High River Gold Mines Ltd HRIVF

Surprise Surprise

[Power1]

Seems to be more favorable opinion of positive posts vs ones that confront/discuss the skeletons in the closet.   I've been a 6 year holder of this stock with varying investment levels and was first introduced by a work colleague and avid Sprott follower.  I too have an appreciation for Sprott which is probably why I held some shares even through periods of questionable MGT decisions (that would be the last 3 years for sure).   HRG brought me to  Jilbey and PLG with good gains but I lost on GOD thinking it would be the same as Jilbey.  Who knows, it may emerge again depending on what direction severstal, I mean HRG takes. 

I have followed this company daily (yes daily) and probably invested a few hundred hours in research and posting on the board.   Positive or negative I post my views, opinions, research and speculative commentary.  No hidden agenda as one persons comments have very little bearing on S/P with this many shares outstanding.  This is my hobby and one that supports my lifestyle (sometimes.....not so much the past 6 months though).  

Whether I'm bullish or bearish in comments I still hold some HRG.  When I sell out completely and no longer wish to invest I'll cease posting.   I lost a good chunk of change on the ride down from $2.20 but had made money prior exiting at $3.25.  I did pick up at the lows and have mostly liquidated those shares to recover the previous loss.  I don't play this daily as I couldn't be bothered playing those games.   I did add to my position at .12    

There is good potential upside here ($1.50 tops IMO) but there are also risks.  The biggest risk as I see it is severstal may not let shareholders realize the underlying value.  

So let;s talk about value.  SOme of MGT's F ups include not focusing on expanding reserves.  Total reserves including Prognoz gold equivalent are approx 4.9 million  oz's.  Each of the operating mines are below 1 million oz's.  There may be potential to add but until quantified it it does little for value.   

You can't value the company on earnings because there is none.  Future cash flow? Maybe, but is there a future.  It may get cutt off at the knees before it bears fruit.  Mine value?  THe older producing mines have little in reserve BIG debt and the new mines with upside on reserves can't produce.  Now let's factor in the cash situation...oops that tank is empty as well.    THe value proposition....how to increase shareholder value. 

1.    Get the mines producing
2.    Improve the reserves at existing mills
3.    Secure enough capital and with free cash flow meet 2009 debt service

Older can correct me if I'm wrong but I believe he showed up at around a $1.00.  Position was assets would assert value overtime.  My position was poor management can erode value of any operation as has been the case at HRG.   You can put as much focus as you want on gold price and reduced costs but the ultimate price of HRG rests with MGT's direction and this will become known to us in short order.  

New MGT has been in place for 3 months which is in my view  sufficient time to set direction for the company.  Their reluctance to provide any operational guidance to the market is concerning.  It may be strategic to the debt renegotiation process or they have other intentions.  

Severstal can dilute the crap out of this and could supprt the action  with a negative financial picture.  It won't hurt their position assuming they are taking it out evenutally anyway.  THe money injected will pay down debt which they would have assumed and HRG shareprice will be held low for take out.  

Severstal can also take it out without further dilution. 

Lastly, severstal could pony up a guarantee which would be a big win for shareholders.  

So why have I turned somewhat bullish.  Simple.   Share appreciation reduces dilution should they inject capital or Increased share price will drive up a purchase offer or I jump in large because severstal makes clear their intentions to back this puppy and drive share price.  

Heres my price call by mar 15th:

1.    0.10 - .12 if there is mass dilution
2.     .20 or .25 take out offer
3.    .40 plus if severstal refinances and backs with corporate guarantee

Caveat is PLG shares.  Now up to $33.6 million.  It could run to $50 million value in short order and play a huge role changing the direction.  Gold at $1000 plus also helps out.

I just had a thought.......maybe one should offer to collect the $17 million A/R and retain 25% for services rendered.  Instant millionaire and it would also give you upside on your shares.  Anyone got their #  LOL