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Very true gharma. I was one of those last year that had most of my posts deleted because I was screaming about the lack of CD’s concern for shareholder value and predicted this decline in sp with the continued dilution. I just gave up in posting. I am very saddened that the potential of EXS will most likely never be realized now because of CD’s mismanagement. I would be really surprised the full $10 million is raised.
I’m afraid we are in a slow death spiral and it’s now just a matter of time. (to no ones surprise there) $10 million in my opinion is just enough to keep the lights on and continue paying CD’s salary for a while.
"Most miners know that TPW is a pregnant elephant just waiting to give birth - eventually"
Desty, I hope you are right.
Right now we are looking less like a pregnant elephant, more like a bloated corpse.
By, we all appreciate your efforts and you are correct. CD needs to have what some company wants. I would still hope it would be multiple suitors.
gharma, very well stated and I really can’t add anything additional. It is what it is. Thanks.
To consolidate responses to posts after yours I need to remind you guys there will be another PP BEFORE the next 43-101. So, the next report will have no bearing on the PP. You do realize the consequences of this????
This is the elephant in the room that is being ignored.
I don’t think you understand my position. You are absolutely correct in saying that you are not selling 2-3 million oz but actually geo potential based on analysis, etc. You are correct as well as to your point of negotiating the highest price for your assets. Your scenario or mine is at this point pure speculation.
But this is what I think you are not considering. Price per share at buyout is irrelevant. It’s the value of the company (or the sales price made as an offer) that dictates the share price and that is why I am so focused on shareholder value. No matter the amount of the offer, the more shares outstanding means the less each share is worth. We get to the point of diminishing returns and I contend we are fast approaching that point in this market.
Unfortunately, CD will be unable to negotiate from a position of strength unless multiple suitors are involved. Otherwise he dilutes again or needs to enter into a JV. Regardless, the market pays what the market perceives as value not what CD perceives. Be careful of lofty assumptions as they almost always disappoint.
There are so many positives with this company the list would be long. The risks though are glaring and by no means should be ignored. It is unfortunate we are at this point as I believe many of our problems have been self-inflicted.
Just to put into perspective the cost of mining today. If LSG is producing and still needs to raise money then I think we may be off on our anticipated worth to a buyer of EXS somewhat.
LSG -.07 (-6.54%)
LAKE SHORE GOLD COMPLETES CREDIT FACILITY AGREEMENT FOR UP TO $70 MILLION WITH SPROTT RESOURCE LENDING PARTNERSHIP
Lake Shore Gold Corp. has signed a definitive agreement with Sprott Resource Lending Partnership for a credit facility totalling up to $70-million. The Facility involves two components, a $35 million gold-linked note (the "Gold Note") maturing on May 31, 2015 and a standby line of credit (the "Standby Line") for an additional $35 million. The Standby Line will be available to the Company as of November 1, 2012 and will mature on January 1, 2015. Funding is subject to certain closing conditions, including consents from the Ministry of Northern Development and Mines and various third parties to the security on the mining properties and to approvals from the TSX and NYSE MKT.
Tony Makuch, President and CEO of Lake Shore Gold, commented: "The $35 million of cash available from the Gold Note and $35 million of additional liquidity through the Standby Line will provide important balance sheet strength for Lake Shore Gold. With this Facility, as well as our $50 million of cash and gold bullion inventory and plans to reduce 2012 capital expenditures by $15 to $20 million, announced yesterday, we are now well positioned to finance our business as we progress towards strong production growth and positive free cash flow from Timmins West Mine in 2013. We very much appreciate Sprott's support for our company, and its hard work and commitment in completing the due diligence period and documentation required to close the transaction
Ah, now that’s the conundrum, isn’t it? Of course we need to continue drilling and that means spending more money and therefore more dilution. But let’s be realistic. My six figure investment has an average cost of around .50 cents. IF he can sell the property for a billion dollars and we have diluted to the point that I barely make a profit if at all, I can’t get excited about that. You don’t seem to acknowledge that there is any risk with EXS.
