my opinion very poor disclosure policies and overy-promotional press releases, and continued increases in the outstanding shares, that the effect of getting the permit without conditions wouldnt have as much effect as one might think. This is a subjective veiw though so time will tell. I have a gut feeling permit will take longer than expected, and next hurdle raising $3 million in this market may prove too tough a nut to crack.But who knows, many seem to think CFO has a secret developing plan to buck all tends in the junior mining sector these days.
Vancouver exchange I think had around 2600 companies last year, down to 1600 and forecast another 600 will drop off by May ( if they cant pay sustaining listing fees and year-end audit fees).I know a permitted mine with NI43-101 compliant measured and indicated resource, which can produce 5000 ounce per year at a cost under $500 an ounce. They can neither find a buyer,nor broker who can raise money for them.So forgive me for being a bit scpetical that $3 million can be raised by this company before September.
I admit I am completely ignorant how with a DTC chill it sustains such regular volume. So I still have more to learn !
But you never know and if you believe CFO's track record indicates he can formulate a strategy, develop a business plan and execute it , then anything is possible !
As far as I know the people who purchase these type of notes couldnt care less on the price, just volume, and selling quickly so to make their profit.Never heard of one of these people holding onto stock.
I guess if one subscribes to the theory that getting the permit without conditions will in itself solve the declining share price trend then that would slow down the growth in outstanding shares.It still doesnt leave much time to raise $3 million and be operating by September.
On the conversion my figures right only if amount recorded under subsequent events was "face value" of amounts converted.Guess we will find out next time sometime gets an updated share count.
Well, I recall several posts indicating that they would be operating at a profit, but I for one do not believe the mill will be operating at a profit this year. Just my opinion.
They cannot convert to free-trading stock until 6 months has passed.
nice conservative press release- sets company apart form their peers in my opinion. some great plays in precious metal sector these days, NEM ( paying over 4% dividend), HL ( lucky friday mine going into producton) FCGD ( turnound story under a penny) and GROC at a good price and looks like it will be a survivor in this shakeout in junior sector.
They can convert but if note not six months old would be restricted stock. Dont know why anyone woudl convert until shares can be free trading- with heavy discount profit is built in, so no reason note holder to take risk on stock price.
Anyway it is what it is, only way apparently to raise funds for this and many other sub penny companies is issued convertible notes with a heavy discount when converted.
So if June or July to get permit without conditions according to your forecast, would you still expect the mill to be operating according to the company's forecast in September ?
It will be impressive if this company can raise $3 million this year to be sure and have the mill operating at a profit or near a profit and not exceed 1.5 billion shares. I admit I have doubts the mill will be operating at a profit in 2013.
Looking at the 10q balance sheet if I understand correctly there was at least $33,207 that could be converted immediately so I think the 154 million outstanding already out of date.
Should be an interesting year.
Dont see how diluton is done.
1. Convertibles
Face value was 332,988 on 10q, less $179,781 converted after 10q.If the $120,000 in new convertibles has six months hold, that leaves $33,207 ready to convert which may have already converted.
The $120,000 if it has to be held 6 months, I would assume would be converted before July 31.
-Depends on stock price but with recent stock price this could be 140,000,000 shares.
(rough calculation of discount, plus I am not sure the $179,000 all a reduction in face value of notes, some may be for interest).
2. Existing Per 10q
It was posted this totalled ( outstanding on financial statements plus subsequent events noted) 154,000,000 shares.
---------------
(1) + (2) therefore equals 294,000,000 share without counting the shares registered today,if 100,000,000 from today's registration plus other shares for services that may be issued , that would bring company up to 394,000,000 shares by end of the fiscal year.
That would be my low estimate, I still believe 500 million more likely by August 31 than less. Of course if one believes they wil receive the permit in this timeframe, and company IR abilities will result in a jump in the stock price, this could change forecast outstanding shares.
Qualified or non-qualified generally refers to tax status ,i.e. qualified optins get treated differently than non qualified-usually difference is between consultants and employees.
