RE: Stock PriceYou have some very good and valid points kazinti and your discussion on "Investor Perception" was especially interesting for me to read. I also believe you are right about the re-evaluation of a company going from exploration into production.
Here is a very good write up and a chart, which shows this relationship much better and clearly, and also comes from a trusted reliable source.
LINK
https://www.kitcocasey.com/displayArticle.php?id=63
To be honest, I am very good at picking a winning horses, but I was never very good at calling when it would move into first place from last place. What I mean is most times that when I buy in, the stock goes down, and when I sell out, it goes up, so I am not very good calling the highs and lows. But at the end of the day I always seem to walk away with nice tidy profit from a very good company.
You also provided a very convincing argument about my perception of other investors. It very well may be that because I research in great detail, where the average investor may not, explains perhaps why I expect too much from the average investor. Even why I am even hard on them sometimes.
It is just that I would find it difficult, if not unimaginable, to believe that someone would place any significance amount of money on a stock, without doing thorough "Due Diligence". But the reality of this whole thing is that many people would buy a stock strictly on the recommendation of a co-worker, friend, or sibling, and would have done very little to no DD at all.
I agree with your long term outlook on Gold Prices, but to be honest I don't think we have fully convinced a lot of the big players of that expectation just yet. I also don't think that the price appreciation will be a straight uphill climb, like it was in 2005 and 2006. I believe in the short term it is still a very bumpy road for gold, but with all things considered there is only one direction gold can eventually take, and that is up.
Although many analysis recommend this, including a couple of my favorites, I am not a firm believer in purchasing a basket of gold stocks. I usually only hold 2, and presently 3, but one is more of a momentum than a physical investment. Perhaps it is for the reasons you have already mentioned, in that I do make a great effort and spend time a lot of time researching my stocks.
In a Horse Race, it is safer to put your money on a few of horses, and only bet them for a "Place" or "Show", to win something. But if your research is thorough, and you are more then confident you have the winning horse, by placing all your money on one horse, to "Win", the payoff becomes much greater, when he does win.
Perhaps the CEO of Gold Fields describes this best. Gold Fields is the worlds 4th largest gold producer and they do this by only holding 4 mines, or is it 5 mines now. They have the Rule of 5 in which they will not purchase, or hold at least, any mine under 5M ounces, although they broke their own rules and did that recently in Venezuela. But I won't be surprised if they sell that mine one day soon, or have another unknown purpose.
Anyway, the CEO says that by only having a few mines they can then devote all their time, energy, attention, and resources into making them profitable, rather then spreading these rare human resources, which are in very high demand right now, over several mines. I tend to agree with him and I guess this is the reason why I only hold 2 Gold Mining Stocks, most times.
I know a guy who claims to hold 27 stocks. Fine if you are a Stock Broker, and can devote all your time and energy to them, but what if you are the average Joe off the Street, like I believe he is? How much time does he have to research all of his stocks and stay on top of them all?
Even if he faithfully spends 2 hours a day researching every day he would average 2 hours per month for each one of his stocks. Is that enough time to do a thorough job? I think not!
It would take you a lot longer than that, just to read the weekly posts here. Especially mine! But I have been on his case lately for posting false statements on a BB backed by no proof or creditble source, so maybe he found a way to save some time, and put me on "Ignore". At least I hope so!
Investing in any stock on the Stock Market is risky. Investing in Gold Mining Stocks are even more risky. Investing in a Junior Gold Mining Stock is extremely speculative and highly risky. But that doesn't mean it has to be a Crap Shoot, or placing several bets on a Roulette Wheel, in hopes of getting lucky on one of them.
Doing good "Due Diligence" takes a lot of the risk out of the stock. After doing that thoroughly, all that is required next is just the duration of some time, and fortitude, which can also be called "Having Guts".
You "4 Key Points" were also very good ones kazinti, but if you don't mind I would like to add a couple which I believe deserves mentioning here. Especially when we are talking about them in relationship to this companies Key Points.
First off, is the "Institutional Ownership" of this company. Since they haven't published these figures, or at least I haven't seen any published so far yet, you can still make a pretty good guestimate using some facts we do know, and I believe come up with a pretty accurate estimate.