I truly hope and anticipate that that we get at least $1.00 to $3.00 but that is no more than a guess. Maybe more if the resources are all truly economical and the world’s economy is still intact. But after taking the cost of money (inflation) over the four years I’ve been in the stock I don’t do as well as I anticipated I would have years ago unless CD does something to change the results. Remember, we only have TPW right now to rely for any success in the foreseeable future.
This is why I cautiously temper my enthusiasm and view anything else as fluff IMHO.
Destinator, please explain where this statement is extreme please. Have we increased the target oz. higher than 3 mil for the potential buy out?
If not, and there is no statement from the company to indicate otherwise, then shares you hold today are worth less with each dilution. So, unless you are getting a potential appreciation to offset the dilution you are not gaining anything, but actually losing on each pp.
I saw nothing in Gary’s response that addresses this.
So, rather than just say I’m extreme, please respond with some facts that I’m missing so I can share your enthusiasm at this time.
Thanks.
Excuse me, I’d just like to ask a question….
Am I supposed to be pleased about the requirement of an additional $10 million that we will need to raise (prior to the end of the year (most likely before the end of the third quarter)to keep us going? That basically means that the share price better start moving or we are looking at another 25%+ dilution which would make it ….. what, three times in row now?
So if I understand this correctly, the potential has not increased at all in the last year. We are still looking to sell when we reach $3 million oz in the 43-101 but my investment has been greatly diluted not only in TPW but ALL the properties, correct?
Now, how should that congratulatory note read when I send it to CD???
Why does God need a starship????
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Well gharma, I stand corrected. I must have missed that because this is the first I have heard of those plans. Bad day today, as I’m 0 for 2!
Thanks for setting me straight.
The problem Slim is that the 200,000 oz. cost us around $4 million by my estimate. Based on what has been reported the first six months of this year I’m not expecting any major increase in December’s report.
CD is going to run out of money sooner than expected IMO. Remember, we still plan on drilling EL.
Unfortunately, if he continues to dilute the stock by 25% on each PP, he better get the price up because at .20c with warrants (assuming he can get that) is a boatload of more stock.
Reality, my friends. There are no buyers for this company’s stock and everyone will need to just hold what they have. Some won’t wait on selling after today so expect some downward pressure. Bad market, scared economy, little communication from EXS all will place a lot of pressure on the sp.
At this rate of discovery, three million oz. isn’t going to materialize in 2013. I said many months ago we could be looking at 500,000+ shares outstanding before any potential buyout and got criticized. I really hope I’m wrong.
Part Two:
Mining sector feels cold splash of reality
FABRICE TAYLOR
The biggest risk in mine investing isn’t geology or third-world dictators or metallurgy. The biggest danger is purely financial. It’s called dilution.
Most of us underestimate how devastating this process can be until it’s too late. Simply put, dilution is when your economic interest is watered down. If a company you've invested in sells new stock and the share count goes up more than the value of the company, your investment is diluted. The more it can sell its new shares for, the less you'll be diluted.
Waves of dilution usually herald the beginning of the end of the investing cycle in mining. I think we’re close.
By way of example consider the travails of Baja Mining Corp. It’s a junior miner with a promising copper-cobalt-zinc project in Mexico. The company has spent hundreds of millions bringing the project to the cusp of production. In late March it told shareholders that construction of the site infrastructure was on schedule for production next year. It also said that the cost to build the mine was creeping up and that it would try to find ways to cut costs to bring the project in on budget.
On Monday, Baja treated its owners to some unpleasant news: the cost to build the project would come in at $246-million more than originally expected, a 22 per cent increase over the original costs that were estimated only two years ago.
The stock, not surprisingly, collapsed from about $1 to as low as 30 cents, with the market cap plunging to $130-million. That’s bad, but it’s just one part of the company’s problems. It now needs to come up with a lot of money fast to bring its mine into production. It will most likely have to sell new shares to do so. Let’s assume it needs to raise $100-million through the sale of fresh shares. At $1 that would have increased the share count by a hefty 30 per cent. At 40 cents the dilution will be a brutal 73 per cent.
Existing shareholders who don’t partake in this financing, should it materialize, will lose more than half their current interest in the company. Dilution is painful and permanent. It never goes away.
