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Not Heartless - smart! Had they not done that and people weren't buying the price could be under $.005
We've all stated on this board that the company needs to raise money to fund restarting the mill. So why is anyone surprised that they are raising money? I'm just happy that they're trying to minimize the damage.
The pps right now is purely a function of supply and demand. Magna Group probably got a good discount on their shares and were able to turn around and sell them for a quick profit. Looks like they blew their supply wad today so now the demand can take over for a while.
It seems to me that the "Reclamation Bond" was to "reclaim" the damage done by the previous owners of the mill and the bond money is to ensure that the work gets done. Once this damage is corrected the bond money should be returned.
As M_T points out in post #61573, a new bond will probably be required for the mill's new dry stacking method for disposing of their tailings once production resumes. This is separate from the reclamation of the ponds which were used by the previous owners for their tailings disposal (which ultimately led to closing the mill) and for which the $500k+ bond was posted. Since the new method for disposing of their tailings is considered to be environmentally freindly and far superior to the tailing ponds, there should be a much lower reclamation bond requirement (or none at all).
See Press release on 7/17/12
I'm simply restating info that the company has released. They feel pretty comfortable that there's at least $350 million worth of ore in the ground and that there could be as much as $1.5 billion. I've never claimed that this is all profit
Magna group just invested $100,000. I doubt they did this without a lot of due diligence.
I think you're just re-stating the obvious. A cease-and-desist was placed on the mill under the old owners. CGFI has been trying to obtain a new permit to open the mill. Until they get the new permit and satisfy all of the Environmental Protection Faculties (EPF's) the cease and desist order would naturally stay in effect. This is the reason they have a $500,000+ bond placed with the DRMS (i.e. to ensure that the work gets completed).
From the 8/29/12 Press release:
"Phase I of the reactivation process consists of the Colorado Division of Reclamation, Mining, and Safety re-certifying the nine Environmental Protection Faculties ("EPFs"). The first EPF to be re-certified is the "Ore Stockpile Area." The half-acre Ore Stockpile Area functions as the receiving and temporary storage facility for ore delivered to the Mill by heavy trucks prior to processing. The Stockpile Area holds approximately 6,000 tons of ore. This means that about 14 days' worth of processing are always queued and ready, ensuring that the Mill runs continuously. Completing this location first allows ore to be queued and staged even while work continues on the other areas. Therefore, the first ore for processing will be in-place and ready to be crushed.
"The re-certification process includes removal of any remaining dump material, which will expose the previously constructed 12-inch thick clay base liner. The access ramp will be re-graded and re-contoured to meet drainage specifications and the pad base will be re-compacted with a smooth drum vibratory roller. The clay base liner will then be tested to ensure that the liner meets low permeability specifications. The test includes assurance of a 95% Proctor rating. The "Proctor test" is used to estimate the maximum density of soils. A new feature of the facility will be a lined evaporation pond that will catch and store any stormwater from the Ore Stockpile Area, ensuring that no stormwater run-off from the Ore Pad Area will be released to the environment," stated Steve Fearn, Chief Engineer for Colorado Goldfields."
Magna's 7 million shares works out to roughly $100,000 at recent pps. They may be the the group of New York private investors referred to in the Q's and my post #61475 and this could be the remainder of their commitment.
"...then why is the market cap only 1 million ?"
Because until they actually produce revenue and/or the estimated resources are audited and documented on an SEC report the market treats it all as speculation.
The "Measured and Indicated" resource so far:
Champion Mine: $231,593,122
Silver Wing Mine: $120,000,000
Total: $351,593,122
But also interesting is the "Inferred Resource" in the report plus the estimates for the other two mining properties:
Champion Mine: $1,041,130,614
King Solomon: $ 20,000,000
Uranium Mines: $ 50,000,000
Total Estimated: $1,111,130,614 + 351,593,122 = $1,462,723,736
i.e.: We know we have about $350 million but we might have as much as $1.5 billion in ore.