It would be uncommon for company to receive share sunder an s8 registration, especially for engineering consulting firms.
I should have been more specific, I mean currently outstanding ? Outstanding stock in first six months went up over 140 million shares- I assume this dilution rate continuing or increasing.
Does anyone know current outstanding common shares ?
A question re the permit : even if granted without condition this year considring current stock price, and $3 million to re-activate the mill,how much effect would that have on the stock price ?
So CEO will have a conference call with shareholders ?
I am just fascinated with you and Striker also positive about a stock that for years all there is are press releases about ventrues which never happem. Since you are in touch with CEO does he feel any responsibility to shareholders ? Surely he has some skill and expertise but delivering results to stockholders doesnt seem to be one of them. If I understand your position doesnt matter lack of results in past or present, just the maybe of the future ?
Maybe all former CEO's fault ?
Maybe CEO is mentally disturbed. Looking at press releases last 3 years consistently they announce things that never happen. Scam implies a level of competence to design a plan and then execute it. Really dont see that here.
Under this scenario CEO believes (a) whatever is presented to him (b) that it doesnt matter whether proposed business deal ever occurs.
How else does one explan the famous mortgage lead generaton business ?
Anyway been a few years, time for CEO to turn company over to someone, and do whatever it is he has expertise in.
financials not bad for a micro micro cap company- some revenue and not too many liabilities ( presumably most to insiders), plus some leverage to precious metal industry.
I can only go by results and whether there are mitigating circumstances. The company did a reverse presumably as attempt to improve their financing possibilities. ( Wording that it would improve position of shareholders I cant imagine why that was put in the press release.Who on earth would believe that ?) The drop in the share price since the reverse at a minimum shows company's ability to create a believable story that results in demand for the stock exceeding the supply being created hasnt occurred,But what other choice did CFO have at that point ?
In company's defense most mining equities last 12 months have had declines, so not all necessarily poor management. But if management approach to shareholder relations not working, and adjustments not made, then it is management's fault. I have argued a fundamental change in the transparency of this company and their projectosn would be one way to build credibility. The resposnes seem to be (a) everything depends solely on mill permit being received without conditions (b) management by silence strategy masks wonderful developments behind the scenes.
I could be very wrong that a more transparent style, and less overly -promotional press releases, would have helped. But I dont think it would have made it worse ! It certainly seems possible for company to enter triple zero territory.
Impression I get is CFO not too shareholder responsive or friendly, maybe he should get someone on baord to handle that area.
Thinking about your post dont know what could be asked of CFO that he would respond to. Look this fellow without a feasibility report or even pre-feasibility report, announces in a press release a property worth over $200 million based on metal in the ground- no estimate of extraction costs, no NPV estmated, nor estimate of CAPX required. This is contrary to recommended OSC guidelines, and surely SEC engineering office ( if this was worth thier time to look at) would require a retraction or at least an explanatory follow-up release. This is not the way to build credibility. What answer could he possbly have to this ?
On the other hand I fully admit my estimate mill will not be open in september is based on looking at information out there. He may have much more information about potential mill feed ( maybe suppliers will finance mill re-activation), or innovative financing mechanisms, that he cant release as not firm and would be premature until probability higher. So maybe his forecast on timing of re-opening mill is based on his estimate of probability- and he surely knows more than any of us. Based on his track record investors can decide for themselves if he has track record of meeting projections.
We will know answers to all of this I suspect over the next 3 months. Shoudl be a very interesting time !
There is no law against poor management, if that is what this is, why would SEC interefere to have CFO give a conference call ? Dont they have bigger fish to fry in any case ? What good would SEC involvement bring to the company ? CFO simply boxed in that financing absent huge discounts is hard to come buy. Either he changes business strategy, or follows same path and gets same results unless somehow operational success increases demand for the stock.
Didnt say they should be, but if they believe there wont be another reverse split , at least more chance to recover their losses.