One hopes the company can find alternatives to equity so that the dilution can be kept to a minimum, but some pain for shareholders is guaranteed as the market reaction proves.
Baja isn’t alone. Batero Gold Corp. was something of a market darling until it produced a resource estimate that made investors sob in late February. The stock price was ravaged when the company reported that it has 6 million ounces of gold but that the grade is so low it’s questionable whether the project will ever become a mine. The quantity and grades are important factors, but the stock price is more important.[url]
A year ago it was $6. On the day of the announcement it was just under $3. Today it’s 57 cents. Even raising just $10-million to keep exploring and developing would send a tidal wave of dilution over existing owners.
And it’s not just the smaller players. Look at Kinross Gold Corp. and its disastrous purchase of Redback Mining, which owned the supposedly wonderful Tasiast mine in Mauritania. I cast doubts on that deal a couple of years ago in this space and for my troubles got an invitation to meet management in the Kinross boardroom, where I was politely lectured for 45 minutes. But just this January the company announced that the mine would be a lot more expensive to build than first thought and that it will take a very big writedown on the deal, which was paid for in stock. Investors have seen billions of dollars of wealth disappear through dilution.
The reason I associate dilution with the beginning of the end of the mining cycle is twofold: first, because I assume that the more promising deals get done earlier in the cycle, the more marginal ones later.
Second, when shareholders get soaked by dilutive deals, they eventually say “no more,” and that’s happening.
Despite the fact that many mining projects have net present values that are multiples of their market caps, companies are having trouble raising money. If you can’t raise money at the right price, you’ve got nothing. Investors should keep this in mind.
Well, I think you can come to the conclusion that we are under the same pressure from shareholders and new money coming into EXS. Manipulation is not what has brought the sp down, IMO. A number of things have influenced this drop. I think Jim Sinclair is off on this one.
Interesting article today on Jim Sinclair’s web site today
Not Everyone Who Writes About Mining Knows About It
April 26, 2012, at 10:55 am
by Jim Sinclair in the category General Editorial | Print This Post | Email This Post
Jim,
Just came across this (below) re esp. "dilution" exposure.
Do you think you have this covered or should it be a big future concern for us as stockholders?
Thanks and take care,
CIGA Ted
Dear CIGA Ted,
Many people write crap that know nothing whatsoever about mining.
The payback can be so fast on development loans that there are project lenders in the private markets. There are not at risk gold sale deals where the bank selling get $25 dollar per ounce sold, limited in time, as part of making the loan.
There are royalty companies that love to finance projects after definitive feasibility. Also, there are quasi-government institutions that are socially minded, eager to make development loans if the transaction is sensitive to the needs of the host nation.
I did the first 45%/55% deal under my management with a country, a transaction with many friends at quasi-government lending institution I have visited with. This writer in question has never ran a company in the extractive industry.
It is the nature of the deal and the quality of the project that raises the required capital and not the capitalization of the company doing the development. If this was not true there would never be a new major and majors who stink historically at exploration would run out of product in 5 years.
The quality of the professional’s and director’s mine building experience is very important if only to guide the turn key mine builders like Consulmet.
It is raving bullshit that it costs $1650 to mine today at an attractive project. The maximum cost according to outside expert opinion will be $750 per ounce published in my PEA.
Surface gold property mining is so low it is comical, and therefore modest resources can be cash cows.
Regards,
Jim
DAC, I agree. It’s not a matter if the markets crash but when. Another effort by the fed to engage QE III will pump up the markets and inflation so it would delay the inevitable. They will do it as they have no other options to prop everything up but how they mask it is the question. Inflation will drive the markets up but the sheeple will think they are making money while the buying power is greatly eroded.
I was very concerned on how a crash would affect the sp when we were higher but I guess one positive at the price we are at is that EXS can only lose just a finite amount more unless the crooks figure out how to short us into a negative price where we would just owe them money for owning the stock. (Sarcasm)
The other factors that will have a bearing on the market are the continued collapse in Europe, and attack on Iran or Russia flexing their muscle in energy sales to get their way on whatever they may want just to name a very few.
Regardless, this year I believe will be unlike anything any of us have ever seen before.
