Picking and ChoosingWith the latest news releases from Goldstrike, the company continues to show the properties in its portfolio were well-chosen. So far, the company has expressed an intention to conduct Phase II exploration in 2012 on all properties for which news was released this year. That's impressive when you think about it, considering that resources in terms of manpower and money are finite. Let's also not forget, since we're talking about the Yukon, that the "no snow on the ground" season isn't exactly long, and therefore time comes into play as well. If any of these properties didn't present an exciting opportunity, you can bet the company wouldn't be spending precious money, manpower and time to look further.
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Now, when contemplating how the company will maximize shareholder value in the future, it has frequently occurred to me that having so many properties with good potential to choose from may actually start to become a "problem" of sorts. Why? Well, when you only have so much money to spend on drilling and such, how do you go about picking? Realistically, the company will not be in a position to finance drilling on all of these properties during the same time window. Yet, to ensure maximum shareholder value, you want every property as developed as possible to ensure when a major does come knocking on the door, that maximum value is achieved. Naturally, the results from some properties will start to outshine others, and those properties will deservingly get the most attention. But what about the others?
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Well, let's fast forward a couple of years from today. Goldstrike will have a better idea what properties represent the "creme de la creme" of its portfolio. Presumably, the Yukon gold scene will be receiving more attention than it is today, and gold prices could be much higher than what we have presently. Perhaps a junior explorer like KAM will have been swallowed up by a major. I don't think it's a stretch to think that the attention the majors will be paying to the Yukon will be much higher than it is today. So what better way for GSR to go about unlocking maximum value for all shareholders than to enter into joint ventures with some majors on the properties it wanted to drill, but just couldn't because of funding and time? Sounds like a win-win situation to me.
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Let's also not forget that the prospect of spinoffs also exists. I'm currently invested in a mining company that has been quite successfull with spinning off high-potential properties into a separate entity. The large share position in the spinoff companies not only provides a source of capital, if required, but also represents a good way of unlocking investment potential while managing finite assets. When you think blue-sky potential with a company like Goldstrike, with 24 solid properties, its easy to see that this company could one day go on to spawn perhaps several independent companies that will go on to success in their own right, which only makes GSR that much more valuable.
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Anyway, for now, today, we're sitting pretty and the NRs released to date show we'll have no lack of targets for future exploration come 2012. Lots of good news here, and on properties like Lucky Strike, it is comparing very well with established companies like Kaminak (thanks for posting the comparison results by the way, Hiker; great info there!). Lots to be excited about as a shareholder, and there's more news to come. Keep up the good work GSR.
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BUMBLEBEE