GREY:GYPHQ - Post by User
Comment by
DetVicMackeyon Jan 25, 2011 6:01am
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Post# 18021255
RE: GGN-t Presentation Today...
RE: GGN-t Presentation Today...Thanks to everyone on this board for sharing all of your DD. I took a small position in GGN last week because the valuation and growth potential offers an excellent risk-reward scenario.
I was at the VRIC today and attended the presentation. John Key Sr. pretty much just read off of the presentation slides and didn't have much else to add since there was only 8 minutes allocated to each company. Later on, I made a visit to their booth where I met Ms. Lewis, the treasurer, and his son, the projects manager. To Ms. Lewis, I asked about how they were going to fund Borealis phase 1a, 1b, and 2 and she replied that they are currently in discussions to fund phase 1a. She reiterated that the plan would be to use cash flows from phase 1a to fund phase 1b and 2. I think she also added that a financing announcement is expected to be made by the end of this week (or next week) if memory serves me right. For operations, Mr. Key Jr. expects heap leach oxide recoveries for phase 1a will be 75-80%. Not familiar with the company, I asked him why didn't the previous operators continue with the project and, to paraphrase, he said that 10 years ago it wasn't feasible with $375/oz gold. Mr. Key Sr. then jumped in and reiterated to me the robust economics of Borealis with $1200+/oz gold and expected total cash costs of $550-600/oz. Lastly, he said that he likes to use contract miners to avoid learning curve issues and the plan would be to eventually buy out them out.
From what I have gathered so far, the market seems to be discounting GGN tremendously. I understand that some deposits in Nevada have development and recovery issues, but aren't the baseline tests for Borealis very positive? If project funding is why the SP is so low, then would it get rerated once it is fully funded? Perhaps the real big question is on management and how well they can execute. It looks like the market is taking a wait and see approach, but I suspect that GGN will undergo a huge upside revaluation if and when they get into production and meet targets.