RE: RE: DMM a local company'Now how is it that Elipe is actually producing gold without an exploitation contract? The answer clearly lies in that Elipe is being given some leeway by the government. It is not being mentioned at all in the recent news releases since technically it is bypassing the official notification at present.'
Elipe is definitely being given leeway by the government. Recall that Washer et al also did an excellent job when the mining moratorium took effect in 2008 by negotiating a relief in order to continue to move forward on mine development activities. The plant is located in a very mine friendly region with a strong history of mining with many artisan miners, so I believe this helped their cause.
You highlight the delicate balancing act that the company is likely having to perform by communicating to shareholders on one hand and negotiating with government officials on the other. During this process, the company has lost a lot of credibility in my eyes (and, by virtue of the share price, many others), primarily but not exclusively for the following reasons:
- Continued promises of higher production despite the moratorium. This has lead to miss after miss after miss.
- Very slow mine development.
- The last press release stating formal negotiations had started when they had only submitted an application to commence the process.
As a shareholder and part owner, the company’s projections on mine development now mean nothing as they have shown and incredible aptitude at over promising and under delivering. And how can any comments regarding the negotiating process be considered seriously when the company views application submission as the start of formal negotiations – by extension, when the Ministry calls for clarification on their application, the company would likely classify this as being very actively engaged in the process.
Given total loss of credibility, we must now rely on the statements of others, such as Kinross, to get a sense for the process. I have no idea how involved Dynasty may or may not be at this stage (likely not very), but I am hopeful they will be able to get something done once the first few contracts are signed. I will give the company credit for doing a good job at keeping the ball rolling through the moratorium, so I have some hope that they may get a deal done this year, it could even come earlier rather than later. And that’s the problem, a lot of uncertainty in the process, but it would appear that we are finally getting closer to some value being unlocked. Once the first few contracts are signed I believe there will be some upward bias on the share price.
Regarding OTTO, as a longtime subscriber I can tell you that he is straight shooter, not afraid to call a spade a spade, and is not motivated by any ulterior motive other than to get the call right.