From my post #60760:
"The official OS on the boards as of today is 73,167,462. Of that, 260,000 shares can not be sold until at least September 2014 with 36,000,000 restricted until 2016 (and we're not sure about another 6 million+ shares). That leaves roughly 37 million shares float. ...
Yes, we'll see more dilution before we go live with the mill. But anyone predicting we'll go through 1 billion AS by the end of the year is smoking something other than tobacco."
567 just posted that the OS is now 86.9 million. I'm not sure of his source but if true, the current float should be about 50 million shares.
I believe it was pointed out in a previous post that the $500,000+ bond should be refunded once the reclamation work is completed. This should provide plenty of funds to complete the mill startup.
The March 1 deadline for the payment on the new mines might be just a milestone placed by the seller to insure that progress is being made toward opening the mill. Since he also is getting millions of shares of stock, he has a vested interest in making sure that the company is successful. I wouldn't be surprised if the deadline is moved up again to perhaps July. This way the seller can back out at various points if he feels that satisfactory progress hasn't been made on the plan.
I think that there is enough ore being mined in the area that an operating mill should have little trouble finding customers. Especially since they can extract several different elements from the same batch of ore. The proximity to various mines will also lead to efficiencies in transportation and lower costs for the mines. Right now there's very little debt to work off since they were able to buy an operational mill on the cheap so their profit margins should be better than most competitors.
My only concern on financing is where the $3 million + will come from on March 1 to complete the funding for the new mines. One possibility might be differing the due date for a year until the mill opens.
As far as funds to open the mill, I just found the following in the last 10Q:
"The Company continues to explore sources of additional financing to satisfy its current operating requirements. During the fiscal year ended
August 31, 2012 and through November 30, 2012, the Company entered into funding arrangements with an institutional investor (the “Delaware
Partnership Investor”), under which the Delaware Partnership Investor has provided convertible debt financing to the Company of $429,000,
($52,000 during the three months ended November 30, 2012) (Note 7).
During the fiscal year ended August 31, 2012 and through November 30, 2012, the Company also entered into three funding arrangements for a
total of $153,000 ($53,000 during the three months ended November 30, 2012), with a group of New York private investors in the form of
convertible notes (Note 7)."
If I'm reading this right, as of the last quarter, the company had an open line of credit with these investors for $429,000-$52,000 + $153,000-$53,000. That's about $477,000 available as of Nov. 30 2012. That explains why the company stated that they anticipated enough funding from these investors to open the mill. At $.02/share that would indicate about 24 million shares (some of which have probably already been issued since November). Except for completing the funding on the mines we're still looking at closer to 100,000,000 OS before the mill opens rather than 200,000,000. As they get closer to opening, they can drive up the stock price with well timed press releases and thus reduce the cost/dilution. Doing so prematurely would just lead to bubbles with the price coming back down. IMO this would be a reasonable plan.
Assuming you're correct and worst case we have 200 million shares next year and Guyer's projections of $50 million revenue are right, at 10 times earnings the stock should be worth roughly $2.50/share(50,0000,000/200,000,000=$.25x10). Typical multiples in this industry are closer to 20 EPS. Consequently, if all goes according to plan we should be at least roughly worth $2 to $5 per share within the next two years.
The only thing I can figure is that either the transaction was trying to fill an AON (All-or-Nothing) trade or someone put in an Ask at .0128 (perhaps by mistake). I've seen the transaction skip over higher bids before. I think it goes to the MM with the closest high bid to the ask.
Hi Bruno,
I would rather have them report on tangible progress as it occurs than announce plans that could change and disappoint. Giving a detailed implementation plan and then finding that they can't report completion of each step on time can only lead to loss of faith in the company and it's stock. There are too many variables that can slip the schedule (or even move it up) between now and September. What does it buy them to announce your details. Sure the stock may spike up a bit but it will just as likely come back down again until there is true value/revenue to be shown. If I were management I would be keeping a lot of my plans close to the vest until they could have maximum lasting impact on the stock price.