When SGA made their Initial Public Offering, IPO, which so far has been the only time they issued any significant shares, they issued 13,697,146 shares. From this total, 397,721 shares were issued to the Agents as Options, who would be classified as Institutional Owners. So what you have left to the public, for sale, is 13,299,425 shares.
Their are Warrants to, but they are all out of money so I doubt someone would turn them in and buy shares for $1.71, when he can buy on the open market for less.
From this total, our largest Institutional Owner, Resource Capital Fund lll, purchased another 4,166,667 shares. So in reality, from our total Outstanding Shares of 55,377,828 shares, all that was left for the public was 9,132,758 shares or 9,132,758 / 55,377,828 = ~16.5%. This means that ~83.5% of our shares where held by Institutional Owners on the day of the IPO.
Of course, since this time, some Institutional Owners could have sold some shares, but I highly doubt that. The reason for this is because of the low volume and the amount of shares being sold in one sale.
Most times it is 100, 500, or 1,000 shares, and I doubt some big guy would diddle with this low amounts otherwise it would take him forever to sell any significant shares. He would also be competing with Retail Investors, so he would not be the only one, and as you pointed out already kazinti, our daily volumes have been very low for quite some time.
In fact, what I believed happened, is more Institutional Owners came on board. Rob Cohen, from Dynamic Precious Metals Fund was quoted as saying that SGA is his stock pick of the year. After saying this on ROB-TV how many shares do you think he bought before he said that? Would one million or more be a fare estimate or an over estimate? If not that then that share purchase pushes us up to ~85% Institutionally Owned.
Then you have Haywood Securities and Paradigm Capital both giving us raving reviews and both calling for a much higher share price. How many shares did they purchase first, before issuing their report? There could also be many others to, in which we never heard of, perhaps from Australia, who bought in on the IPO.
This is why my best guestimate on "Minimum Institutional Ownership" is ~88%, and it could be much higher than this to. We all know that it is a big advantage to have Institutional Owners on board on any stock. That is why most larger companies publish this news. So this is why I think it should be a Key Point to mention here.
The second Key Point I would like to mention here, and in which makes this company stand head and shoulders above the rest, is their exploration potential. Our Mining Lease of Valehaichichi, Namachamata, including the Charivunga Gorge, Kupers, and Dawsons only encompasses about 10% to 15% of our total exploration license with the remaining 85% being virtually untouched.
In fact, even just within our mining lease there is a large exploration program that has been underway since last year to prove up and find more resources, and much more can still be done there. They are also making new discoveries, like in the Charivunga Gorge, which could prove to be very interesting and significant.
Having said that, our future gold discovery potential is very huge. Most of our property hasn't even been touched yet with any kind of modern advanced mining technology.
The reason being that when Ross Mining owned Gold Ridge, they were mining when the price of gold was historically at its lowest. They had a difficult time as it was, trying to turn a profit there, let alone have extra money for future exploration. They only proved up enough resources to justify building the mine, like we just did, and that was all.
Gold Ridge also sits on a Mountain Chain that has some of the world largest gold mines, including Lihir's in Papua New Guinea, and the world largest, Freeport in Indonesia. One basher was complaining here one day and said we should move to Nevada and go where the gold is. I guess he didn't know about this fact, as we couldn't be any closer to a huge gold discoveries then where we are at now.
There is another company, by the name of Solomons Gold, who's Exploration Lease borders our lease in the South. I always say to check out the neighbors before you buy your house, so I know they are making some very interesting discoveries there. This is including an average gold find of 7.5 g/t. But they are not only discovered gold there but they are also finding High Grade Copper there to.
So having said all this, and that, I feel that our potential gold discoveries at Gold Ridge, and surrounding area, is very huge and very likely. It is therefore my reason why I feel it is a very Key Point in this company right now, and why I am not going anywhere, and am upping my position.
I also think we both would agree that at our current share price, SGA has become a very highly undervalued and an unloved stock right now. This could also be another positive benefit and Key Point.
GB