LGC Stock Vacillating Back & Forth.. Volitile near termThe stock is bouncing around like a pinball machine. Its all just noise. One poster in particular seems to have a Jekll and Hyde opinion on the stock.
I think we need to stay focused on facts:
1) They hit a surprising discovery hole (50 million dollar hole)
2) They have 2 500K oz gold (Butia & Cerrito) deposits on the property and 23 discoveries on the property. Lots of smoke... indicates a fire. FDP could be the 3rd @ >500K deposit
3) The market over subscribed the public offerring twice... there was a mad scramble to participate in the offerring.
4) Big names have a significant position (Sprott, McEwan and Kinross)
5) How many large companies have requested site visits?
6) They have a significant drilling budget... But no news... I ask why no releases?
Answer: Low grade bulk resource at FDP won't excite most investors on a hole by hole basis. So if the street will misinterpret the results like they did with the last set.... then why bother releasing anything.
I imagine they will keep drilling until they can define the boundries of the resource. At this point they have $70 worth of gold per ton... it takes $8-$11 to pull it out and mill it if its open pit. I suspect getting a maiden resource estimate is the best thing they can do... so they are in "Drill Baby Drill! mode.
We may not like it that they haven't released results... but I'd rather they don't release what will be misinterpreted. I suspect they will make a release at a time when they can define both the foot print and grade.
Gold in soilds covers a grid of 3.5 Km x 1.5 Km... it is not produced by water run off because it is both broad and long. So assume the the deposit is 1/3 the siz of the soil anomally and the deposit is 100 meters thick and grades 1.1 g/ton.
Soil anomaly = 3500 m x 1500 m.... soil anomally x 1/3 of size x 100 m thick x 1.1 gm/t x 2.67 SG / 31.1 gm/oz = 467 million tons of rock at 1.1 g/ton = 16.5 million ounces if 100 meters thick (assumes consistently grading). no increase or decrease the thickness of the projected deposit by 50%... gives you a deposit of 8-24 million ounces. If the deposit is less than 500-600 meters deep it will likely be economic. Note that open pit mines have low incremental costs per ton until you pass about 425 million tonnes. Ic cost $3-$10 to mill a tonne of rock and $2-$8 to haul it. The cost of a open pit mine is about US $300-400 million (Bele Sun) in Brazil.
Hence in my mind FDP is likely economic.
So in my opinion you are wating for a geological foot print and deposit thickness (50-250 m thick) average grade (1-1.1 gm/t) hopefully with a strip ratio of less than 2:1.
The bonus is that you can blend in additional high grade (Butia, Cerrito and 23 other prospects) feed for the the mill.
Thats the play. It could be a monster bulk deposit with added high grade feed. It still has sizzle in my mind but we all need to wait for the results and a foot print. In the mean time we need to filter out the ravings of the lunatic fringe that vacillates back and forth.