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miningweb article:
http://www.mips1.net/MGGold.nsf/Current/4225685F0043D1B288256D4B00074599?OpenDocument
Great Basin firms up resource
By: Nicole Mordant
Posted: 2003/06/19 Thu 18:19 PDT / © Mineweb 1997-2003
VANCOUVER - Canadian junior, Great Basin Gold [TSX-V: GBG], has firmed up confidence in the size of the gold resource at its South African Burnstone project, recently described in a study as the world's ninth largest undeveloped gold deposit. The market did not move a muscle on the news, but then the stock is up 18% in the past week, having risen off six-month lows.
The news that Burnstone now has 3.6 million ounces in the highest resource category coincided with the Vancouver-based company's annual meeting and gave President and CEO Ron Thiessen and Projects Director David Copeland an opportunity to talk to a small group of attendees about the property.
What is called Area 1 of the Burnstone project, located on the far-east shoot of the Witwatersrand Basin near Harmony's Evander mine, has just completed a 20,000 metre six-month drilling programme. This has resulted in the previously announced 5.8 million ounce indicated resource being turned into a six million ounce indicated resource, 60% of which now meets the standards to be classified as a measured resource. Copeland says that with 10 years of potential production in hand, he is not certain it is worthwhile spending money to harden up the remaining resource ounces in Area 1.
The next step for Area 1 is a feasibility study, which is expected to be complete by the end of March next year. A decision also has to be made on whether to sink a shaft and trial mine, a common practice in the South African mining industry. Another decision for Great Basin is whether to go it alone or to bring in a contractor or a partner, most likely a South African mining group.
Drilling work has started to firm up the 11 million ounce inferred resource on Burnstone's so-called Area 2. The two areas taken together give Burnstone a resource of 17 million ounces of gold, a tidy sum which saw it ranked as the world's ninth biggest undeveloped gold deposit by Paul Burton of World Gold in a study presented at the PDAC in February.
London listing
Thiessen confirms rumours that Great Basin might seek a listing on London's junior AIM market. But a decision hinges on weighing the dear cost of a London debut against the advantages of a potentially wider shareholder base, more comfortable with investments in Africa.
Like many other non-London juniors, Great Basin finds itself second in line behind the foreign majors when it comes to investment by the UK's large mutual funds industry. "Once the funds have bought a bit of Placer or Newmont, their foreign content limit has been used up," Thiessen says.
Given Great Basin's 35% slide this year, and if Thiessen's optimism about the interest from London funds is correct, the company could well be leaning the way of a secondary listing.
<try to catch well the current real estate upswing here>
Where exactly do you live in Mexico?
I had some property in Ajijic, near Guadalajara, that I sold last year for a decent profit... Ajijic is a great place, lots of international ex-pats down there from all over the world, great atmosphere for a gringo... But got worried about Lake Chapala being drained bone dry which would/will destroy property values there in the not too distant future... Mexico government has continually delayed (i.e. for over 15 yars) building the necessary dams and taking other measures to replenish Lake Chapala and rain falls over the last few years have been lower than normal... It will be a dust bowl if Guadalajara continues to use the lake as a primary drinking water source...
In any event, I am looking for another suitable place in Mexico to retire...
Vein Structure Geology-Could you put that in English, echarters..., for those of us who are geologically challenged...
In regard to the Ivanhoe mine, my understanding is some geologists thought it possible that the east-west veins thus far discovered could be offshoots of a much larger north-south vein that has thus far gone undiscovered. Does your analysis in post 18 support or deny a "high" probability of this?
In regard to your comment:
"All to many companies wildcat the geology on the basis of like mines too far away, instead of mapping scientifically and drilling at putative structure the fold fabrics dictate".
In your opinion what is the best way for GBG to proceed in developing the Ivanhoe mine...
GBGLF 6/18 press release:
GBGLF now up to 6M ounces at Burnstone Area 1:
3.669 Measured
2.369 Indicated
6.038 Total
Prior inferred resource was 5.3M ounces, so this is a net increase. Results do not include Burnstone Area 2 which has another 10+M ounces inferred, drilling has begun on Area 2 now to try and bring it up to measured.
http://www.greatbasingold.com/gbg/NewsReleases.asp?ReportID=63619
Okay, Marcos our due dilligence on the water rights is now complete... :) I feel better now that we have some facts laid out on the table, water rights should not be a problem IMO, or less of a problem than Corner Bay's..., and BAY did eventually get the water rights...
51mm = 2 inches
Thus, BAY's Alamo Dorado had 25.5 inches annual rainfall versus Alamos' Salamandra 40 inches annual rainfall.
Also believe that the BAY mining project had more farmers/agricultrual development around their area than Alamos does, that's my recollection, and your prior posts seem to indicate there are very limited number of farmers around the Mulatos area?
Thanks again for your help and input.
Alamo Dorado located South of Navajoa, near the coast.
in the project located in Sonora State, Mexico... The Alamo Dorado project is located in the western foothills of the Sierra Madres... Near Hidalgo Dam
see page 2
http://www.cornerbay.com/annual/CBS_AR_2002.pdf
Marcos, thanks for the info...