Hey Akula,
I finally filled my order today at $.0131. The price can go up now, my average cost per share is down to a little over $.06. The next 10Q should be out by mid April. I don't expect any big moves until then. Although moving up over $.10/share on some good news wouldn't surprise me.
Over 1.5 million shares traded during the last hour. Looks like someone was raising some cash.
Hi Bruno,
You keep saying CGFI has a low level of transparency for a junior mining company. I disagree. For a company that has yet to generate revenue I think that they have been more transparent than most. If you don't believe me, check out how many recent news releases and timely Q's you can find on BRZG, TAON, NSRSE, HMNC and GDSM just to name a few.
One of the main reasons I'm still investing in CGFI is that I can do a better job of DD than on any other pre-revenue mining company.
I don't have a way to capture the screen but here it is long hand:
Bid
ETRF 10,000 @.0175
NITE 10,000 @.0163
PUMA 10,000 @.015
UBSS 90,000 @.014
MERQ 10,000 @.013
ATDF 32,400 @.012
ASK
PUMA 15,000 @.018
NITE 10,000 @.018
VFIN 10,000 @.019
ETRF 71,000 @.022
ATDF 20,000 @.025
MERQ 10,000 @.029
Keep in mind that each Market Maker only shows their highest bid and lowest ask (e.g. I have a bid at .0151 for 40K shares with NITE but it doesn't show).
I said in my post that I was giving a rough estimate of the convertibles without looking up the actual numbers. I was estimating the discount but my math was off a bit. Since you raised the issue,
$84,636 + $151,386 = $235,022
$236,022/.015 = 15,734,800 shares
The point I was trying to make is that this number is not that significant when you consider that over 1,000,000 shares are traded each day. That 15 million shares is owed to several different parties and wouldn't all be traded at the same time. Each party can also trade all or any part of their shares at any time.
Hi Bruno,
I wasn't trying to be exact. Just a rough estimate based on about an $85k balance on the Q. The discounts range from 30% to 50%. Ten million shares at .015 pps gets you $150,000. I figure that should more than cover it. Point is 10 million shares give or take is not that much.
Nevertheless, I agree with your other point that unless there is new news we won't see much change in the pps. Right now people are just speculating but see a bargain around this level under the assumption that the price will go up when the mill produces revenue. Maybe if they can price in the asset value of the Silver Wing or any of the other properties based on the NI 43-101's we might see some earlier movement.
No! I was tied up getting my level 2 back (which I finally did about 3 hours before market closed). Anyway, I didn't want to buy while I was half blind so I waited. Good thing since the pps went up to .021. I put a bid in at .015 for 40K shares (after it had already dipped) and waited. Hopefully, it'll fill tomorrow. I have another bid in at .0125 if it dips that far. We'll see. At worst case I'm holding up the bottom
Assuming the lenders sold off all of their convertibles at current pps, even with the discount, we're looking at less than 10,000,000 shares to pay off the entire debt as of the last Q. With an average volume of over 1,000,000 shares a day, that could easily have been absorbed in a few weeks. I'm simply pointing out that for all we know, there may be no convertible shares at this time. Alternatively, as I've pointed out before, Guyer may be using this as an open line of credit and issuing more convertibles as needed (and only when needed).
I just learned that QuoteStream cut me off today because they found out I was a Registered Rep and I wasn't paying the professional rate (even though I only trade for my personal account). Anyway, it's a bitch trying to trade without level 2. Kept moving my trade up and still missed it. Hopefully it will dip back down long enough on Monday.
Thanks for the info.
Thanks Akula,
I'm still working blind on quotestream. I put in a bid for 140,000 shares at .0125. Not trying to drive price down, just trying to get a bargain.
It looks like only the investors have been trading the past few days. Not much supply and low volume. I think vendors, lenders and employees have been driving the price down lately just trying to get some cash. We'll see how long that continues. I think we'll be trading between .01 and .03 until the next Q or until there's some new news. This is a good demand level.
