Thanks for your comments on the AGM, Jack.
<If trial mining is decided on, would add about 12 mo to dev time.>
<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.>
Did you get a sense on whether GBG will go it alone or bring in a contractor or a partner on Burnstone? Did they talk on capex requirements for Burnstone and whether the total capex of $85M for a dual shaft mine is accurate? Will a mill need to be built or can GBG use an existing mill, or is this mill included in the $85M?
<London listing cost about 700k US, split about half between actual work and bal for guarantees.>
My reasoned speculation is GBG wants AIM/London listing primarily because of Burnstone shareholders. Am thinking the London listing will enable SouthGold shareholders to realize better value on their shares and warrants, will better enable the Black BEP partner to raise funds to finance their 20%-26% ownership in Burnstone, will enable more effective GBG lobbying of S African government on mining issues if shares traded on both continents, and will allow some of SouthGold/Rob Still’s institutional shareholder base from Southern Mining to participate in GBG more easily. Just reasoned speculation…
<The formal part of the meeting had the increased options as the only point of contention. I was the only holder to object but my 129k sh would have needed extra 300k to knock it down. The mgmt 2.1M sh could not vote, and since only another 12% of the holders bothered to vote at all, it carried by a small majority.>
Well at least we tried…, I would have preferred issuing them options at a US$2.00 strike price, that would make them think twice before issuing new PP shares. Actually, I would vote to eliminate management stock options altogether and just give them 500,000 shares each for free as a “gift” with a 5 year vesting period. Then management actions would be more closely aligned with shareholders…
<There may be something to support a primary vein theory. At yesterdays AGM mgmt stated they KNEW it was there. I then questioned them - you KNOW it is there ? - they said we KNOW it is there. Last yr they said they thought it was there so this is a change. They also said talking to Ken Snyder supported this.>
Now that is interesting. However, if they know it is there then why isn’t management buying shares in the open market… All GBG management would need to do is delay Burnstone development for another 18-24 months and they could finance Burnstone via internal cash flow from Ivanhoe ($24M cash flow per year @ $350 POG). If and when GBG can operate on internal cash flow alone and not need further PP’s, believe we will then see the real stock price move upwards…
<Since HL has only 5% of the land JV'd, I asked if there is a plan to get stockholder value from the balance? Theissen said they are laying low on drilling plans until the HL permits are in in Aug, but will get drill permits after that, and can drill both from surface and underground later from HL access. I questioned the right to drill under and they said it is in the HL contract. (If more ore is found outside the JV it is reasonable to assume extra payment at the going rate, but if a main cross vein system develops I don't expect a bid battle as HL has the decline. This may be worth checking out.)>
Agree, this is worth checking out… HL gets a management fee for mining at Ivanhoe, so I would assume that any extra production outside the Hollister area would be subject to that management fee (transportation plus this management fee = $20 of the $133 cash cost, with transportation making up the bulk of this $20 I would assume). Getting the use of HL incline capex development for free, since it is part of the contract, to develop subsequent GBG 100% owned ore is great news...
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