Annual precipitation of 40" ('having an average annual precipitacion of 40 inches') is quite comforting, that's a lot of rain. Can you please provide the annual precipitation for the area around Corner Bay's Alamo Dorado mine, for comparison.
But no more comments such as below, otherwise you will have me start worrying about Alamos having to finance archeology digs... :)
<says it's older than Yécora, 'founded' by the jesuits in 1641 [actually they just found it then], before that it was the capital of the grand chief Sisibotárit, who ruled 70 nations>
thanks Marcos, here is the SEDAR INFO:
V0168540001 / #84979.v7
Water
In Mexico, water rights are managed by the Comisión National del Aqua (“CNA”). According to Mexican water rights legislation, all users, whether individuals or companies, must pay for the right to use national waters regardless of how the rights were obtained, with the rates being determined by the availability of water and the method of extraction.
The project’s main water consumer will be the heap leach facility. The Feasibility Study envisioned using an estimated average annual consumption of 45.6 litres/second (723 US gallons/minute) due to evaporation and water retained within the heap as a result of heap irrigation. In addition to make-up water used for the heap leach facility, the Feasibility Study called for the open-pit will consume water for dust control with the camp consuming water for domestic purposes. Average annual consumption for all purposes was estimated at 58.8 litres/second (932 US gallons/minute), with maximum estimated consumption being in the month of June at 100.2 litres/second (1,588 US gallons/minute).
The project’s source of water was to be the Rio Mulatos with water withdrawn east of the proposed open-pit and pumped to a water storage reservoir on the Arroyo Mulatos, above the proposed open pit. A dam was to have been built across the Arroyo Mulatos to create this reservoir, which needs to have a storage capacity of about three months to ensure water supply during the driest months of the year when the Rio Mulatos would
not be able to supply sufficient water for the project as proposed by the Feasibility Study. The rights to the water have not as yet been established. Discussions are continuing with the Mayor of Sahuaripa to rent or lease the town’s unused water supply.
42
Current work of the planned heap leach test is designed as the first step in evaluating the feasibility of operating initially at a smaller scale than planned by the Feasibility Study. The purpose is to test the higher grade core of the deposit and evaluate if a profitable mining operation can be started in the core. Prior to the results of the heap leach test and the probable need for more testing it is not possible to say what the water needs of a smaller scale mining operation may be or if such an operation is profitable.
_______________
also this:
Regulations require that an environmental impact statement, known in Mexico as a Manifesto Impacto Ambiental (“MIA”) be prepared by a third-party contractor for submittal to SEMARNAP. Studies required to support the MIA include a detailed analysis of the following areas: soil, water, vegetation, wildlife, cultural resources and socio-economic impacts. Although the regulatory process in Mexico does not have a public review component, proof of local community support for a project is required to gain final MIA approval. A risk analysis must also be prepared in conjunction with the MIA for approval by SEMARNAP.
A number of other approvals, licenses and permits are required for various aspects of a mine development. The most significant permits for the development of the Salamandra Project, other than MIA approval, are permits to extract water from the Rio Mulatos and a blasting permit, issued by the Mexican Army, to
purchase, store and use explosives.
MSA received approval for its MIA in July 1997 for the development of an open-pit mining operating extracting 30,000 tonnes per day and for a crushed ore heap leaching facility producing 15,000 tonnes per day. The permit application proposed moving the village of Mulatos. Separate environmental studies and
subsequent approvals have also been received for the construction of a new 130 km, 115 kV transmission line from the El Novillo power station, the construction of a new access road from the town of Yecora, and the relocation of the village of Mulatos. The MIA resolution is valid for a period of 10 years from the date of issue.
________________
You need to update that map for the Mulatos International Airport that's going in...
Richard Russell feels the same way...
http://www.321gold.com/editorials/russell/russell060603.html
Next I want to turn to a stock that I have urged all my subscribers to own (I bought more today). That stock is Newmont Mining (NEM), the world's largest producer of gold and the gold stocks with what I consider the best management in the business.
But again, let's get technical. NEM has formed a massive base, and I showed a point & figure chart of NEM on a site a few days ago.
Looking at a monthly chart, NEM looks to have formed a massive five-year base going back to its low of 13.25 recorded in August of 1998. The breakout of the huge base would come on a Newmont closing of 33. As I write, NEM is trading above 31. If NEM can close above 31 it will be its best closing in five years. But the real breakout would come at 33.
Again, I'll repeat -- I'd like all my subscribers to own shares of Newmont.
Alamos needs to resolve the ejido and water rights issues, seems these may be the issues holding it back along with those $.90 warrants, then it should rise to near parity with MFN...
Marcos, how comfortable are you specifically with the water rights, always appreciate your knowledgeable comments on the ejido issue. That is, do you have anything further to add to your prior post:
http://www.investorshub.com/boards/read_msg.asp?message_id=1076723
What's wrong with MOY???
NEM up today and MOY actually participated...
above the 50 day MA and accum/distribution has crossed...
http://stockcharts.com/def/servlet/SC.web?c=MOY.TO,uu[l,a]daclyiay[dd][pd20,2!b50][vc60][iUf!Uc45]&a...
