Dissolve Co. - Return Cash Regrettably this is the conclusion I come to when I review the fundamentals.
I, like some of you, doubled down - now only to regret it. I had thought the vulture funds took this too low and would then push it back up again. But no one is pushing it back up. It looks like they didn't even think it was worth the risk.
We just keep drifting lower as the remainder of us bag-holders just dump in abhorration of this management. The drop in TIG today upon the good news release confirms the distrust of mngmt. (note: to those unaware - it is the same mngmt.)
Here's fundamentally why we have no future in further developing this property:
Deposit - as already mentioned here - you can't build a mine around 1 mil. oz @ 1.5 g/t
Extension of Deposit - my review of the drill results indicates the deposit is not open in other directions without substantial dilution to the grade to add more ounces - therefore not economical.
Satellite Deposits - from what drill results are available from other areas of the property - they appear hardly half as good as those from the main deposit - so it does not appear that more oz can economically be added from anywhere else.
Management - of about 80 venture stocks trading below their cash value (that's how oversold this market is), none have shares approaching 50% of cash value. Need anymore be said about this mngmt? Unless they go, no one is going to give this co. credit for anything.
Getting some cash back is reasonable. SinoTech is a major shareholder and can initiate dissolution of the co. Right now we have about
.46/ share cash and if we could get $10.00/oz for the deposit and perhaps double that to throw in the rest of the property. If so, we could get
.56/share back - that's a double from where we are presently trading.
The alternative is they continue to drill and advance the PEA only to burn through the rest of the cash and have this thing die in the end.
Dissolution will eliminate the legal problem overhang and get rid of this managment that does not appear to have the integrity to quit. I think its the best we can do. And I would think SinoTech would want to recoup anything they can from this point and move on.
Some gold macro mkt. points:
HGU - to the poster that said they were going to buy this - DON'T. Look at a long term graph of this ETF. The re-balancing erosion of this doubled leveraged ETF is incredible - even when gold stocks are rising it can fall. Unless you expects gold stocks to rise rapidly in the next couple weeks you will lose.
XGD - this is iShares basket of major gold co. shares ETF - its not leveraged but won't erode. This will be first to participate in gold stocks run.
ZJG - this is BMO's junior golds basket ETF - if you want the juniors. No leverage and no erosion.
LSG - my single largest junior gold - it has been hammered for missing guidance - it is a critical juncture - I expect a double or more by year's end and then again by the following year.
Greg