My Level 2 access is down this morning at QuoteStream. Does anyone have level 2 access? Please post if possible.
I agree with your analysis ficose. The main point I was making was that if they are able to pay off the notes before they convert it results in less dilution even if they somehow sell shares to raise the cash. Like you, I believe Guyer has been tight with his financial fist and only raising funds as needed to keep moving forward.
I'm not saying that we might not end up with 150 million OS before the mine opens, only that I don't currently see that as inevitable based on what we know today. Unless the pps goes sub penny and stays there and/or there are other surprises, I'm still thinking we'll be closer to 100 than 150 million OS by end of summer. 900 million AS represents over $9 million at current pps. That's a lot of flexibility and I doubt a significant part of that would be used before the mine opens.
The level II screens don't really show the true size of the bid and ask. People can hide the number of shares. That .0135 ask can actually represent 500,000 shares.
Correct me if I'm wrong but the remaining balance due on those notes, if paid in cash, would be $84,636 as of the last 10Q (see post #60746). The discounts are the additional shares that would be expensed if the notes converted according to the conversion agreement. For example, at a 30% discount and $1 pps, your $70,000 loan would be converted into 100,000 shares. 30,000 shares - or $30,000 - is your unamortized discount.
If they have paid off the convertibles and have indicated that they anticipate that the same funding sources would help them through the mill opening, they may very well have an understanding with those funding sources that they could go back for more money if certain conditions are met.
Assuming that you're correctly estimating $40,000 per quarter to to survive, that would only be 4 million shares at $.01 or 2 million at $.02. We can only speculate at this point on the cash to complete the mine deals. Perhaps it will be renegotiated to a later date, perhaps they can get a conventional loan using the "proven" ore in the mines as collateral, perhaps convertible loans with a restriction beyond the mill opening date (at which time it could be paid in cash). We just don't know.
In any event, issuing restricted convertible shares, with the expectation that the loans would be paid in cash after the mill opens would seem a reasonable way to fund the operation without significant dilution. You're predicting we may go to 150,000,000 shares from the current 73,000,000. I'm saying it should be closer to 100,000,000. Realize that an additional 50 million shares at $.01 per share is about $500,000 (or $1 million at $.02 pps) between now and the mill opening. That's quite a burn rate.
Correct me if I'm wrong but the remaining balance due on those notes, if paid in cash, would be $84,636 as of the last 10Q (see post #60746). The discounts are the additional shares that would be expensed if the notes converted according to the conversion agreement. For example, at a 30% discount and $1 pps, your $70,000 loan would be converted into 100,000 shares. 30,000 shares - or $30,000 - is your unamortized discount.
If they have paid off the convertibles and have indicated that they anticipate that the same funding sources would help them through the mill opening, they may very well have an understanding with those funding sources that they could go back for more money if certain conditions are met.
Assuming that you're correctly estimating $40,000 per quarter to to survive, that would only be 4 million shares at $.01 or 2 million at $.02. We can only speculate at this point on the cash to complete the mine deals. Perhaps it will be renegotiated to a later date, perhaps they can get a conventional loan using the "proven" ore in the mines as collateral, perhaps convertible loans with a restriction beyond the mill opening date (at which time it could be paid in cash). We just don't know.
In any event, issuing restricted convertible shares, with the expectation that the loans would be paid in cash after the mill opens would seem a reasonable way to fund the operation without significant dilution. You're predicting we may go to 150,000,000 shares from the current 73,000,000. I'm saying it should be closer to 100,000,000. Realize that an additional 50 million shares at $.01 per share is about $500,000 (or $1 million at $.02 pps) between now and the mill opening. That's quite a burn rate.
I was making the point that the company may have sold shares to pay off the convertible loans. They would need to raise $84,000 to do that and that's approximately the value of shares traded last Friday. There may not be a formal line of credit but the company has stated before that they anticipated that they could go back to the same funding sources to carry them through to the mill opening.