Guess it could boil down to if there an 80% chance with a joint venture of stock recovering to $.05,
or 10% chance they pull off a miracle at 1.5 billion shares with mill operating share price explodes,
or X%(?) chance company reaches 1 to 2 billion shares and does another reverse,
or simply they reach 500 million shares by August, and just limp along and get to a billion shares by this tme next year but get permit, and slowly advance mill towards re-activation maybe in 2014. Y % (?)
Dont pretend I can assign probability exactly but I certainly try to look at to make investment decisions. But yes in my opinion dilution will be massive this year, and mill will not be operating by september. Doesnt mean not worth speculating on if one understands the risks.Doesnt mean I am right either, just based on what information is available that is my opinion.
Yes except they wouldnt be responded to,many posts have indicated this. In fairness ,under fair disclosure rules any answers must be provided to all.
And what could CFO say at this point ? It is obvious share count absent strong increase in demand will steadily increase month by month.
No I have no association with the company. Sorry I really dont understand the post- selling will keep happening no matter what anyone posts on this chat room, the convertible note holders will steadily sell to recover their investment and make a profit which is built in, just the way it is.
I could answer ( which would be unfair) that if they are so smart how did they arrive in this position ? But I disagree that an investor shouldnt try to understand probabilities and possibilities. Dont we all try to do that in some way ?
Out of curiosity do you really believe people questioning this sock on IHUB is the causing the stock price, or is it that supply is increasing steadily without a corresponding incerase in demand. Surely part of CFO's job is to increase demand for the stock.
I guess I can understand people are upset who bought before the reverse split, and in particular CFO brings it on by claiming reverse split would help shareholders. Silly press releases claiming $200million + in value - how do you think people who keep repeating this value will feel if the NPV in a serious study might show only $15 million ? Or CFO puts a second on the mill, and has complete voting control ?
I agree attacking just for sake of attacking doesnt seem productive. Questions though are reasonable.
Yes everyone ( or most) seem to realize a lot more shares will be issued this year.It is not attacking the company to try to figure out what options company has and what are the probabilities.Any information helps investors make better decisions I think.
here it is from the company 10q :
"We currently have minimal cash on hand. Our significant capital requirements for the foreseeable future are payment of $305,801 on a promissory note and accrued interest, which is collateralized by the Mill (due June 1, 2013), payment on notes payable to related parties including accrued interest totaling $348,011, re-activation expenses for the Mill (approximately $3 million), and our corporate overhead expenses. Additionally, we must raise and pay approximately $3,160,000 to consummate fully the acquisition of the Silver Wing and Champion Mines."
- I guess it sounds nice everyone just accumulate enough stock so price goes up and they have to dilute less to reach their objectives.But if convertible note holders can convert at an immediate discount,this is a losing proposition until demand for stock increases to offset that discount. Now they announce $3 millon needed to re-activate the mill.So at a range of $.002 to even $.01, that is 300 million to 1.5 billion shares on top of shares to be issued for quarterly burn rate and existing comvertibles.
So I fail to understand why another reverse split is not a possibility. CFO is boxed in as far as I can see,so the alternative seems to be a joint venture fast before situation out of control again unless the belief is price will skyrocket when permit without conditions granted,and contrary to all trends in the industry CFO can finance this according to "conventional means.
It is a sub penny stock, and they control a mill, which is more than many sub penny mining stocks, and gold price still at historic high level. Why shouldn't company bite the bullet and find a better strategic plan to deliver shareholder value ? Why go down same path that already didnt work ?
If detractors having such an effect ( which I dont think so though), then why wouldnt CFO announce (a) he is releasing his second lien on the mill (b) reducing his voting rights to 25% - wouldnt that show confidence he has in future ?
i guess same reason there are many repeated posts on this board, such as permit is just paperwork or the one i like repeated references to properties being worth $200 million etc. seems we are all trying to get a handle on what the probable situation is.
