RE: Stock Price / kazintiVery Good Point about the low volumes kazinti. I forgot about that so I tend to agree with you now.
I have been saying all along the volumes are low. Even 55,000 shares only represents one tenth of one percent of our total. We would have to trade 55,000 shares every trading day for almost 5 full months to be equal to only 10% of our total shares, which shows how small this volume really is. Especially when this 55,000 shares represents our most recent largest trading day.
The only problem I have with this though is that I can't really understand why someone with 50,000 shares would dump them at market price based on this news unless some manipulation was behind it. We need to raise C$110M and since we don't have any other source of income how did they expect us to raise it? Rob a Bank?
Retail Investors may not have known that the company needed to raise this much money, even though the company stated 2 years ago that this Gold Ridge Redevelopment would cost C$110M, and that is what they are rasing.
But they certainly heard that the company needs to raise at least C$72M. They also should have known that there were other costs associated with this mine, and that we would also need working capital for a year, and money to cover our expenses over this time. So even a low guess would put us at least C$85M to C$90M.
So where is the big surprise and disappointment here? I mean is 50M or 55M share dilution really that terrible when it represents only 66% of the total amount needed to finance a mine, that will producing of 134,000 oz in less than one year?
Jinshan has a gold mine in China comparable to us in size, production, and startup date. They have known resources of about 1.1M oz of Au, with the M & I being close to ours. Production should start this summer, only 4 or 5 months ahead of us, and they will produce 117,000 oz per year for 9 years.
Their cash cost is presently C$120 less than ours is, but we will be producing more gold then them, and presently we have more gold then they do. We also have a very strong possibilities of reducing our cost significantly, by using an alternate energy supply, when they do not.
No two mines are identical but I find their mine to be very comparable to ours. They even have some refractory gold ore like us. Although their 219 Page Feasibility Study blows our 3 pager completely out of the water, and their promotion is far superior then ours. I do believe however that we will find more gold at Gold Ridge then they will at their site, although both projects have potential for much more gold.
All in all, in my view anyway, they are very close fundamentally with us. The big difference here is that they have ~145M Shares Outstanding, which is a lot more then we will have after the new share issue, and a Market Capital of C$276M or 5 times larger than ours. So what is wrong with this picture?
I suppose that if all the options were cashed in and if we converted all the warrants to shares, and paid off our debentures, and this same thing did not happen to Jinshan, then we would also be close to ~145M Shares. Our Market Capital would also go up because of this and at our current price would be C$145M. But Junshan would still be valued twice as much as we would be and if you want the truth I think they are highly undervalued right now to.
Just for the record, I do not own any shares in Jinshan nor do I plan to at the present time. Why should I when we need a double bagger here just to catch them now and we should be at least equal.
Maybe investors are disappoint in this share dilution but the company could have raised all this money they need by share dilution, and as you pointed out kazinti, our share dilution would have been triple, and not just double and what it stands at now.
I am really trying to be objective here and to be honest I was hoping the company could have been more creative in their financing plans. The most I thought they would dilute was maybe 50% of the cost, and not 66%. I was also a bit surprised that they needed so much money, but I shouldn't have been because I knew long ago they needed this amount. But being a bit disappointed certainly doesn't justify me wanting to dump 50,000 shares on the open market at market price. Especially when it was already trading near its all time low.
I have seen stocks fall far less than this one has on terrible news, and in which by my point of view a company raising financing to build a profitable mine to me is not terrible news, but rather good news. So this is why I wonder if their isn't some big guy shaking our Apple Tree right now.
As you also pointed out kazinti on low volume it does not take much to drop this price drastically. It also doesn't take much volume to raise the price dramatically either. It will be interesting to see how this all unfolds, so I am not giving up my front row seat for no money right now.
GB