I'm not sure about the reporting requirements for companies selling shares but they may be different for development stage companies. They would at least have to report new shares on the Q's and K's which they have been doing. They have stated in their reports that their reliance on selling shares to fund operations is one of the factors that may result in dilution.
Back in December (post #58965) I stated that there were about 83,000,000 commited shares (add anther possible 10 mllion in convertibles). The latest outstanding share count is about 73,000,000. Unless there's another major mine purchase or unforseen expense, I think we can get to the mill opening with about 100,000,000 shares. But even if we have to go to 150 million I think we would still be in very good shape.
Did you see my post #61061? Basically anyone with a Series 7 license can register as a Broker-Dealer and short whatever they want. In fact, any Registered Person (someone who's licensed) must register this way to do business unless they are working for another Broker-Dealer.
Some evidence that Fridays pps may have something to do with the convertibles. The volume shorted last friday (5.8 million + shares sold) was only 317,000 shares (5.41% of total).
The carrying value of the convertible notes listed on the last 10Q was $84,636. They bear interest at rates ranging from 6.25% to 8%. The value of shares traded on Friday was $88,500 (from 84 trades totaling 5.8 million + shares). Curious? Could the company be paying off the convertibles with cash from stock sales to reduce the amount of dilution that would be necessary if they converted at discount. Are they perhaps freeing up their line of credit with the convertible investors? It would make sense to sell into higher demand to avoid taking the pps down with a large sale. Just speculating.
"- And of course I remain curious how you can short a stock like this, no one has ever answered which brokerage firm I can go to and short this stock"
I have a Series 6 license (allows me to trade mutual funds) and had to learn most of this but unfortunately I've forgotten a lot. Broker-Dealers can do short sales even if you can't find one who'll do one for you. As I said before, I suspect you could execute a short sale with a Trade Station account.
Nevertheless, anyone with a securities (Series 7) license can register as a Broker Dealer. They would have to incorporate and register with FINRA and their state securities regulator (each state has different licensing requirements). When a Broker Dealer operates as a broker he buys and sells securities for others. When he operates as a dealer he buys and sells securities for his own account. There is no requirement that he operate in both capacities. If a dealer buys and sells the same security he is considered a market maker.
Broker Dealers must conduct business with a high standard of ethics and be members of an SRO (Securities Regulatory Organization) - in this case FINRA. Among other things, "the SRO rules also include a duty of best execution. For example, FINRA members must use "reasonable diligence" to determine the best market for a security and buy or sell the security in that market, so that the price to the customer is as favorable as possible under prevailing market conditions."
The following information can be found at this link:
Guide to Broker-Dealer Registration
6. Restrictions on Short Sales (Regulation SHO)
A "short sale" is generally a sale of a security that the seller doesn't own or for which the seller delivers borrowed shares. Regulation SHO was adopted in 2004 to update short sale regulation in light of numerous market developments since short sale regulation was first adopted in 1938. Compliance with Regulation SHO began on January 3, 2005. Some of the goals of Regulation SHO include:
Establishing uniform "locate" and "close-out" requirements in order to address problems associated with failures to deliver, including potentially abusive "naked" short selling.
Locate Requirement: Regulation SHO requires a broker-dealer to have reasonable grounds to believe that the security can be borrowed so that it can be delivered on the date delivery is due before effecting a short sale order in any equity security. This "locate" must be made and documented prior to effecting the short sale. Market makers engaged in bona fide market making are exempted from the "locate" requirement.
"Close-out" Requirement: Regulation SHO imposes additional delivery requirements on broker-dealers for securities in which there are a relatively substantial number of extended delivery failures at a registered clearing agency ("threshold securities"). For instance, with limited exception, Regulation SHO requires brokers and dealers that are participants of a registered clearing agency to take action to "close-out" failure-to-deliver positions ("open fails") in threshold securities that have persisted for 13 consecutive settlement days. Closing out requires the broker or dealer to purchase securities of like kind and quantity. Until the position is closed out, the broker or dealer and any broker or dealer for which it clears transactions (for example, an introducing broker) may not effect further short sales in that threshold security without borrowing or entering into a bona fide agreement to borrow the security (known as the "pre-borrowing" requirement).
