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With all due respect, I am just trying to understand this company and like any junior exploration company it has to dilute until it generates cash flow. That part is normal. Since company has a very low level of transparency and follows IMO the path of least information compared to standard practcie in the industry, it is a challenge to fully understand this company and its projections.
Whether (a)management knowingly is issuing shares without belief in its projections just so management can make money or (b) management unfamiliar with junior mining sector and recent trends thus simply unable to achieve more (c) bad luck in general (d) difficult time all junior companies have had last two years in financing; I will leave to those who have followed the company longer than I to give a more informed opinion.
Here is a low priced stock with a DTC chill and no positive cash flow. Do they have any other choice but to dilute ?
As far as to whether company is "legit" I would be curious how this is defined and how company doesnt meet this standard.
I admit I give the company some benefit of the doubt when I forecast IMO 150 to 200 million shares outstanding this year according to their stated objectives.
Balance is not $85k, it is that plus the unamortised discount. I wrote about this earlier explaining that it is the face amount that is converted, not the face amount less the discount which is amortised over the life of the convertible note.
The NI43-101 unless it includes a reserve study forecasting the NPV and IRR, or establishes reserves, will ahrdly establish a reasonable asset value. I am unsure why there is some thought that there may be reserves on the company's properties but who knows maybe there are some legacy reserves, we just do't know. The forecast for sept/oct production doesn't really include much information to determine the probability of that hapening.
I admit I find it quite interesting the lack of transparency in this company, yet the incredible potential if they can go into production in September without any cash coming in the last three months.
However I agree with you, even at 150 million shares if company is producing it will provide a great speculative return. Of course when someone can explain how a retail investor can short this stock one could make money both ways.
I agree one's experience may be different, but ultimately convertible debt holders sell into voulme and as long as they can turnaround quickly after receiving the free trading shares they are quite unconcerned what the price is.My only point is between management under s8 ( though dont they have to file when they sell?), shares issued for servcies past 6 months, and convertibles, it would seem entirely reasonable to assume stock will stay under pressure until there is news confirming the projections management has made.
My forecast is still ousttanding shares this year to reach between 150 to 200 million absent any news that would indicate otherwise, and IMO very worrisome that since 11/30/2012 there hasnt been any announcement of new funding. IMO you cannot run a public company for $5,000 for a three month period.
Good point, though I am not sure what balance you are using for the convertible balance ( prior posts people seemed confused as to the face value of the convertibles vs 11/30 balance after the debt discount).
Not sure how we would really now, but if those who were able to convert had sold all of their stock per the face value of their notes after 11/30 stock would probably be much lower IMO. what they need is volume, and they generally do not wish to own over 5% of the stock, so it isnt abnormal for them to space out their sales accordng to what volume is out there but of course they dont sit on stock.My point perhaps not clear that until the shares issued for services and the convertibles sold in absence of ositive news about the comany the rice will probably remain under pressure and decline. Does present a geat buying opportuntity for those who believe comany will be producing by September.
I still wonder how DTC chill effects all of these issues.
Called tradestation today , at least per person I spoke to they wouldnt allow shorting this stock.So my quest to find a brokerage firm that allows clients to short this stock continues !
Could be various parties selling- besides those issued shares for services ( I am still looking for way to access 144's filed without subscribing to Edgar service), the convertible debt holders will keep selling as their profit is built in. Makes one wonder what real financial status of the company is currently. Guess we have to wait until their next filing.
Anyone in contact with company ?
Thanks, while still this company is one of the least transparent pre-production companies I have ever seen, this certainly seems very positive that two producing mines have or are considering processing ore at this mill- and if economics good who knows they may help financially.I will try to look up those prior posts.Still think CFO needs to get someone who understands IR a bit better in my opinion. The excuse that one cant release forward-looking statements, but then proceed to release extremely selective forward-looking statements doesnt make any sense to me in terms of building confidence.
Certainly promising news that two of the mines are producing
Has this company placed orders to mill ore at the Colorado Goldfields Mill ?
Thanks, are these same mines that LKAI and RCKE have ?
If I understand correctly-
1.Silver Wing- No information seems to indicate it will be producing by September.
2.Red Arrow - Is this the same mine owned by Rock Energy Resources (OTC- RCKE) ?
3.Ruby Trust- All I found is in 2010 they projected a 3 to 4 year drilling program.
4.Golden Wonder- OTC : LKAI. I assume this is same mine referred to.
(2) and (4) appear to be producing so does that mean they are the mines that have placed orders with Colorado Goldfields ?
No problem, guess I just dont understand.I read the 10k and none of the properties mentioned is there sufficient information that indicates they have ore that is immediately accessible, and since they are discussing custom milling I am just wondering where this ore wil come from. Sorry to bother you, I will read again.
