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If significant work is ongoing at the Mill then there must be contractors. All the contractors and tradespeople I am familiar with work for cash; restricted shares do not put food on the family table. The natural conclusion is that there is a middle man accepting shares and selling them to pay the bills.
Many of us also are of the opinion the company creates new shares on a daily basis to meet ongoing expenses and salaries.
Many of us did not fully understand how the loan discount works until your explaination a couple of days ago. Certainly this process does partially explain the ever increasing numbers of shares hitting the market as those who loaned the company money unwind their positions.
You have been around long enough to know very well that was a temporary interruption of Guyer's salary payments; about 14 months. Used as an excuse for a massive award of controlling "B" shares to Guyer without a shareholder's vote. After gaining control he had his salary resumed.
Re: Your point #3.
SanBruno; you should check the capital structure given in the 10K's. "B" shares have all the votes and thus constitute the "Board" that decides salaries, benefits and bonuses; and the largest "B" share holder is Guyer himself.
Incentive is in the wrong place, IMO. Guyer is no spring chicken. Working this investment out to include exploration and mining will take years if it ever happens; but annual salary of $300 K is guaranteed as long as dilution continues.
Sanbruno, there seem to be no informed answers to your penetrating and business savvy questions.
The mining properties in question have been inactive since 1942 and 1965 respectively. What will be the CAPEX to reactivate these; and permitting, safety/OSHA regulations and training for reactivating same; no answer.
What are the companies proven ore reserves? No answer; not even in the 10K and 10Q's. The CAPEX and operating costs to extract the undefined resources is also unknown. IMO, if there were proven reserves per SEC regulations CGFI would trumpet these on the 10K and thus be in a better position for conventional finance and a higher PPS.
As you say, not to be critical but one good answer would add much confidence.
Your math is good enough.
A better way to express it might be: Anyone who bought $3250. worth of stock when it was at $0.65 (5000 shares)now has $0.02 today. Or maybe $0.03 now.
Not sure anyone has been around that long...lol.
Guyer's B share windfall was created by him at a time when he only held about 10% of the "A" shares. So he gained absolute control of the company without a shareholder vote; just a board of directors vote ramming it home at our expense.
Not saying it was wrong of him to do so; must have been OK'd by the CGFI incorporation papers of Nevada?
The Form 4's you reference are required for sale of his stock acquired as bonus awards, retention incentives, stock purchased, etc. But Form 4's are not required for stock he received in lieu of salary.
He is legally clean with the SEC in all his stock sales, those he reports and those he need not report.
So now Guyer is Santa Claus? I don't think so.
Stock received in lieu of salary is fully taxable income by IRS rules. I doubt Guyer gets $300,000. in stock every year; pays the income tax on it; and never sells any.
"A" shares received in lieu of salary are exempt from Form 4 SEC reporting because the "A" shares are not control shares. Another benefit of Guyer setting up the "B" control shares for himself.
As many have said, Guyer is a very smart man. But he is not Santa Claus.
Unfortunately my Nov. 9th prediction has come true; per Post # 58240.
CGFI was $0.10 on Nov. 9th; now $0.02 by Christmas. Bad for the Longs, good for Flippers and Shorters.
I agree; massive dilution today.
Whatever the mines-to-be value may prove to be, that value cannot overcome this massive dilution IMO.
If it all shakes out as planned;
I'd bet it will take 4 years and the full Billion shares to bring the mines into production.
I think Guyer has a dual strategy.
(1) If the mine and mill can be profitable, take the company private before selling out. 85% of "A" shares are already in insider hands. Public shares have no strength as minority shareholders and will be forced to accept PPS as whatever "B" voting shares decide.
(2) If profitability cannot be achieved, then continue to dilute and collect salaries and bonuses.
Why expect more updates so soon? The 10K is quite complete.
Including the Fearn deal; 85% of "A" shares are held by insiders, with further shares authorized for employee stock compensation plans. And, 90% of "B" shares are held by insiders who hold all the voting power.
IMO this is a strong positioning for taking the company private; especially if their plans for profitability are successful.
Whether or not and when these shares can be sold is avoiding the main issue. No financing is created without claims on assets. $3,000,000 to be paid out in Jan. plus 40-odd Million new shares are a huge claim on the assets and a claim on any future profits of the company. This is a much larger claim than the existing 5.5 Million shares that are now in public hands.
How will the $3,000,000. be raised? Selling another 500 Million shares perhaps; or issue another 500 Million restricted shares? Will a private investor be holding a huge chunk of the company asset value or will it all be held by insiders? IMO, existing shareholders are being diluted to insignificance.
When you factor in announced plans, the hopelessness of this investment increases. Existing shareholders are under the bus, IMO.
Existing O/S about 5,000,000 publicly held shares. Voting strength less than 5%.
By January 6th, 36,000,000 new shares to Steve Fern.
By January 6th, $3,160,000. to Steve Fern for purchase of various mining claims including Silver Wing. How will the money be raised; by selling more new “A” shares at $0.10 and lower, of course.
Huge cash needs likely requires selling 100,000,000 new “A” shares. Existing shareholders voting strength reduced to 1/4 of 1%. PPS maybe $0.02.