Yep, I noticed that..., and agree that it is almost certainly referring to the Ghana operations...
<and if so then I would think that would include a review of their soon to be acquisition, Ntotoroso.>
Yep, could be upper management due dilligence... :)
CUMBERLAND RESOURCES (CBD : TSX : C$3.25) - SPECULATIVE BUY
12-MONTH TARGET PRICE: C$4.25
Graeme Currie
Comment: Cumberland reports additional kimberlites at Meliadine East On the Meliadine East property, Cumberland and 50/50 joint venture Comaplex Minerals (CMF : TSX) announced in May that the first hole in a diamond exploration program intersected kimberlite in what was interpreted as a pipe. Yesterday, the company announced that of 16 targets drilled in the just ended program, 14 intersected kimberlite though the release did
not define whether the targets intercepted appeared to be pipes or dykes.
We understand that the samples are to be processed by caustic dissolution for analysis of diamond and diamond indicator minerals. Cumberland's discovery of kimberlite bodies adds to, or enhances, firstly the general district and secondly the speculative leverage of this junior. The discovery of multiple kimberlite bodies at Meliadine East adds a new dimension to Cumberland. The shares remain a SPECULATIVE BUY with an
upward revision in the target price from $3.75/share to $4.25/share, inclusive of current working capital.
NEM still busy with Yandal...
If my assumption correct, MOY will have to wait until after 6/26/03 for NEM lawyers and staff to get MOY due dilligence done since Yandal is a much more pressing matter...
Nonetheless, believe MOY will start getting the top attention of NEM (instead of Yandal) as the July 22nd deadline nears.
___________________
DENVER, June 16 -- Newmont Mining Corporation today
extended the consent payment deadline in regard to the
offer through its subsidiary, Yandal Bond Company
Limited, to acquire all of the outstanding 8 7/8 percent
Senior Notes due April 2008 issued by Newmont's
Australian subsidiary, Newmont Yandal Operations
Limited (Yandal), formerly Great Central Mines Ltd.
Under the original terms of the offer, in order to receive
the consent payment of $20 per $1,000 principal amount
of the notes, holders had to tender their notes and
provide their consents to the proposed amendments to
the indenture pursuant to which the notes were issued
by the consent payment deadline, which was 5 p.m.,
New York City time, on June 12, 2003.
A total principal amount of $39.28 million of notes were
tendered before the original consent payment deadline.
However, several note holders requested an extension
to the consent payment deadline to allow for additional
time to analyze the offer. Newmont has agreed to this
request.
Under the amended offer terms, holders that tender
their notes and provide their consent to the proposed
amendments by the scheduled expiration time of the
offer, which is 5 p.m., New York City time, on June 26,
2003, will be entitled to receive the consent payment
of $20 per $1,000 principal amount of the Notes.
Citigroup Global Markets Inc. is the dealer manager
and Mellon Investor Services LLC is the depositary
and information agent for the tender offer and consent
solicitation. Note holders' requests for documentation
should be directed to Mellon Investor Services at
(917) 320-6286 (for banks and brokers) or toll-free
(800) 392-5792. Questions regarding the transaction
should be directed to Citigroup Global Markets Inc.
at (800) 558-3745.
The offer to purchase notes and consent solicitation
are being made solely by the Offer to Purchase and
Consent Solicitation Statement dated May 29, 2003,
and the related Letter of Transmittal and Consent, as
they may be supplemented or amended, which set
forth the complete terms of the tender offer and consent
solicitation.
The bond offer was made concurrently with an offer by
YBCL to acquire all of the hedge positions of Yandal's
seven gold hedge counterparties. The only hedge
counterparty that did not accept the May 28, 2003,
offer by YBCL has stated that it is continuing to evaluate
YBCL's offer in the context of developments relating to
Yandal. This counterparty has indicated that it will not
demand payment under an alleged early termination
event in its hedge contract until close of business on
June 26, 2003.
This forbearance was conditioned upon the
reinstatement and continuing effectiveness through the
forbearance period of YBCL's May 28, 2003, offer to
purchase that counterparty's hedge positions with
Yandal. YBCL has agreed to reinstate its offer to the
counterparty and continue that offer's effectiveness
through close of business on June 26, 2003.
Newmont, based in Denver, is the world's premier
gold mining company and the largest gold producer
with significant assets on five continents.
which one of you gurus wants to comment on this article...
http://news.goldseek.com/CanaccordCapital/1055784676.php
new analyst report:
http://www.alamosgold.com/i/pdf/McFarlaneGordon-AGI-10June2003.pdf
Not really that knowledgeable on MOY, have only been involved with MOY for the past 2 months or so... I did call the company a few weeks ago as described, and based on that call still believe MOY will make a 60% - 75% NEM share distribution, and it appears recent shareholder letter supports this hoped for distribution...
Bob Zumbrunnen Q & A:
I have started a new GBGLF board:
http://www.investorshub.com/boards/board.asp?board_id=1750
Please be advised, I plan on being aggressive on deleting posts and hope this does not violate your "Chairman of the Board" concept outlined in Post #2.
