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Gold Canyon Resources Inc V.GCU



TSXV:GCU - Post by User

Comment by Geospoton Apr 04, 2013 1:16pm
317 Views
Post# 21211363

RE: Geo - volume post

RE: Geo - volume post

20/20/12, no need to send: management (some) follows this board. However, since writing that post I have heard a number of things that make me think I was too harsh (wrong), and perhaps management does have a plan (or clue) and they are not sitting around blaming the markets for their woes but working actively to implement several reasonable and coherent strategies for getting this a plausible valuation.

First, I'm hearing some in management are shocked at the share price but all are "undaunted" and they feel the direction of the PEA was the right thing to do. I also heard they see the sell-off post the PEA as the broader market weakness combined with the markets' perverse ability to sell good news, and that this market has become completely irrational and is not valuing anything--news or proven assets--correctly. From various sources, the mood seems surprisingly positive and they see this moment as something to get through.

I'm also hearing that several important things are progressing and that they feel Gold Canyon is unusual among juniors as they have non-core assets with significant value as well as the ability to finance even though they expect not to require further dilution. They realize that the market is currently giving zero value to the Malawi asset as long as it is inside the company and monetizing it quickly is therefore a priority, and that (perhaps) negotiations for a price are already underway so that the deal can be done shortly after the report is released (note: that could be my own mishearing clouded by 'hopium'). It would also be a non-dilutive infusion of capital. It seems again from having my ear to the ground that a silver stream is also a very real and near-term possibility, and discussions are active. With all the things they are working on they see no reason why they cannot fairly soon get the market cap back to a reasonable level. Although everyone is putting caveats on timing based on the market craziness--as in things could start getting better in days or months. They see other catalysts outside the company, such as would spark M&A activities based of what global investors are seeing as "insane"ly price assets, and I inferred this may include soveriegn money. It seems, as Rick Rule said at PDAC, contrary to the popular notion there is no shortage of capital for juniors and explorers and that is in fact the opposite, there is an abundance of money, and that the TSX will soon start to "bifurcate" with the good companies with money, real proven assets and management will begin a marked rise above trend while the others will languish and some without cash will disappear (from memory here).

At these prices for ounces in the ground (I would calculate what it is today but I might get a tummy ache) a lowball hostile bid that would probably be a multiple of the current price but not acceptable to many shareholders is the greatest risk. That probably has not appeared because it would likely be blocked anyway, or so I heard.

While the goal is obviously to be acquired (not quoting, as they still claim to be taking this to production) they see that taking it into production is a viable option that would within two or three years create a $1bil + company, and so they are focused on business and not the share price, although that certainly concerns them. Obviously, demonstrating the ability to take it to production (including financing and rapid payback of capex) was also critical to a negotiating stance with an acquirer. They seem adamant in their sense that the PEA was without flaws.

Further exploration to expand the resource and explore identified targets is in the cards once one or more secondary assets is monetized (call me a skeptic, but despite the apparent confidence for that happening soon, I say the proof is in the pudding...or in the check going into the bank).

Overall, management is extremely pleased with the PEA, which they feel exceeded expectations, e.g..., higher than expected recovery rates for the silver which have added to interest from streaming companies, which unlike producers, are laden with cash and looking for ways to deploy it.

They are not concerned about the range for the price of gold and with the low all-in costs the project is priced to be not only feasible but very profitable at $1300/oz.

The release of the REE metallurgy being done in Japan and the formal filing of the PEA, which will allow producers and silver streaming companies and some institutional investors to fine comb the details are the next milestones.

So in general, my take is that while there may have been some mishandling of people or news to get us in this pickle, there is someone at in the pilothouse and they are also watching for icebergs. They feel the share price is absurdly undervalued based on the funds selling and on pshycology that has nothing to do with the true value of the assets. They are focused on the business at hand and they feel that the proper valuation and/or the proper buyout price will come from that. None of this helps watching the current share price. I think it was Rick Rule who said you need an iron stomach to trade these markets. Unfortunately I don't.

Do your own due diligence, I am only passing along what I have heard that made me rethink my previous post about management getting a clue and getting off their respective sitting devices with a hole attached. Some of this is hearsay from people I know who have close and reliable contacts, some of it is more direct. It is a composite what I can glean from listening to the drums in Vancouver, Toronto, New York and Winnemucca, and includes my interpretations and possible mishearings or misinterpretations. Caveat, caveat, disclaimer, disclaimer, disclaimer, etc.

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