More shares to be issued, up to 1 Billion, to complete the Mill renovations and invest in starting up a 70 year old mine. PPS drops further.
This is a brand-new company share structure; CGFI should be renamed Guyer and Fearn enterprises.
Agree, huge share dumps today.
To get the money Guyer needs for his January asset purchses he will likely issue 200 M more shares. This could cut PPS to $0.02 by Christmas. IMO.
Seems like Guyer is still free to get financing through a "B" share exchange. Taking on a partner in exchange for valuable voting shares.
It is insurance against further decline in PPS. For a premium you purchse the right to "put" your shares to someone else for a fixed PPS. So if the stock declines you force a sale at the price you wanted. If the stock rises you get any increase, minus the cost of the premium you paid for the Put.
As NVT suggested; $10,000,000. over 3 years just to try and find the gold and put in infrastructure. For one mine.
A subcontractor will want big money like this up front, plus his 3 years of profit. Or would you try to pay him time and material until he finds the gold? That sounds like a license to coin money and find little.
IMO the inactive mines around the POW have the same problem; finding big money upfront to invest underground.
Your impression makes sense to me.
If Guyer has the funding he needs, this explains cancelling the increase in A/S. And now the R/S discards existing shareholders as not being necessary to his plans moving forward.
But what will the deal be? Stay tuned...
So, in a buyout scenario (I'm learning here) WHY would "A" shares have any value? Would not "B" shares have many, many times more value?
LeGoose, will this R/S also affect the voting strength of A and B shares?
On the surface of it, it looks like "A" shares total voting strength is reduced to 7,000,000 votes. While the 50 Billion "B" share votes remain in place. If that's the picture, we know who owns this company and who can get the best price for his shares.
From the funding facility plan of 2010; the Institutional Investor gets restricted shares in exchange for the loan. The old formula was either 1.3 or 1.42 times the cash value of the loan. So, for a $450 K loan that is somewhere north of 6 Billion shares. Totalling 20 to 25% of O.S.
This is IMO only; the PR does not make the funding formula clear.
By rough calculation...$84,000....PEANUTS!
Actually if you check the 10K filed with SEC, Guyer paid himself $250,000. last year plus a $70,000. bonus. $320,000. annual salary. By rough calculation, that is 12 M shares dilution every trading day.
There is no other source of income to pay it...
I agree with AK's analysis.
No need for a R/S once the mill is operating. A R/S only makes sense to raise more capital through more dilution, and if the mill operates profitably there should be no need for more capital.
Those waiting for a share buyback should consider it a poor use of hard-won capital, and that capital is better applied for mining and exploration to grow the company instead of buybacks.
So IMO both a R/S and buyback unlikely. The PPS will be whatever investors are willing to pay for existing shares and that PPS will be based on company performance.
LtC.; very true statement. Mr. Anderson is better advised to stick to just his facts and analysis; discarding personalized commentary intent upon trashing those who may disagree with him. People should expect a P.E. to produce a professional analysis with personal feelings left out.
I do not find his P.E. registration listed as valid for practice in Colorado. This may well weaken his standing and conclusions in the matter.
bobhwang: Guyer maintains control through his supervoting majority of "B" shares. If some investor had 100% of the "A" shares that person takes nobody out.
Check the 10K SEC report.
Shareholders meetings are not needed; "B" shareholders control the company with a supervoting majority and no matters are submitted for "A" shareholder votes.
Perhaps a cow but we do not see any cash to shareholders yet. IMO all cash will be consumed in operations and salaries.
Over that last couple of months; maybe half the time.
About 2.43 B. for Guyer; 750 M. for Rice. However, some are restricted for several more months. More significant short term is their monthly salaries coming out of dumpage of new A/S. IMO.
Give us the results of the ground ...
Maybe waiting to cut AMNP in on the deal first. Or, no results worth announcing. IMO
Can someone explain...
IMO; Sales at .0001 are to raise cash for company operations and salaries. And, investors who have loaned money to the company in exchange for stock recovering their cash plus profit after sales restriction expires.
Any asset of potential value not nailed down or pledged to others walks with him. Accrued salary not taken is payable, and his separation agreement is payable. Since the company has no money the assets walk.
Lonibee; just my opinion but I agree
with your views. Outside financing to facilitate production and income from the Mill and development of any mines is going to demand a feasible plan of action to achieve positive cash flow for paying back the new outside investment. If it is developed as a separate project with outside financing this has a good chance of cutting off any participation in profits from current "A" share investors for many years.
Sure, and if she has a good lawyer that is what will happen.
Maybe CGFIA should buy her out. Should cost only 2 B shares.
It seems to me the potential of the Mill is 300 TPD (Permit, intermittent operation) and 300 operating days/yr. = 90,000 T/Yr. At 0.5 oz/T that is 45,000 oz. output per year. But at what profit margin? And what's the cost of mining and delivering the ore to the Mill gate?
Double up your holdings for 31 days; then dump the original shares. You will establish your loss for tax purposes and still hold enough shares to ride off into the sunset for whatever happens.