My Post from 2012 Worth a second read.......
Newbie's please read...........
i find it curious that Sean AKA DaStockplayer AKA Marketmaker88 AKA AKA AKA would waste his time commenting on a stock he doesn't like and apparently doesn't own. Is he short, it would be a gutsy move? Is he hoping if he talks it down it will get cheaper so he can buy? You have to wonder as everyone is looking to make money playing the market, so what is his angle? I'll tell you why I think he is wrong just based on my interpretation of their news over the last several months.
Historically the two problems at the Carolin Mine were the poor metallurgical recoveries and the price of gold-the gold price dropped right after anyone got active on the property. Management has figured out the metallurgy-over 91% recovery and the price of gold is cooperating nicely.
The issue today as everyone is aware is the property ownership issue. We know that Century mining is in receivership and New Carlin has been negotiating with the receiver to facilitate buying out the property purchase agreement quicker but on a discount basis. They also told us that the receiver has some issues to work out within the agreement before New Carolin is obligated to make this next payment. The market is obviously concerned about this issue but should we be? Earlier this summer they announced that they had hired George Goldsmith to work on a debt facility to lever the roughly 30,000 oz of gold in the tailings pond into a financing. We can presume they are still working on that option. Is it reasonable to assume that if you had roughly $50 million worth of gold easily accessible that someone might want it and would be willing to make sure you got your property payment to make sure that they had access to that gold? I think so. If the property payment is made and New Carolin has a 50 % ownership in the property and access to cash flow from the tailings to make the future property payments to take them to 100% ownership and to further develop the property, do you think the stock might go a little higher-duh?
Two other points that are very interesting and very important;
1. The last news release re the drill program mentioned a possible open pit scenario. If they can operate this as an open pit the economics of the project will go through the roof. The historic mining grade for the underground operation was 4.5 grams. At 1 gram they would make money and even at 2-3 grams they would be sailing.
2. Recent acquisitions of gold mining companies have been for around a $100 per ounce in the ground-remember though, that these companies did not have mine permits in hand and the acquirer would be looking at 5-10 years and significant expense to take the project through to production. I would argue New Carolin would get a significant premium to the $100 per ounce price but let’s use $100 per ounce. The current 43-101 lists 715,000 oz although the historic accounts would imply that this could be closer to 900,000 if certain holes were twinned successfully. I believe in the near future they will get to the 1 million ounce threshold and will immediately be in play as an acquisition target. As an open pit they could easily have much more ore and maybe we will be talking about 2-3 million ounces at 1 gram plus.
The stock is trading at around a $5 million market cap, and as I just illustrated, a $100 million plus buyout sometime in the not so distance future, is not unlikely. This is a risk reward ratio I can not only live with but that I go out of my way to try to find. The stock is cheap (and given the facts and value proposition as it stands before things get cleared up),I see New Carolin as a buy right now and that’s what I am doing!