I will go down to the BLM office in Boise on Monday and
look up what properties this Laoshan Group owned, or what
royalty properties they controlled. It might be in the
Owyhee County Recorders office, if not in the BLM records.
I love a mystery, especially one that is unfolding. I
feel like Sherlock Holmes...just give me a pipe and a
coat.
Talking to my buddies over the weekend, they said that it
appeared as though someone was buying the royalties on the
center of the mountain. The rumors have been DCUT, which
is why I came to this board in the first place, and the
press release tends to confirm those rumors. They said the
price was high. The center section is where the main gold
and silver veins are. Whether DCUT bought the center section,
I don't know, but the records should provide a clue.
The DCUT press release of last week stated that they were
doing a recapitalization. This would usually mean some sort
of 504 in return for capital. I would imagine that there
is a connection between the purchase of the royalties and the
need for an infusion of capital. From what I have been able
to glean from the SEC records on DCUT, there were a lot of
institutional investors in DCUT before it failed. Could be
that these guys are trying once again to put the broken
pieces back together again. It's a shell, but not a reverse
merger, from what I can tell.
From what I have been able to get from mining people is that
War Eagle has lots of gold. However, it is an underground
operation and therefore expensive to develop. Only someone
with deep pockets would attempt it. This means that Gold has
to be at a high enough level for a long enough period to
justify it. The last time gold was at $ 650 was 30 years ago.
It's only been in the last year or so that gold reached a
level where it looks like it could be feasable.
Kinross bought the other two mountains after the last peak
in gold, and they are open-pit operations. Open-pit is a lot
less expensive to operate.
Now, maybe with the price of gold elevated again, and Kinross
being right next door, and their open-pit mines nearing a
mature stage, and with the technical skills and the money to
do it, maybe they are looking at War Eagle to expand. It
would make a lot of sense. I saw an awful lot of activity and
rigs this weekend for it to be mom and pop activity.
Again, however, with that said, a full-scale operation on
War Eagle would take years to accomplish. This might explain
the position of Laoshan selling the royalties. If enough
money and stock was offered, they might have decided to take
the offer and run, letting the new owners wait for the checks
down the road, getting an extra kick from the stock. There is
always a risk that it doesn't happen, and a bird in the hand
is better than two birds in the bush.
Maybe Laoshan is getting stock in DCUT. This might make
sense. A publicly traded company owning the royalties would
force Kinross ? to pay a higher premium to get the royalties
at a later date, vs dealing with a private entity. Maybe
Kinross offered Laoshan money, but it was not enough, and
it pissed off Laoshan. Maybe DCUT offered both money and
stock as a sweetener.
Who knows ? But, sure is getting interesting.
