Golden Minerals Company (TSX:AUM)

[basserdan]

Fwiw, a tale of two posts (from the AUMN board at SH)


some thoughts on todays resource news

posted by GWR1 on May 18, 12 12:37PM

I was expecting more. It seems they have taken a let's start over approach which I had some fear of given what they stated in the press release a few weeks ago and how these sort of merger deals work out with the new guy always dissing the old guy and wanting a low base to build the business from which makes them look better in the next year, I had hoped that AUM management was above this approach, it seems not.

I have been through this before and it takes me back to 2005, not my idea of going forward. I spoke to previous ECU management and they are shocked at this approach. It's like they decided to make this as low as possible and then go higher from here. They couldn't have gotten these numbers any lower if they tried and I'm not happy about it.The cut-off grades and dollars used are also much lower than necessary again suggesting the ultra-conservative approach taken.I understood they were using a different methodology than Micon but this is absurd in my view and Micon is a large world class firm and I don’t even know who these CAM guys are.

It looks like only the veins with drill holes are being used plus some production stopes and mostly only the Santa Juana mine and only level 12-18 with little to no statistical spread, projections and variance allowed. A simply stupid approach for a large resource with the continuity demonstrated time and again at Velardena, in my view, and unbelievably backward when the resource exists as suggested in the potential numbers provided.

The good thing is this is bare bones and grades are much higher and no base metal credits included nor any San Diego and I expect not much if any San Mateo, Teneras, etc. I am now taking the same ultra-conservative approach as the company in now valuing the company having adjusted my target price to a $400 million market cap for a 12 month target, this is down from a 12 month $900 million target. This gives a higher value to the Velardena resource (higher grades, actually mining) than El Quevar because Velardena has 2 producing mills with increased production guidance and no value for any other assets (none for San Diego or over 80 other exploration properties or cash). I'm not happy about this bottom basement resource assessment approach and think it is 100% wrong when you have a huge resource, as resource matters to me as much as 3-5 year production forecast.

They are now using the Great Panther approach, measure only close to production resources and value based on production only. This is one of the reasons I sold Great Panther long ago because they had a tiny resource and weren't building it higher making me wonder if they could build it higher.I know it’s much higher at Velardena having been there and thoroughly reviewing the mine and all data sets and mills and knowing the work Michel/Steve put in along with Bill Lewis from Micon.

I remain fully vested and no intention of selling as there is too much value and upside in Golden Minerals.

http://agoracom.com/ir/GoldenMinerals/forums/discussion/topics/532636-some-thoughts-on-todays-resource-news/messages/1683445#message

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Re: some thoughts on todays resource news

Posted by Silverbull50 on May 18, 12 01:28PM

GWR1 and I have alot of respect for each other and there are often points we agree with and some we occasionally disagree with.

Since 2008, and the JPM annihilation of gold/silver, I have disappointedly felt that the market no longer gave explorers credit for the resource. Case in point, the day ECU reported 431 million silver-equivalent ounces, I believe the stock went up merely 1 cent! Furthermore, some very credible analysts give no credit for the inferred category.

After the massive takedown in 2008, the market suddenly became focused on cash, cash flow, etc. and thus explorers without production were hammered! Fortunately, Michel Roy realized the necessity of obtaining the Hecla oxide mill, even as costly as it was to the stock (Thanks to Blackmont's corrupt sales desk and hedge fund partners in crime).

Now, focusing on this Valardena resource report, it is my understanding that Micon allowed a very wide 400-500 meters inclusion to a drill hole, whereas CAM only allowed 100 meters. It is a different methodology and I'm told by mgmt that most engineering firms are more conservative like CAM.

Management makes it very clear that one study is not right and the other wrong, just a different methodology. Management is also very clear that they KNOW the resource is huge and that there will be production from Valardena for decades. Perhaps all of the 431 million ounces are there on top of the 1/2 billion "potential" that Micon included. So, this may all be moot! However, it could not have been included in this report without drilling many more holes and spencing millions of precious dollars. This is also why management abandoned drilling the Massive Sulfide Zone--it would be expensive, it would not have been available for production for another 10 years, and the market probably would not have given any credit for it.

Management realizes that all the market cares about is production and cash flow. So, instead of spending money on additional drilling, they will put every dollar toward Valardena's production.

Lastly, I still believe that Gilder Gagnon has been the major seller this week and is probably cleaned out. Since they have been selling for a year now, I don't attribute this last million share sale to any "knowledge" of the pending resource news, however one never knows what the shorts might have ascertained. My guess is that the company was planning on delivering the report by the end of the month but was advised to submit the PR immediately with all the volatility and inquiries.

I'm glad it is out and anxiously await production enhancement, supported/funded by property asset sales. This progress will drive AUMN back up much higher.

Silverbull50

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