Ok, the way I see this is that we have a market cap of about $24 million, less $7 mil in the bank for a net cost of all properties at about $14 million. If someone was half serious in buying TPW, you could get the entire company for a steal. Even with the poison pill you would pay about $40 million. Hmmm, we get bought out at around .32?
And I don’t think we have bottomed out yet. I’m surprised there hasn’t been a massive consolidation in this sector yet. The big boys could cherry pick the better exploring companies or juniors because I don’t think this opportunity will come around again for quite a while.
Sooner or later the smart money will pour back in to miners. The question is obviously when.
Amazing. Simply frigging amazing.
I am getting so tired of this crap. CD has lost his mind.
OK all you CD apologists, spin this for me because I can’t for the life of me understand this placement for $21K.
"Definitely not the first time I have seen a junior punished in the market for, or at the time it becomes public knowledge, cutting a financing deal with Sprott ! ! !
EXS beware. "
Gharma, so are you saying that maybe some brokerage house, oh .... I don't know, let's say maybe Union, is punishing EXS for going with Sprott on the new financing?
Hmmm??
Agreed Tessaa, my point was that a 43-101 at 3 million oz. and a December 2012 expectation of a buyout are not guaranteed and debating values of EXS in the future are premature. If these things don’t go according to plan there are some pitfalls we will face. Never intended to trash CD or EXS.
Anyway, I bought a boatload at .28 a few weeks ago so I definitely don’t claim to be too bright! :)
By, you need to go back and read my post. I said nothing other than there are other possibilities that could derail the over enthusiastic expectations and it would be best not to speculate. You can disagree with me that any of the possibilities might play out but you can’t guarantee the numbers I see being thrown around.
Yes, I am a shareholder. If your implication is that being a shareholder means you have to blindly believe a buyer is going to make us all rich by December well believe what you want. I hope you are right. Ignore what I posted or tell me how you know this sector will be turned around by the end of the year(which I hope happens), that we won’t run out of money by the end of 2012, how much of the 3 million oz. will be economically minable, or that CD doesn’t already have a price in mind as others have stated.
And I never implied or suggested anything about selling at .20 or any other price.
I think everyone is focusing on the magic number of 3 million oz. which will provide us with a wind fall buy out. I hope you are right, but these past three years in EXS has caused me to reign in my expectations, as very little has lived up to the hype. All our hopes are now in the buyout potential of this company, primarily because this sector has tanked again. I think it would be wise for everyone to consider some very real possibilities.
Just because we end up with a 3 million oz. 43-101 by the end of the year (which will be the first time we hit a stated target date for anything) does not mean we will have a buyout offer. The question is how much of it is truly economical to mine. Unfortunately, no one on this board can answer that.
CD has shown that he is going to do things his way and has a price in mind to sell. If it’s not realistic there will be no deal and we are raising money and diluting again.
If we get to the end of the year with little money in the bank (which is when the money just raised in the recent pp is projected to run out) then CD will be negotiating from a position of weakness. Any potential buyer will know the financial condition EXS. There is no way this helps us.
I just think it would be wise to step away from trying to guess the price of the wind fall offer. PB’s posts are right in line I believe
as conditions exist now.If we are in the same depressed sector in 8 months from now then a lot of people will be very, very disappointed.
Happy Easter everyone!
Tomberry,
I don’t know if it is being manipulated but I do know that we won’t go above .215 as long as this continues which I ask again, why this seller would be willing to leave money on the table!!!!!!!
I also don’t need a weatherman to tell me it’s raining outside when all I need to do is look out a window. Just try to be open minded or please show me another stock you have ever been associated with that this has occurred. There is a reason this can’t be traded like this in the US.
Tomberry: "You have to accept the fact that if this shareholder dumped all those shares at once on the market, it would have a devastating effect on the share price."
That's just it. It’s unnecessary to do this at 500 share lots and this seller under your scenario must have bricks for brains because of the money being left on the table. All I’m concerned about is the motivation and although I respect your opinion it makes no sense….. unless the seller has bricks for brains! ;)
MJ, perhaps but you don’t seem to acknowledge the elephant in the room.