My goal is to prevent board clutter, messages that offer little or no meaningful information on GBGLF. Posts that say "great comments" or "stock is up today" or talk about what the poster is doing this weekend, etc. will be left on the board for several days and then deleted. I will not be deleting any derogatory posts on GBGLF that contain any facts or reasoned speculation, these will all remain.
Hopefully, this moderator style is compatible with your views. You are more than welcome to undelete any GBGLF posts, but I am confident you will find my judgement viable. Feel free to e-mail me at amarksp@bearforum.com if you ever have a problem with my role as a moderator.
Thanks for your time in this matter.
relevant jackc comments:
http://www.investorshub.com/boards/read_msg.asp?message_id=1107196
____________________
Yes Marcos, have been in since around the low when a European
fund mgr took over and sold off their holding driving to a
bottom. Then added sev times paying too much finally. Have
kept all because of the value of Ivanhoe. Mixed emotions
about Burnstone but expect it to be a big winner also...
My big complaint with GBG was the heavy insider selling at
vulnerable times in this thin trader at those times.
Hunter sold about 200k sh driving down hard, then sev mo later
CEO Theissen sold about 70k to almost as bad an effect.
Their IR guy asked me at the Jan show for info on this,
then did not return my email. The latest weakness hasen't shown up as insider sells yet.
I attended last yrs AGM, and complained about the option
re-pricing (couple other holders showed up and think they
had similar feelings). Holders voted to stop re-price but the
increase in max sh cap was not.
They said HL wanted more of Ivanhoe (only got Half of 4% of
the land) and will only make the bal worth more in time,
so we have more yet to get out of them with any exp luck.
(The nearby Snyder(sp) mine started as 1.5M oz and dev to 7.5
with similar vein structure.
Don't want any more HD deals, but expect to make good on
this one eventually.
_______________________________
Some worthwhile comments by Jackc. I have hopes for expanding Ivanhoe reserves from at least 1M ounces to 1.25M ounces as a result of the HL development/incline drilling during 2003-04. However, so far, the east-west Ivanhoe vein structure differs substantially from the north-south vein structures found at most all other Carlin Trend mines, such as Ken Snyder, BuckHorn, BuckSkin, MuleCanyon as shown on slide 30 or so of this presentation( http://www.greatbasingold.com/gbg/Multimedia.asp ) entitled "Carlin Trend-Northern Nevada Rift".
Thus, it appears either the Ivanhoe mine will not be as prolific as Ken Snyder, etc. or GBG will find a north-south vein trend, and then I would not be surprised to see well north of a 2M ounce deposit. There remains much hope that north-south vein trends will be (further) discovered, as GBG has found a vein called the "Velvet Vein" (drill holes 111, 204, 206, & 216) and a East Clementine Vein, 50% of which is outside of HL's Hollister area. Refer to Apr 26, 2001 and Feb 5, 2001 news releases discussing the possible north-south veins. My recollection is this was going to be GBG's primary exploratory drilling focus (i.e. try to find north/south vein) until they decided to stop all the drilling and go straight to the incline drilling/exploration via the HL joint venture.
Looks like East Clementine will be a large part of their exploratory drilling program in 2004 or so, trying to find that elusive north-south vein. See slide towards the end, entitled Proposed Drilling. Note, GBG will not be drilling any new exploratory drill holes @ Ivanhoe until the mining permit is obtained from Nevada, expected in August 2003. GBG believes asking for drill permits will slow down Nevada issuing the more needed mining permit.
FWIW, my understanding is GBG still very optimistic they will get an AMEX listing in the near future. Filing the 2002 annual report was a necessary step, and as usual GBG waited until the last moment, May 21 2003, to get this timely filed.
<With MOY I am comfortable waiting for another 40 days>
<Me too, but gosh do you think these idiots need that long? If so, the stock may get pretty nervous without disclosure. If they disclose terms, a definite timeline, and it's short and sweet (at least equal to the current share price on the distribution), I'll be a big buyer if the stock fails to react again. The fact that I wouldn't now reflects on mgt's credibility wouldn't you say?>
I would venture a guess that there is over a 50% chance that this deal does not close until the week of the deadline, now 39 days away... NEM still has to complete their due dilligence and I am guessing that the Yandal hedge fiasco takes top priority over everything right now for the NEM lawyers and management team. MOY deal will be on the backburner until Yandal resolved or right up until the July 22 deadline.
That being said, I would also not be surprised if they announced the due dilligence being completed today..., but I think it is 45% chance we see this deal close between now and July 15 and 55% chance we see this after July 15... Just a guess.
You should not be surprised that MOY is quiet now, MOY is likely in a quiet period required by SEDAR/SEC rules pending the announcement. As I recollect, neither Francisco or BAY.to made any announcement whatsoever between their merger announcement and its completion. Any announcements/news releases made were always made by the acquirer, namely GLG and PAAS. Neither Francisco or BAY.to ever made a press release during this quiet period is my recollection, and I believe this has to do with SEDAR/SEC rules prohibiting such communications.
The real problem I have with MOY is they issued very few press releases during the MONTHS before the announced merger intent. Have to agree with your comments that MOY is not shareholder friendly in regard to communicating with its shareholders... I understand why they cannot communicate now, but they should have made several press releases for the 6 month period prior to the March announcement.