Thank you for your detailed answers about the permit, and all who have patiently explained to me the company can operate with their November 30 cash balance , that some sort of financing will be fairly immediately accessible once permit is received without conditions, and I guess now I am to understand if the mill is operating by September there is ore to be milled there.
By the way, which mine will ore for processing come from ?
Thanks as I couldnt find way to access it through SEC site. I would think it will be quite informative who has filed form 144 last three months, and amounts of shares involved.
Does anyone have an opinion what $9 million in orders actually means ? Does this mean amount of material that would be processed ? How is gross margin calculated - on material processed or of their share ? Do stockholders have any information as to ore is actually ready to be trucked over to the mill ?
Thanks, I could pull up lots of 144 filings but not the actual file to see how many shares filed last few months. Does anyone have access to this, or where else it could be found ? Somehwere on SEC site ?
Where to find 144 information- is there any location that gives 144 filings for a company ? I know there used to be for all 144 filings, not sure if a site sill lists these.
Thanks for answering my questions.By the way, if concept is they will be up and running sept/oct with ore form the nearby mines, are those mines ready ? I tried to find on MSHA website whether they had active status but couldnt find them.Do we know anything about whether thos emines are also gearing up to start delievring ore by September ?
Just read again the correspondence in regards to the permit. The overwhelming impression I receive is that while there is paperwork to be submitted, that additional construction is required and additional inspections required before operations can commence.Is my impression wrong ?
This posting certainly supports your prior post that it is mainly paperwork, but management is saying by the end of June they expect conditions to be met.If engineering designs requested does this not imply construction is required ?
You have obviously researched this permit matter a lot- based on past experience if management forecasting conditions will be met by June 30th, does management have a track record of being able to estimate permit progress and results ? or meet their stated objecives ? Since CFO led company to situation of a 5000 to 1 reverse split, is it your opinion he has learnt from situation that developed and doing things differently so next reverse not as steep ?
Do you see a scenario outstanding shares could reach a billion again this year ?
Look forward to your opinion.
This sounds very positive of course , and I do hope that they will get the permit approevd without conditions this year.
Sveral people have posted about the shareholder losses, and several years of poor performance by this company.
Do you feel that if this is a result of management over several years, that they are capable of creating shareholder value going forward ? What has changed ?
Well why not explain how it is you are shorting this stock ? I keep hearing about this stock being shorted yet no one seems able to explain how a retail investor can do this, and second market makers I speak to have opinion no market maker would invest any serious effort in shorting this stock.SO this is a valid question.
Looking at our conversations we both state convertible debt will cause dilution,just that you state it will be in the billions, and I am just still researching though I did hazard a guess that outstanding shares would get to at least 150 to 200 million this year.
Well, what a pleasant response but I fail to follow the logic.
I have already indicated that their share count will probably go to 150 to 200 million this year , and in fact patiently explained why the convertibles they had before would result in much more dilution than some thought. As with anyone on this board we all know more dilution is coming, only question is how much.
I also asked you to explain how exactly you can short a pink sheet stock like this, no one has apparently been able to explain how a retail investor can do that.
The convertible notes when received according to accounting rules a discount is recognized which is then amortized over the life of the loan, that doesnt change the face value of the convertible. Thta is why to determine the face value that can be converted you add the two together initially. When the note is converted, it is at a discount to the market price, and as far as I know that event doesnt effect the books of the company. Thus if you look at their filings they had over $200,000 face value of convertibles. A dropping stock price only increases the amount of shares to be issued- and vice versa. That is why the provider of the convertible couldnt care less what the price is, they just want volume to sell into as their profit is locked in- what I dont know is with a DTC chill when they convert how do they speed up their proceeds when they sell.
As far as $40,000 per quarter cash needs I am only going by their last 10q and accepting for the moment that a company gearing up to go into production, and having to meet permit conditions, doesnt need more cash than previously. This is a huge assumption and would perhaps be unique in the annals of mining history, but then again I have only followed this company for a brief amount of time so perhaps there is something I am missing.
I am unaware of any bank that would provide a conventional loan without established reserves or ongoing profitable cash flow -which if I understand limited information company has provided they plan to go into custom milling a year before they process their own ore and in any case I see nothing that indicates they plan to establish reserves.Risky but they wouldn't be first company to produce before establishing reserves.We have no idea terms of orders, nor for that matter their terms to collect money from sales- which means some working capital is needed for this factor as well.
So if they have existing convertibles to be settled in shares, the s8 shares registered, how many shares will they issue for other services and expenses this quarter and next ? I would hazard a guess wouldn't be too dissimilar to the last quarter.