I would like your professional opinion on what scenario would prompt this type of selling activity. You ardently dispute any manipulation is taking place but you give no insight as to why this is happening. In all your years of trading could you give us some examples as to what would prompt this? I don’t mean the method as in an algorithm but the motivation.
The sales price of the stock and how we got here is not in question. That’s not the debate. I just can’t come to your conclusion that the poor sector performance, market conditions, dilution, etc. are the only things keeping us down right now. Regardless, there are many long term holders that are not happy and to expect this type of selling to be ignored would border on financial irresponsibility.
Occum's Razor
The simplest expression of scientific truth; where 2 theories exist to explain a similar phenomenon, the one making the simplest assumptions should prevail—i.e., it should be no more complicated than necessary. In keeping with Occam’s razor, generalisations should be based on observed facts and not on other generalisations.
Fact:
Why sell at .215 when you can sell at +.22?
Why sell at 500 share lots when you can sell at +1000 share lots?
PB is correct. As I stated, TD Ameritrade spoke with TD Securities as they are the market maker and responsible for the multiple trades of 500 blocks. TD Securities stated they were not concerned with the activity. They did not say it was legit or suspicious. They just said they were not concerned with it.
To be clear, if this was taking place in the US it would be flagged and stopped. This came directly from TD Ameritrade. Not so much in Canada for whatever the reason.
In the US, this activity would be considered an uneconomic trade. It would be assumed that this would be an attempt to manipulate the price.
As far as this not being illegal in Canada I would say that it all depends. If it is a controlled dump then I would agree. If this is part of an effort to hold the price down while accumulating a larger position or working in tandem with other brokerage houses to influence the price then there is no doubt it is illegal. I don’t think the Canadian markets are the Wild Wild West of trading, where anything goes.
I’m wondering if there is more to this than we see. Follow me here.
Facts:
Perhaps a million or more shares are in the queue at 500 share lots being sold by TD Securities into the bid.
On a given day there are 50 to 100 trades. I00 trades would consist of 50K shares. Today we are already at a total volume of 577K by 2:00 PM.
Volume has increased substantially since this controlled selling started.
It would be too obvious if TD was doing the selling on the small lots and then buying large volumes.
The activity was holding the price down up until yesterday and today which has now caused the sp to drop.
The activity shifted to the American side for one day so this appears as premeditated effort in accomplishing some goal other than just liquidating. It doesn’t make any sense that this was associated with an algorithm to liquidate shares. Probably didn’t work too well since the American OTCB never has the volume the Canadian market has.
Right before the close earlier this week, a rash of 500 lot trades took place dropping the price by .005. With five minutes left in trading there was 168K on the bid and 1000 on the sell. ?????
I’m beginning to wonder if we are seeing a effort by someone using multiple market makers to accumulate shares. TD plays the game to keep the price in a tight range. One or more brokers are accumulating in massive amounts. So if your goal is not to be accused of manipulating the stock down, and if you want to keep it in this range so you load up then this makes sense. You sell 50K at 500 lots a day but buy 300K to 500K while keep the price depressed. Hence, the uptik in voulume for no other reason? Split the activity up so that it’s not as obvious.
If this is what is happening then when this entity decides to sell it will not be good for any of us. A flipper with millions of shares!
Maybe his tactics needed to be changed this time!!!
Just speculating.
I want to mention that the TD Ameritrade Trade Resolution Specialist really put a great deal of effort into trying to get to the bottom of what was taking place. Everything he said he would do, he did. He empathized with our concern about the trade activity too.
I didn’t mean to imply that they were slow in getting back with me. Opps!
Thanks.
Finally got some information from TD Ameritrade concerning the 500 lot trades. Apparently, there is no concern from TD Securities (Canada) regarding the trades and frequency. One interesting comment they made was that these were set up as separate trades and the depth was enormous. This means that there is more to come. Algorithm or not, this is premeditated and it won’t stop until the seller has finished dumping their shares.
In the US, this would be flagged for “uneconomic trading activity”. This would be viewed as a negative.