Some more information...
1) Here is more info on SouthGold/Burnstone:
http://www.miningweekly.co.za/mw/search/?Query=southgold&x=12&y=14
(if this link does not work, go to www.miningweekly.co.za and enter search for southgold
Note that SouthGold Exploration was a private company and has 6 shareholders.
2) Early history of SouthGold Exploration (see pages 4 and 5), a VERY good article:
http://www.mips1.net/mgdld.nsf/2090f74ba5297296422567b5004b8fb2/85256bcd005228b642256be9004f5de0/$FI...
As you can see, Rob Still of Pangea appears to be the managing director/primary shareholder for SouthGold.
3) Rob Still seems to be a very savvy guy, and appears to have sold Southern Mining Corridor Sands project at a nice profit:
http://free.financialmail.co.za/coulsononair/coulsouthm.htm
http://www.mips1.net/MGCoal.nsf/0/4225685F0043CE9F85256C8A007F100C?OpenDocument
Note Rob Still comments from first link reference:
RS: I think that’s right. Our shareholders deserve the return and if they want to back any people who were involved in this project in something in future, that’s a separate decision.
Based upon above, Rob Still ownership in GBG via SouthGold shares is encouraging, he appears to have plenty of cash, and hopefully he will have considerable influence over GBG management, given his views on rewarding shareholders. If or when he starts to sell large GBG share blocks, then it may be wise to get out of GBG.
4) I am not sure but the 4 million GBG warrants issued to HL may also be a deterrent to a takeover...
Russ:
Did not mean to imply that your specific comments caused price decline, although can see how you could interpret my remarks that way...
What I meant to imply was other shareholders likely held the same sentiments as you, namely GBG has:
"management that may just be a "tad" too self serving, and prone to "use" average shareholders? They don't really own much stock themselves, just use other compensation schemes. Maybe these guys are just culturally that way, and can't change".
And such sentiments have caused them to sell here recently.
(With MOY I am comfortable waiting for another 40 days... My average price is US$.56 and have only held a few months. See this as a cheap way to obtain NEM shares, and I will likely sell the MOY shares and retain the NEM share distribution.)
In regard to GBG, I too have been a long term shareholder although I have successfully traded the stock. Just picked up some trading shares @ $.83 and my next hoped for buy level is $.76 which may or may not come... But it just does not take much to panic the typical GBG retail shareholder who has typically bought at higher prices and is prone to panic attacks. For example, my largest GBG share purchase was on 9/7/01 for US$.33 when GBG had $.29 per share in cash as I recollect. When GBG shareholders panic, they tend do it with style, for no apparent rationale reason, with reckless abandon, and like no other junior gold stock I follow. Probably large shareholders selling out of sheer disgust with GBG management or otherwise, who knows, but the OTCBB market makers just keep on walking the price down which begets more selling...
And it certainly would not surprise me to see GBG trade below $.76, after all GBG only has US$.39 cash per share now (excluding all Burnstone acquisition shares and the $2M cash paid). Can$14.5M at year end plus Can$7.4M from Jan 03 private placement (@Can$1.80 per share) and 46.9M shares outstanding = US$.39 cash per share. With GBG's panic trading history, we could even see GBG trading under $.70, and I will have cash available if it does..., but likely $.75 will hold given POG over $320.
Guess theoretically one should count the SouthGold shares issued plus the $2M cash in one's cash per share calcs, but when you are buying measured and inferred ounces at US$4.00 per ounce, a better treatement may be to call it an investment and count it as cash in the ground... (It certainly has more value, IMO, than the prepaid expense loan to HD on their balance sheet...)
One last interesting tidbit, am encouraged by the former Homestake President & CEO appointment to the GBG board of directors...
http://www.greatbasingold.com/gbg/NewsReleases.asp?ReportID=47213&_Title=Mr.-Walter-Segsworth-Jo....
Russ:
Really have no reasoned opinion on first 2 paragraphs of your post other than what previously stated. We have no idea of what terms are in Voting Trust Agreement. Do not believe SouthGold will retain all their possible shares, will likely have to cash in some options to pay the exercise price on the ones they keep plus the tax liability...
As for your second question:
"What's your theory on why HD stocks trade so poorly?"
Well, the 4th quarter $4.5M loss was not helpful as analyzed here:
http://www.bearforum.com/cgi-bin/bbs.pl?read=289676
Second, GBG has issued stock via PP's like candy... My opinion is LOM has not found suitable shareholders for many of these shares although RBC/Embry has taken 10% on each of the recent offerings and I believe the 5.6 million share June 2002 placement likely had better/long term institutional participation than past offerings. A few gold mutual funds also participated in this June offering. Still, I would not be surprised if many of these PP shares ended up with hedge funds or other investors that would short the GBG common and retain the warrant for upside protection... An educated guess on my part...
Here is a related possible guess. The 5.6 million 6/3/2002 warrants just expired on 6/3/03. Maybe, just maybe, those hedge funds are still short, without their upside protection with the warrants anymore, and they have pressured the stock down hoping to cover at lower prices... Probably wishful thinking, but possible...
