GBN's Bottom 10 GBN had goods and bads in 2011. Here is my 10 worst:
10. Haywood Resigns
Some may argue Haywood`s value and as long as the company has Netolitzky everything will be fine. I agree but the loss of a key figure still creates uncertainty.
Haywood was underpaid by industry standards at a yearly total compensation of $295k but walked away from a lucrative option package. He still had 1.8m options ranging in price from .26 to .60, whereby 500k expired in May 2012 at .48, and 500k expired in Apr/2015 at .60.
Comparison companies experienced major turnovers as well. Claude Resources seen the resignation of it's VP of Mining Operations. Wesdome's CFO Donald Orr and Director Roger Jolicouer resigned. San Gold changed CEO's from Dale Ginn to George Pirie, hired a new VP of Corp Development (same as crowd favroite Rodney Orr), and appointed 2 new directors.
9. Drilling at Alimak and Decade Disappoint
Drilling this spring at Decade was cancelled due to poor ice conditions. 4 shallow, 26m, drill holes at Alimak to test the near surface mineralization were disappointing considering the previous drilling programs.Insignificant results less than 2 g/t from 2 holes and one hole with a 6.66 g/t over 1m intersection.
https://www.goldenbandresources.com/html/news/press_releases/index.cfm?ReportID=203149
The extraction of a 6,284 tonne @ 6.76 g/t bulk sample from Alimak turned out to be costly as a result of production losses due to the physical constraints of drilling and blasting and material movement from the open pit ~200m from the mill.
8. TMF Approval Delayed
The federal government TMF approval took an extra 6 months. It was costly for the company because it created an immediate need build up the berm walls 3m to increase the life of the Jolu Above Ground Tailings Management Facility (JAGTMF) by another year. Waste rock from the stripping of the Alimak open pit was used. This unfortunately resulted in a domino effect as it delayed production from EP with the shortage of surface personnel.
7. Rocky Goes Down
Welder, Rocky Arsenault, was trapped in the crusher chute resulting in the second emergency winter shutdown during the commissioning phase. Rocky was uninjured but any emergency shutdown in -40C weather makes for a difficult start-up. The first emergency shutdown occurred with a loss of power during the initial commissioning stage while testing the deisel back-up generator.
6. Shakedown, Breakdown, We`re Busted!!
Testing of the mill in June to a throughput of 540 tpd using the low grade stockpile resulted in the failure of the springs in the drive train of the jaw crusher. The mill was shut down for 7 days while waiting on a parts inventory and repairs. No money meant no parts inventory on hand.
5. EP and Komis Delayed
Many reasons as to why production has been delayed but expectations were that mining at EP would occur early in 2011 with production for EP and Komis to occur in late 2011. Dewatering at Komis began in Q1. took much longer than expected, ended in late Q2 resulting in over 100,000m3 of effluent being pumped from the underground mine workings. As mentioned earlier, a shortage of personnel meant a wait time for mining to commence at EP. As well, EP must be blended at low ratios due tto the high copper content in the supergene ore.
4. 2009 PFS Out The Window
2009 PFS projections were basically out the window with a forecasted POG of $825oz and costs of $520oz. Investors suffered a great shock when production costs at start up were $908oz even though the POG averaged $1428oz. Q1 costs improved but seemed out of line with industry standards at $901oz and an average POG of $1491oz. By Q2 it was apparent that similar sized established producers were operating at similar costs per oz to GBN which improved slightly to $900oz. It has been speculated by some that the new IFRS standards adopted in 2011 has resulted in increased cost numbers for gold producers.
3. Share Dilution
In Feb, investors, who believed the company was fully financed into production (not a lie just a pizz off), were greeted with the devastating announcement that GBN had entered into an equity financing agreement for $13M with Northern Securities. 26.3M common shares were issued at .45, 26.3M warrants were issued at .60 and .65 to 2014, and 2.5m flow through shares were issued at .58. The result was a 20% increase to an already bloated float which now stands at 285M outstanding and 345M fully diluted.
2. Sprott
The original Sprott Gold Loan, resulting in proceeds of $7.3m, carried GBN into production. Payback 13 months later, achieved 1 month ahead of schedule, was a proposterous $12.4M.
GBN with a NPV (current assets - current liabilities) of -$10M went to Sprott for a debt financing deal of $9M to advance the development at Komis. Sprott offered an interest rate a little higher than industry standards and GBN accepted the terms. Sprott returned to GBN with further demands and GBN terminated negotiations. GBN has opted to proceed with development at Komis using cash flow from operations. Cash flow in Q1 was $7.6M, and Q2 was $8.9M. A company currently asking contractors not to cash the cheque until Friday has decided to go it on it`s own in terms of funding it`s growth.
1. 2012 Gold Price Means 2009 Share Price for GBN Investors
The GBN share price surged from .26 in Mar 2010 to .70 in Dec 2010. Since that time investors have been devastated watching the share price plummet to 2009 levels of .225. Thankfully, it has been a sector wide phenomenon seeing declines in share prices across the board from 40 to 70%. Still an awful pill for investors to swallow. For some investors a lot of money was made in a short period for investors in 2010. I can only tell others that I became a buyer again as the share price dropped to .42. IMO the only way for me now is to continue to average down. I am now priced in around .30 but have over doubled my holdings in the process since my original 2010 investment. By the time it is all said and done I fully expect my holding to triple in size in comparison to 2010.
Good luck to all in 2012