RE: Be patientSorry for the confusion, I was inferring that we will know which way the investment trend is going within the next few weeks. This has been a perfect storm for HRG, what could go wrong has gone wrong, and with the stock being punished I believe it is way oversold and all the bad news is fully baked in. But, HRG management and BOD had better snap to it, and start delivering on even the smallest of sliver of positive news. Baby steps, then we will get the share price recovery and some fiscal confidence will be restored. I believe the stock is trading way below the NAV, and fully discounting any of the future developments. However even if HRG came out with great reserves news the market would not pay much attention because they have not been able to delivered consistently in the past (if at all).
This company is the flip side of Eldorado, Paul Wright knows how to run a gold company, when they make a plan, and they stick to it, and more often than not deliver good/great results. Deals get done, period, no messing around. These guys should take notes!
I spoke with Mr. Whalen yesterday, and I expressed my concerns, in fact I asked him specifically about the equipment issues. In fairness, opening a new mine is a big project let alone two. He indicated that there were breakdowns involving the critical crushing stage/cycle. Various options we explored to rectify the problems, however they could not correct the problems. The equipment issue was also mentioned during the annual meeting back in May. Apparently there are folks on the ground right now who are familiar with the equipment, and can hopefully either fix it or remedy the production output somehow. He indicated replacement equipment requires a 24 month lead time, and cost a ton of cash, so not an option, back to door #1.
I also asked him a question concerning the $900+ cost per oz. If the cost (fixed + variable) / output = cost per oz (less recovery of by products) is correct, can HGR be more specific towards the values? For example, fixed costs are fixed cost, but if the output was 1/2 with 100% of the fixed costs etc, then cost per OZ would double. Did costs escalated to the extreme? He could not answer immediately, but will make the suggestion to other folks, whatever that means.
I asked him if they had talks with K and others, and the cryptic response was "small industry....everyone knows everyone".
So as far as I can tell HRG has two things going for it. What they don’t have it lots of time to get the propaganda machine going.
1) Good assets, other gold companies need to up build reserves, HRG mines are permitted, working (sort of), kind of a shake and bake for a take out…maybe?2) Price of gold should rise in the fall, and this could a) lift the share price because of gold, b) make a takeout more likely as the big guys will be gushing cash. Much luck to us all!
CJ