Third, I share many of your concerns expressed over on the SI board, and this has likely prompted many shareholders to sell causing the share price weakness. For example, your post:
http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=19026507
In addition, the lack of transparency in their accounting is troubling to me, i.e. the use of that Prepaid Expense HD account listed in their current assets. Also, believe Sinclair's comments/warning on multiple gold companies being managed by same management team have an element of truth to them, this is not the best way to run a gold company, IMO, I would like to see HD salaries/bonus listed each quarter on their income statement and not booked to prepaid expenses on the balance sheet.
However, I beg to differ a bit on whether GBG has delivered or not... Agree GBG has failed to deliver on share price, BUT delivering 5 million proved ounces plus 11.5M inferred ounces at a cost of $4 per GBG share is great management performance, IMO. Just look at how NEM's directors and management are awarded options/bonuses:
"Murdy said net asset value per share was the key value driver for Newmont and most other major mining companies. NAV and reserve replacement constitute 70% of the company’s internal performance hurdles, the rest made up of free cash flow after capital expenditure and earnings per share."
Holding GBG to the same methodology as NEM would certainly justify HD's $1.1M of salaries this past year plus the options., if anything HD management was underpaid last year... Nonetheless, I am very much disappointed in the share price and by the dilutive share issuances by GBG (but not with the SouthGold deal shares issued, which was by far the largest share issuance/commitment during the past year).
If GBG shareholders relied upon "NAV and reserve replacement" metrics to make their selling decisions over the past 12 months, GBG would certainly not be selling at under US$1.00 today. I have this love/hate relationship with GBG management, love the 2002-03 management performance causing the increase to their NAV and hate the 2002-03 management performance responsible for the current share price...
If you really want to know what I think would solve the share price problem, look no further than NEM's Murdy comments:
"Citing the most common conflict of interest problems, Murdy also hinted that Newmont might be more demanding of its investment bankers in future. “We have to look at compensation for investment banking services. Perhaps its time to pay for services with restricted stock?” he suggested.
Speaking later on the fringes of the conference, he said the company had no immediate plans to implement such a plan, primarily because its Newmont Capital division has been able to execute 40 transactions in the past year without any investment bank assistance. Nevertheless, he said performance based compensation might be considered in future, rather than paying large upfront fees as is the norm today."
The full Murdy comments are here:
http://www.mips1.net/MGGold.nsf/Current/4225685F0043D1B288256D42006E7D57?OpenDocument
Sure wish junior gold stocks had more bargaining power, because paying for PP investment banking services solely with restricted stock would work wonders, IMO...
Finally, I continue to believe GBG will be listed on the AMEX shortly. Per my prior posts and understanding, surprised that this AMEX listing has not already happened... Possibly we have Nasdaq market maker shennanigans going on coupled with a large seller that has been rumored... Believe the AMEX listing will help the share price, AMEX market makers should be better, AMEX listing is more credible, and at least the bid/ask spread won't be so large...
Just some thoughts.
Refer to my April 23rd comments item #3, link here:
http://www.bearforum.com/cgi-bin/bbs49.pl?read=286675
Until the Voting Trust Agreement becomes a public document, if ever, we can only speculate on the terms and conditions of ownership transfer from SouthGold... Read the link above, my sense is that SouthGold shareholders are more long term oriented and will sell little or none of their initial shares on Aug 31st, the date first allowed. The initial 5 Million US$.75 warrants are another matter, these must be exercised within one year, i.e. May 1, 2004. I would think HD will find institutions to buy these warrant shares from SouthGold shareholders as necessary.
My opinion is SouthGold shareholders are very confident in the economics of their own Burnstone mine as well as with the Ivanhoe mine. If they were interested in the quick buck, they would have taken the presumed Placer Dome all cash offer as mentioned in above link. In the GBG deal, they got $3.25M cash so that should meet their immediate cash needs. Accordingly, my view is SouthGold will not be selling many shares onto the open market except for the US$.75 warrants they must exercise within one year. Would not be surprised to see Southgold exercise these warrants and retain some of them, rather than sell all of them, unless the GBG share price is substantially higer.
With GBG currently trading at $4 per ounce of measured plus indicated reserves, and with SouthGold likely confident on the probability of converting the indicated to measured reserves, would not be surprised if SouthGold largely retains its ownership stake in GBG, at least until GBG is valued more in line with its peers...
June 11 comments and analysis:
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subsequent comment: Am not sure the $55-$85M Capex cited on Burnstone is entirely accurate, this seems low...
this post with replies at:
http://www.bearforum.com/cgi-bin/bbs.pl?read=291641
available for public access about 3 days from now
________________________________
Talked with the company today…
1) Every time LOM issues a research report beware, often a private placement soon follows, but my understanding is NO such private placement is being done anytime soon… LOM has historically been involved with all recent GBG private placements…
2) The Ivanhoe mine permit is expected by August and commencement of drilling in September. Speculation of July permit may be optimistic.