Creating uniform order marking requirements for sales of all equity securities. This means that a broker-dealer must mark orders as "long" or "short."
For further information, please see the adopting release for Regulation SHO, as well as Frequently Asked Questions, Key Points, and other related materials at http://www.sec.gov/spotlight/shortsales.htm.
I would think $5,000 could handle phone, electricity and gas bills for a few months (I wouldn't be surprised if they have their own generator). What other bills do they have? Especially during winter. I think everything else is being contracted. Twenty million shares were allocated for that. They might also have a line of credit with the Delaware and New York investors. They did say, several months ago, that they expected these sources could provide funding through the mill's opening.
LAKEWOOD, CO -- (Marketwire) -- 07/12/12 -- Colorado Goldfields Inc. (OTCQB: CGFIA) (PINKSHEETS: CGFIA) announces that it has paid down a total of $450,000 of the existing promissory note on the Pride of the West Mill through the same funding facility announced in June 2010, leaving a balance of approximately $200,000 plus accrued interest. It is anticipated that this funding source will also assist the Company in funding operations through permit approval and into the construction phase of the Pride of the West Mill. The Company has also received an extension until December 31, 2012 of the loan on the Company's Pride of the West Mill. The loan was originally due to expire on July 1, 2012, at which time Colorado Goldfields would have had to repay the balance in full.
1st SB Partners Ltd., a consulting firm providing strategic advisory services in the micro-cap realm, headquartered in New York City, was instrumental in arranging for and maintaining the financing facility for the Company.
Hey Hemi,
You've been predicting sub-penny next week for over two months. ...and you criticize Guyer for not being on schedule
No company that I know of has ever reliquished voting control of their stock to anybody but insiders. Proxy battles are only possible when one of the insiders sells out to an outside large investor or revolts against the other insiders. If you think that with your piddly investment you'll ever be able to influence a company, you're smoking something.
Yes I lost big time on the RS (about $20K), but everything management has done since I started investing makes sense to me. They've made steady progress on their business plan and delays can be expected when you're trying to get a permit (I anticipated them). Since the RS I've purchased another 300,000 shares and brought my average cost down to about $.09.
I may buy more if I can spare some more change because I still believe this company has the potential to be worth at least $5/share within three years (hopefully a lot more and a lot sooner). If you simply take the $120,000,000 value of the silver wing and divide by the OS the price right now should be about $1.60/share just based on assets. It's being kept unreasonably low by the shorters but once the permit is granted and the mill opens I expect a quick and huge turnaround.
I just found a new article that people might find interesting - "A Short Seller Manipulation Technique Used by OTC Market Makers" You can read it at the following link:
A Short Seller Manipulation Technique Used by OTC Market Makers
Thanks Hemi but...
"when new shares are notated"??
What does that mean? On the big board the market makers are trading their own shares, even if it's done by computer, to keep the trading orderly within a range and prevent sudden spikes. Otherwise a big trade could come through and wipe out all of the "bids" or "asks" Who's putting up the shares/money for penny trades?
People keep talking about market makers. My question is who are the market makers for a penny stock? For most stocks you have large brokerages like Goldman Sachs or Morgan Stanley take on this role. Who would do this for a penny stock and is it a formal arrangement or what do they expect to gain? It would seem to me that a few large investors might take on this role informally. Anyone have any info on this?
Can anyone name a company that is managed by shareholders - I think not. Can anyone even name a company whose management decisions were changed by a shareholder vote? - Probably not! Democracy in a corporate environment is an illusion. Management (or management in partnership with an institutional or large private investor) always controls the voting power. I'm not loosing any sleep over not having the same voting power as management.