$500,000 isnt a lot considering need for working capital in months leading up to production and once into production, property deals to negotiate, costs of being a reporting company etc etc. Especially as we havent a clue what sort of custom milling deals have been worked out.So how do I come up to 150 million plus shares ? (a) cash needs at least the same as last quarter (b) some share issuance for s8 plus some for vendors estimated per filings and last quarter (c) additional convertible financings of $100,000 minimum this year.This would be an optimistic scenario in my opinion.But if they dontget anotehr convertible in place fast my opinion is company could be in serious difficulties.
If they could do this - only $100,000 in convertible financing + $80,000 in other cash sources that would be quite an achievment- and with some improved IR ,if the mill truly to be operational by september/october, certainly they could turn situation around based on these optimistic assumptions.
Just my opinion of course !
So how many shares outstanding do you feel they will have by summer ?
Thanks. Does bring up some interesting questions about the convertible notes- if they convert at a 35 to 50% discount off the stock price, but have delays in receiving funds, will this effect company's ability to secure convertible financing this year ? Certainly if they did a private placement any buyer would wnat a sizeable discount because of this. I heard of one brokerage firm that charged $1,000 per trade minimum for a non DTC eligible stock. If someone buys stock through broker online, how does it get settled ? I assume through prior DTC balances of stock , does anyone know ? Does this mean stock issued under s8 offering bearing these sort of charges and delays ? So many questions arise for this stock !
I am just trying to understand this fascinating company, in particular from standpoint of those who have followed longer than I. My own thoughts ? I highly doubt they will be able to raise anywhere near the numbers thrown out there for property purchases such as you mention but (a) will simply re-negotiate (b) but will need some cash to grease the wheels. That is why my concern they are not doing another convertible now to give themselves some chips to use in negotiations.I really do not understand how a publicly-reporting company that has to meet permit conditions, gear up for operations, stay reporting, and negotiate through a signficant negative working capital situation, can be expected to do this on $5,000.But I am new here so just trying to grasp this rather unique situation.
My take is take whatever convertible financing they can get, and get advice on IR so that investors feel comfort during this rough spot. They control a mill in a mining area without one, that is an asset they can build on.
Has the DTC chill now effected their ability to get a convertible financing ?
The face amount of the convertible notes was over $200,000 as of 11/30, and with discounts etc that would amount at current prices over 20 million shares to settle. You indicate that they have 73 million shares outstanding now, which presumably includes some shares issued through conversion the last two months.However as others have mentioned they issue shares for services etc. Roughly I foeecast they would end up at 150 to 200 milllion shares outstading using some fairly positive assumptions.
As far as company being able to issue free trading shares to settle convertible notes I am unawae of any filing they have made that would permit that.
To forecast shares I used following assumptions (a) Company would need at least $40,000 in cash per quarter to survive as indicated in their last 10q (b) they would need to issue shares for propertie deals to re-negotiate, they would issue all the s8 shares for services, and continue wherever possible to issue restricted stock for payables.(c) they would go back and get at least 1 possibly 2 convertibles to fund cash needs.
I admit I do not believe their cash needs are decreasing as they move forward to meet permit conditions and gear up for production.
As far as unknown line of credit being used to fund expenses, I doubt as a reporting company they would be drawing on this and not reporting somehow.
Very good point though that trading on Friday good chance tied somehow to the convertibles. That makes perfect sense
Thank for advice and yes I did visit that site, and yes it seem fairly clear some work needs to be done to meet the conditions. However the other poster who has followed stock longer than I indicated it is all just paperwork. I do not know how constructing and testing a revised tailings pond and water treatment system can be paid for in shares and done within 3 to 6 months but I defer to those who have more experience with company's plans.
Yes, saw your post and I responded. A broker dealer has limits how many days they may be short and generaly most market makers I have spoken to have indicated that it would be uncommon to short a stock like this past one day and in any case would count against their net working capital. I admit I do not understand if there is a DTC chill how a broker dealer could reasonably support there were shares they could borrow since this appears to be a requirement and it would seem unclear how many days it would take to settle if physical certificate had to be transferred. Thanks for your information which was most helpful.
What would be estimated cost of "new tailing storage and water treatment system" ? What is lead time ? I thought someone said removing conditions required only paperwork ? Is the consensus this coudl be done with payment in shares ?
I agree , if they go into production this year CFO will be a hero and it would be worth a trip out there to celebrate ! To be this would be an incredible case study for any business school if he pulls this off in 2013 !
SEC usually reviews filings of smaller reporting companies on a routine basis every 3 to 5 years, or unless they have a specific reason too. So the filing of a 10k or 10q doesnt mean it has been autmatically reviewed by the SEC, but CPA has reviewed(quarterly) or audited (10k). Transfer agent will issue new shares only with company provides instruction ( except for transfers of existing shares) but each transfer agent will have their own level of documentary requriements.Transfer agents check documentation on whether company can issue shares and generally if transaction looks correct from standpoint of share issuance- i.e. they do not check whether transaction makes any business sense.If company wishes to issue a billion shares to Joe Blow for purchasing a light bulb it is not transfer agent responsibility !