3) My understanding is many analysts may be missing the boat, production will begin in 2004 and not 2005. Actually, this should be termed “pre-production” as a formal production plan will likely not arise until 2005. BUT, my guesstimate is GBG will mine and truck out about 30,000 ounces during 2004 as part of digging the 6,500 foot decline and vein sampling.
From the HL Form 10-K:
“The underground exploration project will consist of approximately 6,500 feet of decline, cross-cuts and diamond drill stations, a minimum of approximately 2,500 feet of exploration and bulk sampling on different veins within the system, and approximately 40,000 feet of diamond drilling from underground locations... Plans for 2003 include applications for all operating permits, construction of the surface support facilities and a drive of the initial 500-foot decline."
From the 6/10/2002 GBG press release:
The Stage 1 program consists of underground development to access the eastern extremities of the high-grade gold veins identified to date, and underground drilling leading to the establishment of mineral reserves and completion of a feasibility study. Estimated costs for the completion of Stage 1 are US$10.3 million. Stage 2 consists of pre-production underground development leading to commercial operations from the Gwenivere and Clementine high-grade gold veins and is estimated to cost US$11.5 million.
FWIW, GBG is not going to be throwing away the tons of rock mined digging this 6500 feet decline, they will put this on a truck and head it to the mill for gold processing. 30,000 ounces multiplied by $217 profit margin ($350 gold less $133 cash cost) equals $6.5M.
4) The preliminary capex cost for Burnstone Area #1 mine is between $55M and $85M depending on whether it is a single shaft ($55M) or double shaft ($85) mine. The feasibility study currently being performed on Area #1 should allow GBG to obtain 60% debt to 40% equity financing, IMO. Thus, GBG is going to need between $22M and $34M of cash/equity financing by around 2006. Ivanhoe should generate around $23M cash flow in 2005 assuming $350 gold (and $4.5M G&A, exploration and other expenses). The 10M SouthGold warrants at $.75 would yield another $7.5M by 2006.
Thus assuming GBG can get 60:40 bank financing, my math shows that GBG would not have to issue any more stock via private placements to get Burnstone Area 1 into production. That's my hope anyway..., but GBG seems to issue stock like it was candy..., so I would certainly not rule out another equity offering...
5) Short term, we need that Ivanhoe mining permit issued by state of Nevada ASAP... Once this permit is obtained, I believe the market will start valuing GBGLF well over $1.00 and $3.00 is readily achievable in 2004, IMO, given gold over $325 and completion of the HL "underground exploration project" (described above) which will prove up once and for all the Ivanhoe 1M ounce gold reserve and likely expand this reserve by at least 25% via "2,500 feet of exploration and bulk sampling on different veins within the system, and approximately 40,000 feet of diamond drilling from underground locations."
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subsequent comments:
Also, still digesting some of the call/analysis..., GBG initial cash flow has to pay back the HL $21M investment first, so GBG still may need to finance, but GBG still has lots of cash on hand (hopefully they don't spend too much). And GBG really could internally finance this Burnstone mine if they could delay the mine startup until 2007, or hedge 6 months of production, or guarantee the loan with the annual $5+ million royalty from HL, or some combination thereof...
Burnstone capex of $55M - $85M seems low, needs verification...
Comments on Russ Winter post:
http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=19022241
At $350 gold, GBG cash flow before G&A expenses is $27.5M which includes a (sliding scale) royalty from HL of $5.85M. At $375 gold, these numbers are $31M and $7M royalty. At $325 gold, these are $25.1M and $5M royalty.
In regard to takeover, please note the following:
"Any Great Basin shares issued to Southgold shareholders are subject to a voting trust agreement, whereby the holders undertake to vote with Great Basin management for a period of five years."
Per page 25:
http://www.sedar.com/csfsprod/data38/filings/00550170/00000001/f%3A%5CSEDARFile%5CGBG%5CAIF%5CGBGFY2...
Analysis of Form 10-K for 2002 filed in May:
http://www.bearforum.com/cgi-bin/bbs.pl?read=289676
Sedar Filing here:
http://www.sedar.com/csfsprod/data38/filings/00542773/00000001/m%3A%5CBETTYC%5CSEDARFile%5CGBG%5C200...
April 23rd Comments:
These posts should now be accessible...
http://www.bearforum.com/cgi-bin/bbs49.pl?read=286675
http://www.bearforum.com/cgi-bin/bbs49.pl?read=286679
Great Basin deserves its own board...
GBGLF makes up a sizeable portion of my gold stock portfolio, and I have frequently posted on this stock at bearforum.com.
If sufficient interest, I will begin to make contributions on this board as well.
In 41 more days we will know, one way or the other...
Today................ 11-Jun-03
120 Day Deadline..... 22-Jul-03
Days to Go........... 41 days
NEM 120 day deadline for due dilligence began 3/24/03, I would think the TSX and other regulatory and corporate approvals either have been obtained by now or just a rubber stamp process, pending due dilligence being resolved...
"subject to TSX approval, appropriate due diligence and other regulatory and corporate approvals."
http://www.marketwatch.com/tools/quotes/newsarticle.asp?siteid=yhoo&sid=126960&guid=%7BA1338...
I will wait before buying...
Seems best to wait for the terms and conditions of Gabriel's next financing..., IMO.