Basically, the “best case” scenario would be about a 10% commission rate per trade to the seller and an investigation would be launched to determine if the activity was attempting to influence the stock price. It would be stopped rather quickly, regardless. In Canada, there is not much concern. The rules apparently are different. These trades could also be tied to an institution or brokerage house using TD securities as a market maker so the commission percentage would not be as high.
I guess if we want to get someone’s attention, we can all file a complaint with the link below. There is no concern on TD Securities part to do anything at this time. Here is part of the email I got from TD Ameritrade today. I also spoke with them shortly after receiving this.
"Well, I've learned that Canada does not have a securities regulator at the federal level. Various provincial administrations regulate the securities industry. EXS seems to be listed on the Venture exchange, so it is jointly regulated by the following agencies:"
British Columbia Securities Commission http://www.bcsc.bc.ca/about.asp?id=16
Alberta Securities Commission http://www.albertasecurities.com/Pages/ContactUs.aspx
Here is the link to file a complaint on the American side. EXSFF only had one day of activity like this so it may not return.
http://www.sec.gov/complaint/tipscomplaint.shtml
I can tell you that whoever is doing this is leaving a lot of money on the table. To assume that there is not an ulterior motive behind this doesn’t make sense. The good news is there is plenty of support keeping the sp where it is. Now if the seller is trying to unload millions of shares without the sp tanking, I guess this would be one way but why not 1000 or 2000 share trades? We are going to need to sit back and let this play out.
I said I would report back tonight that about my inquiry of the strange 500 share block trading TD Securities (CAN) has been doing for the past week. I received an email from TD Ameritrade (US) today and they are still researching it and hope to have some information for us on Monday. I will let you know what they say.
Destinator, please check your SH email.
I just called TD Ameritrade and reported the activity of the 500 share trades. The person I spoke with agreed that it didn’t look right and was going to contact the TD “Newcrest” which is the market maker for TD Ameritrade. The companies are different. He will get back to me by tomorrow and I will let you know Friday evening what they tell me.
Gharma, I have a question. If the flip in is triggered, then each stockholder has the opportunity to buy the additional shares at a 4:1 ratio with a discount. What if the shareholder doesn’t or can’t purchase the additional shares?
What happens to those shares?
Well PB, as you have mentioned perhaps an early participant of a PP below today’s price may be selling at handsome profit. Unfortunately, we are venturing into very dangerous territory with the price heading lower. This is why I harped over a month ago the importance of CD building shareholder value. I remember many here totally discounted "todays" stock price as irrelevant to the long term payday we were all going to get.
If the stock continues its downward decline, and there is no reason to believe it won't, there will be a price point that will make a takeover worth the risk to the buyer regardless of the 43-101. Even the poison pill may not deter a hostile takeover if the price is low enough.
The root problem continues to exist with no apparent interest to address it by the company. CD must build stockholder value and quickly or in my opinion we run the risk of never seeing $ .50 again. Before you blast me remember that the market cap at $.50 a year ago was worth a lot more than the market cap today at $.50. The result of dilution!
Totally agree with you PB. This is not good anyway you look at it. Unless, you are one of the lucky ones that got the sweetheart deal at below today's close price. (Yes, I know this was put together before today.) Now, what I don't understand is that with all the talk of $5, $10 ,$20 buyouts, JV's etc. on here, why do we have so much trouble in raising money that you give away potentially 15% of THE ENTIRE LAND PACKAGE for such a low pp? Don't these investors know that this is the mine of the future and we are sitting on 30 million oz. just at TPW?
Seriously, something is really wrong with this picture. But, maybe CD has some very happy friends right now.
CDL, thanks for reaching out to Gary but truthfully, he doesn't know much of anything. When he does relay information, he very rarely is completely on target. For a PR guy, he sure doesn't get much good info from CD. How many million shares of stock did he negotiate to get the contract? I believe it was about three?? plus cash. I could be off on that.
Gmoney2, sorry but my post didn't imply that you should hold your shares "tightly". If you want to flip, then so be it. We have bigger issues here with this stock than flippers. What took the momentum out of our sales yesterday were not day traders or flippers.
Destinator, looking at Ballenger's previous history of accuracy in predictions or forecasts I would say do we really want to hear from him?