The $3 million requirement to re-activate mill is a game changer in my opinion as to where the outstanding shares might be. if one believes that they can raise this sort of money fast to be able to re-open mill by september the 500 million forecast will prove conservative. what is the deal here, one just hopes whether information indicates probability or not ?
anyway if my projection based on poor assumptions please do let me know a better projection. a lot depends on price, and i guess i can be convinced the marketing by silence routine is working except chart last 6 months doesnt show it is.
1.Limited Information : We have limited data to even judge remotely the possibility of those figures quoted in the press release. (a) we have no idea terms of the "orders" (b) amount of time to get permits , and CAPEX required to produce ore from those mills.(c) we do not know projected IRR or NPV to judge attractiveness for equity,debt orJV financing.
- I consider the press release "limited information". Though I guess if one has confidence in management, then one can take position they have petty advanced planning in place. For me at least not enough information.
2.Bank Lending : Cash flow to pay loan would be from mining operation. Appraised value a factor but more specialized the collateral is, harder for the bank to attribute much value to it.
3.Convertible/NI43-101-The NI43-101 reports arebasically a gudieline on how data collected, according to what standards, and how disclosed. They do not necessarily include projected economics such as a pre-feasibility or feasibility study, let alone a "bankable" feasibility study. Most convertible note buyers are very short term fellows.
Maybe with a solid enough study, ownership of the mill, permit without conditions, rising gold price, they could find a strategic investor or JV partner.Solid companies often cant raise a dime in equity financing these days, so I think their choice is convertibles or a partner.
A pre-feasibility study from an independent firm would go a long way to improving transparency and giving them ammunition to seek alternative financing.Even a preliminary economic assessmentby an outside firm.
- Seems they are heading to 500 million shares outstanding within a few months, and cant imagine shareholder value resulting from $3 million raised at a discount to the current price.But maybe you are right CFO has been hard at work and has a creative plan just ready to execute. I just cant imagien what it woudl be in this market.The more shares they have outstanding the worse their negotiating positon will become.
Thanks for the well-presented list of potential options,I guess we can agree to disagree though I find your royalty concept a variation of the JV option, and maybe there is some unknown way this company would pull it off. However in response to your post :
1. The Royalty concept would take some legal expense to pull off, and frankly some certainty of mill feed, of ownership of assets,and would as in a joint venture, give up quite a percentage of any profits. Carving away $5 million if they were producing $50 million certainly would have some value. I cant imagine setting up a royalty trust under these circumstances attracting equity. Would be heck of an idea though setting that up and perhaps dividending out 5% ownership trust to current shareholders. We really dont know whether they could produce $50 million in profits based on the limited data available.Do we know the NPV or IRR, Capex required in full ?
2 Bank Loan- No banks do not normally lend on appraised value of mining assets alone, heck even hard to get that on real estate these days as the sole criteria. Most banks do not lend to mining operations without bankable feasibility studies , and those that do are pretty specialised. Then add the company's track record and balance sheet- if there is a banker that would lend to this company, that bank could probably dominate the market for North America.The only way I could imagine any sort of bank financing is after they are producing and have a smelter contract signed maybe getting some receivable financing.
3 Special convertible arrangement with delayed conversion + special equity arrangement with a kicker in warrants or profit split, ect. I guess one could imagine that, this gets pretty close to a JV type deal. Havent seen recently convertible note buyers for a sub penny stock offering delayed conversion deals, nor many companies without reserves and ownership of key projects getting equity financing.
Newmont paying 4% dividend, Hecla under $4, 20% of vancouver companies facing de-listing. This is not a great market for mining equities.Doesnt mean cant get done, issue whether probable.
I stick with my current prediction, 500 million shares and under a penny by August, and mill will not open in 2013 or if it does then to get $3 million shares will be far north of a billion shares.