Nastase: Rosia Montana project involves high risks
Prime Minister Adrian Nastase stated on Thursday, during the National Forum of PSD ecologists, that the Rosia Montana project is not a priority and its enforcement would involve high risks.
“We keep avoiding saying what we think of this project, we send it to the Academy, to the Parliament, we should say this is not one of our priorities and that it involves high risks. Those who started the operations there, and not in our ruling period, might be unpleased, but we must have a viewpoint. We do not want to have an economic colony status”, said Nastase.
Nastase considered the National Forum of PSD ecologists should get more involved in solving this matter. (Mediafax)
http://www.zmag.org/sustainers/content/2003-02/21grubacic.cfm
Even if it closes on Monday, I would not get my hopes up for anything close to full value being received, e.g. over C$1.20.
If it trades similar to other small cap mining cap arbitrage deals I have seen, it will pop up the first day (well above the 70% distribution amount and likely to 100% of NEM share value) on the announcement, and then trade back down again, IMO. You will likely have to hold until you actually receive the NEM shares to get the most bang for the buck, given NEM share price remains constant.
For example, even after PAAS formally announced to acquire BAY.to (i.e. after water rights fully resolved), the shares bounced up, dropped down a bit and were very undervalued right up until the day you received the PAAS shares and warrants. I bought more BAY.to the last day of trading for a 20% arbitrage profit. Sold all my PAAS shares and got the warrants essentially for free. Would not be surprised to see same for MOY...??
Similar situation when GLG bought out Francisco, I bought the last week prior to formal merger date for a good arbitrage profit as I recollect...
new math = US$.67 **
currently trading @ Can$.78 = US$.58
this US$.67 includes ONLY the "likely" amount to be distributed to shareholders... Thus, MOY now trading at 86% of the "likely" distribution to shareholders...
**excludes everything else..., i.e. cash on hand, 30% NEM shares retained, existing MOY gold properties, and NEM royalty...
____________________________
________________________________
The new math with NEM stock price @ $32.25:
$20,000,000 NEM consideration
$25.50 share exchange rate
784,314 total NEM shares to MOY ***
70.00% assumed % distribution to MOY shareholders
549,020 share distribution to MOY shareholders
26,414,014 MOY shares o/s
0.020785164 NEM shares per MOY share
$32.25 NEM share price
$0.67 arbitrage value of MOY share in US$
________________________________
*** Note, the 784,314 shares have now been confirmed by MOY latest quarterly report (see page 2, paragraph 2):
http://www.sedar.com/csfsprod/data38/filings/00547392/00000001/w%3A%5C3w_out%5C25493%5C1qtr.pdf
thanks Jack! eom
criticize MOY mangement all you want...
But that $25.50 NEM share cap was a stroke of genius...
http://www.321gold.com/editorials/russell/russell060603.html
Could be, as long as NEM keeps rising, we may be better off with continued delay right up until the 120 day deadline... The 25% to 40% that MOY retains in NEM shares will likely be sold soon after the merger and converted to cash. Reading Russell tonight, MOY would be better off just holding onto the shares (after distributing the 60% - 75% to shareholders as I anticipate and hope)..., rather than converting immediately to cash.
New merger activity on the horizon???
We could certainly use it...
http://www.mips1.net/MGGold.nsf/Current/4225685F0043D1B285256D3B0073E848?OpenDocument
CUMBERLAND RESOURCES (CBD : TSX : C$2.55) - SPECULATIVE BUY - 12-MONTH
TARGET PRICE: C$3.75
Graeme Currie
Comment: Cumberland reports on improved metallurgical testwork and announces the results of a resource revision
Cumberland reported improved metallurgical recoveries, from feasibility level testing, for their Meadowbank gold project. Recoveries now exceed 93% and reagent consumption has dropped by 90%, which could result in a large operating cost savings. The company also reported revised resources within the Portage pit area that are now estimated at over 1.9 million ounces. In total, resources at Meadowbank now exceed 3.5 million ounces.
Cumberland remains a top pick with a SPECULATIVE BUY rating and a $3.75 target price. Yesterday's release continues to imply that further improvements through ongoing feasibility study work may reflect positively regarding capex and operating cost improvements at Meadowbank. The feasibility study is due for completion in late Q4/03 or early Q1/04.
Preliminary results to date suggest that improvements to our cash flow model can be achieved. We plan a thorough review of our model in the summer. With the latest resource revisions at Meadowbank, net in situ ounces for Cumberland at Meadowbank and at their 22% held Meliadine West project now total 4.4 million.
Marcos... (Thanks for the link Russ)
http://www.alamosgold.com/i/pdf/053003_Alamos_Report.pdf
Marcos could you please comment on the water rights relative to the ejido issues. Does the ejido have any input/decision making in regard to water rights or are water rights solely determined by a regional water board authority (as with Corner Bay per my recollection).
Per the NSI research report:
"The Company must secure water rights to support the proposed future mining operation and all outstanding permits."
It would seem best for Alamos to negotiate BOTH the acreage payment and the water rights at the same time if the ejido has any significant input on the water rights decision...
Thanks for any comments on this issue Marcos!!