CFO looks experienced and they do try to put in a lot of disclosure, so offhand it would seem financials are o.k ( though valuations on transactions in stockholders' equity are interesting). IMO they would have more of an issue in regards to selective disclosure of forward looking statements and not providing information typically expected per SEC Guide 7. It is a concern the DTC chill since this implies DTC has a problem with prior share issuances at some time.
I agree with you if statements audited generally that provides a certain level of comfort- but CPA does need to get paid and review board checks this otherwise it is seen as compromising their independance.
Accounting 101 always an interesting phrase but I think I have to try again with my question. I fully understand some shares can be issued for transactions - and if material would need to be disclosed on an 8k. So using "accounting 101" last quarter they needed over $40,000 in cash for operations. Even forgetting that one would expect if they are gearing up for production one would expect cash needs to increase, how are they covering the $40,000 quarterly cash need this quarter.
I agree,between the convertibles and the share issues for assets,services and liabilities,that came come off restriction after six months, that would explain the ongoing dilution.
They do have cash needs- transfer agent, utilities, regulatory filings, etc etc. The question is simple, how can they meet their cash needs without doing more convertibles ?
Middle Man ? So they would issue restricted stock to middle man, who would then re-distribute ( without being classified as an underwriter ?), or would sell after six months and pay company bills ? Or middle man is a jack of all trades ? Kind of interesting how a small busienss that has regulatory burden of being a reporting company can operate with $5,000 for a quarter.When middle man pays company bills, how is that recorded -as a loan ? contribution to capital? where would that be recorded ?
I do agree officers have every incentive to keep this company moving forward and probably look for every creative way to keep it afloat, but in the end some cash if required.
Certainly positive news that they have already purchased the necessary supplies, spare parts, and checked that no replacement items needed etc. Great news !
OK so how does someone short this stock ? No one seems to be able to say where a retail investor can short this stock and how ? I am really curious, I see all this reference to shorting or shorts etc, yet only answer to my question is that maybe tradestation may allow shorting this stock.
You got to admit this is a fascinating company.
Not sure how to respond - if I understand your post they have already stocked up on necessary supplies ranging from spare parts to safety and maintenance supplies to chemicals etc. Easily available on internet type of supplies needed.
Cant comment about the grocery store, maybe they could purchase supply of MRI's.
This is a fascinating company.
The toal amount that can be converted is the net carrying value + the unamortized discount as I explained in my prior post, so what can be converted, at a discount, is higher than $84,000.
I am unaware of any line of credit this company has, was there an 8k filed ? Or where does this appear in their 10k or 8k filing?
Company cant go and sell shares on the market with proper registrations etc. Even if they wanted to pay off convertibles usually there is a penalty fairly similar to the discount.
I admit I dont know under their s8 registration if officers can sell without filing new form 4,so most likely convertible note holders will just keep selling whenever there is demand.Also, looking at their last 10q shares were issued for accounts payable etc, most likely restricted shares that after 6 months can be sold.So shares issued prior to six months ago can now start hitting the market.
So talking about speculation, what do you forecast their outstanding shares by end of the year ? I am thinking after looking at their 10k and 10q comments, and quarterly cash usage per last 10q they will end up at least 150 million if not 200 million by end of the year. what are your thoughts ?
Just seems sometimes in internet world things are taken the wrong way or people go off on a personal tangent. Thansk for answering my questions.
So,April 1st to June 1st before all conditions removed, and based on your posts all just paperwork- i.e. no funds for any construction etc.
You are very optimistic that experienced mill personnel can be found so easily- high commodity prices the last few years generally has created a situaton that experienced personnel are generally working , in Nevada or wherever, but let us hope you are correct that qualified experienced people are just waiting for this particular mill to go into operation.I would have guessed it would have taken at least two months to hire necessary personnel,and of course with no money company cant start hiring process.
They will also need to order mill supplies,and presumably need a few weeks to turn over mill and work out any start up issues.
To start production this assumes of course that the $9 million in orders represents ore that is ready to be delivered immediately to mlll.
So if they do not receive final permission until June 1,and if they need at best 1 month to get supplies, hire personnel, and then a month to turn over mill and work out any startup issues, that takes it to end of July.This also assumes they pass any inspections during this period, and of course solve their funding problem. This requires believing a bank will lend to them, or that a stock with a DTC chill and trading under $.05 can do a private placement easily and in a timely fashion.
I for one would be much more cofortable if they could do another convertible financing now so at least we know they have some access to funds to provide for this positive scenario.