A last alternative is to offer royalty to a existing royalty company as they are always looking to purchase new royalties- and they can make up their minds fast. If the company has the goods , they can sell a royalty in a heartbeat. I would bet no way a royalty company would touch this situation without mill being in operation and some ore feed assured, or a bankable feasibility study.
how can CFO manage dilution when company has and will continue to issue convertible notes to survive ? if $100 to $150 k per quarter the burn rate,and no other funding mechanism, seems die is cast for dilution to continue. wonder what current outstanding is.
I agree all speculation but the revelation that it will take $3 million to acitivate the mill prompts thouht as to how they will do this, and options in my opinion pretty limited.
1. royalty trust- i cannot see how not having a permit, owning properties, oreven owning without reserves, and no cash for legal expense, and limited market for equity financing of junior mining companeis these days, that this would be a probable option. certainly an interesting approach though.
2. bank loan- even in good lending environment few banks llend to mining company without bankable feasibility study with current regulatory environment and company's liabilities, hard to imagine bank lending to them.
3. straight equity at no discount- cant imagine any investor buying equity with no discont when the convertibles are outstanding with their discounts.
so at least in my opinion 2 choices : keep on the convertible route until share count is astronomcial again unless somehow they can meet their projections and very quickly generate positive cash flow, but for $3 million in convertibles share count probably would end up over a billion this year. OR joint venture option which could deliver best returns to shareholders.
yea i admit, seeing that $3 million is necessary to re-activate the mill certainly makes me wonder how much lower stock price will go.not that i would expect them to raise $3 million and go into production in september, just seems they wont produce this year which means even more convertibles just to survive.
mayve you are right CFO will pull a rabbit out of the hat. will be an interesting time !
fair enough
i predict shares to be up over 500 million by august. but dont ask me why i think so, just do.( i just happen to think i should back up as much as i can opinions).
yea i am just annoyed at realizing shares could be easily over 1 billion shares this year.
Good points. In my opinion shareholders are faced with (a) sure and certain massive dilution if under these circumstances company raises $3 million using convertible financing. (b) dilution and further delays until 2014, causing share count to increase quarterly until they end up at a billion again.
So why not at least consider a JV as an alternative.
I cant imagine that they could raise $3 million in a short timeframe from convertibles.You bring up another reverse to attempt to get the financing, I guess this would depend on whether CFO believes a reverse would help him raise equity capital. It didnt last time, though may have been seen as beneficial by the convertible note financing companies.
A joint venture I wouldnt see as transferring 80% control of company,but of any projects. Though if most of any potential assets under option or delayed contracts, not sure how they would establish a joint venture without owning the projects or firmly leasing.
At least now it is clear that absent raising $3 million company is stating that mill wont be re-activated, so that does at least provide what the criteria for re-opening mill is even if permit granted.
Guess from shareholder perspective what is better ? Company actually does raise $3 million, plus costs to run the company, and share count hits 1 or 2 billion shares OR put a stop to this and let joint partner takeover, and company keeps say 20% and only has to finance keeping company alive until profits generated ?
I had projected 350 to 600 million with 500 million likely outstanding shares by end of August. Yes this was conservative in what the price would be, but also looking at them raising $100 to $150k per quarter to meet burn rate. You are right they certainly could hit a billion shares by August if they start raising more money at these prices.
Since I highly doubt any bank will lend them money without established reserves/bankable feasibility study, and any equity financing would be at a discount similar to the convertible ( who would not ask for a discount), in my opinion they will just keep on using convertibles.The $3 million to re-activate mill certainly is an indicator if opening the mill the main srategic objective that the oustanding share count will explode this year.
Looking at situation in my opinion it seems the only option is to seek a joint-venture partner, probably people who provided the "orders". Of course we dont have any idea of terms of these "orders". Nor whether those customers will have mill feed ready by the fall.
Got to give credit to company it announcing they need $3 million to re-activate mill, otherwise some investors might believe it was probable they could re-open the mill quickly and without dilution.
we have no way of knowing, though if only 10 to 15 hours per month i think there is some SEC comment letetrs that this should be disclosed as i have seen a few companeis who disclose whether officers full time.