RE: VALUATION - Reflects Company''s Poor DeliveryWe were supposed to be producing 30,000 oz annually. The company has now been in production for the full year 2007 and produced 2751 oz. gold (based on full year 1110.9 t concentrate and 933.2 oz Au contained in Q4 concentrates of 376.8 t). This is less than 10% of projections. Even when consideration is given to the fact that it is the first year of operation the production is dismal relative to guidance.
Further, the independent consultant’s estimation of proven and probable reserves on the Kearney vein of 367,000 t @ 7.52 g/t over an average width of 4.4 m is questionable based on the Dec. 2007 drill results. This reflects Haititrader’s sentiments on the condition of the deposit.
Obviously, they are going to have limited cash flow which raises the question of when the next PP is coming and what will it be placed at - perhaps $0.10 - $0.12? And this will likely take us to around 200 million share marker. This is a prohibitively high no. of shares for what this company has to show for. As such, it is reasonable to expect some sort of consolidation should follow in the future – perhaps 10 to 1?
Also, issuing the new CFO 7.7 million options @ $0.14 good until 2012 hardly inspires confidence in the company’s projected future stock price.
I, like many others, a couple of years back, thought that the newly operating gold juniors were the place to be in this long term bull market. But many of these juniors, despite the price of gold, have shown themselves to be unproductive operations – run by, perhaps well meaning, but effectively incompetent people. What is hoped to be open pit gold operations turn out to be “money pits”.
Perhaps the company will still have some good news for us in the near future – maybe from the custom jewellery end if not operations – and this coupled with the fact that we are still in the “skepticism” phase of the “pessimism, skepticism, optimism, and euphoria” gold bull market psychology, may provide some hope for the share price.
All just my opinion and feedback welcome.
Greg