By: dryreef
12 Feb 2007, 04:16 PM EST
Msg. 40022 of 40029
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Just called the Golden Phoenix office,
thinking I'd chat up Rob for answers to several questions that were bugging me, but he’s out of the office until next week, so I spoke with David Caldwell. So glad I did.
I thought I'd try and limit my call to maybe 10 minutes and 25 passed before I knew it. David was very easy to talk with, and needed no prompting to delve into the details. I was scribbling madly, so this reportage doesn't qualify for quotation marks.
I asked David:
1) What’s the timing on the mediation/arbitration process, when will we likely see a final outcome, and what are the issues in dispute?
David said it took him a while to get WEX to even acknowledge (in writing) that there was a dispute over their non-payment of operating expenses (even though they had acknowledged it in a PR). According to the terms of the LLC, that acknowledgement was required before the next step could be taken, which was a face to face meeting within 10 days of documenting (acknowledging) the dispute.
Of course, the face-to face didn't happen, so the next step was for WEX and GPXM to trade lists of acceptable mediators. WEX now has GPXM's list of mediators, but there's no indication that WEX will depart from its historical record of being unable to make a decision. They have not responded with a choice of acceptable mediators.
David assured me that WEX's history of excessive delay on critical decisions wouldn't be a factor in resolving this dispute. He said that the processes for mediation and binding arbitration spelled out in the LLC didn't require that the mediation process be exhausted before initiating binding arbitration. He said GPXM was pursuing both mediation and binding arbitration in parallel, not series. He expects the process (binding arbitration) to be completed within two or three months.
There are basically two issues comprising the dispute. First, Article 7 of the LLC gives GPXM the right, upon WEX’s failure to cure their non-payment default on 40% of operating expenses, to appropriate another 9.5% of the revenue stream. Second, as part of the "goodwill" fostered to form the LLC, GPXM agreed to drop it's right to pursue legal attachment of 60% of the stockpile proceeds.
WEX’s default also brought that chunk of cash back into the poker pot.
2) Is WEX still contributing its 40% share of production expenses, or has that been reduced to 31.5% after their December default?
No. The LLC suspended cash calls at the end of December. They were no longer needed to fund the LLC. It is now being funded by the mill proceeds. Neither WEX nor GPXM are funding the 60/40 (or 69.5/31.5) split in operating expenses because operations have reached a self-funding level. The LLC has generated approximately $500,000 over the last 1-1/2 months, which has been equal to its burn rate.
And then David lost me... because I’m not as familiar as I should be with ALL of the costs associated with running GPXM’s enormous portfolio. I was confused about why, if our burn rate equaled our production expenses, we still needed Fusion financing, so I asked.
3) Why are we still tapping Fusion to fund operations if we’re meeting our burn rate, and when will we be finished with Fusion financing?
The LLC requires a funding "buffer" of one month’s operating expenses, before ANY revenues are apportioned to WEX and GPXM, so the LLC will be sequestering all revenues until that condition is met.
GPXM also has legacy costs, and other expenses not related to the Ashtown JV. It will probably be toward the end of the 1st Quarter before there are any disbursements from the LLC to GPXM and WEX, which will signal GPXM's weaning off of Fusion financing.
As we spoke, it seemed GPXM’s entire Executive team was engaged in finding an alternative (and more attractive) financing vehicle. David acknowledged that Fusion was getting shares at a 7-1/2% discount to the market – which effectively capped us (and chapped them...) so, it’s a big priority to heave our Fusion ballast overboard.
4) When are you guys ramping up a PR campaign?
We already have, but it’s pretty subtle so far. Our intent is to maintain the same profile, chronicling what we have accomplished and explaining our business plan to increase shareholder value. As we ramp up production and revenues, along with the developments additional cash flow will allow, that value will become apparent.
AI
