Updated RE and New AZX Corp Direction My initial reaction for the 2 NRs issued on 6 June 2018 is as follows. More to come when additional info is coming out.
1. the new RE
- It's not a surprise to see a rebuttal to EO's expectation that the new RE would be double that of the 2009 numbers.
- What was surprising was the new number is lower than that of the 2009 RE.
- Cut-off grades were different.
- There has been discussion about a more conservative model which resulted in some data falling outside the shell. In addition, some of the data, even tthough avialable, were not included in the calculation to produce the new RE. So, are we comparing apple to apple here.
- It should be noted that the 2009 RE was done according the the NI-43-101 standard, hence the methodology was acceptable. The dispute would seem to be in assumptions and inclusion of certain data from the point of view of conservatism. This should be a point of interest to ES, since he's always keen in knowing "conservatism versus reality". The data are there for used in both cases. In fact, there are a lot more data, some of them look quite good, so it would be ashame not to include them just because you want to be on the conservative side. As long as it is acceptable according to the standard, at least they should be used in a sensitivity analysis situation so that investors could see the potential.
- The current release does not contain enough info for a comprehensive review. We would have to wait for the Technical Report to come out officially. During the meatime, presumable EO will have some comments on this new RE.
My gut feel is that there are good indications (from the data currently available) that the Au is there in the ground of Orenada. May be they need to drill some additional holes to bridge the gaps, but this should not be a monumental task.
2. New Corporate Direction:
- No selling the entire company (and merging with PRB is not in the work, but who knows?)
- Emphasis: selling non-core assets (such as the properties in Manitoba?). They would need around $5-10M to continue with an aggresive drilling program to prove up the RE. Selling of non-core asset would not result in dilution. Also, it would allow the company to focus on the Cadillac Break.
- Accelerate wt exercise program: This is interesting. Presumably the SP would recover following some succesful completion of non-core assets, then management can initiate the accelerate the wt exercise program (just wondering if management/BoD can adjust the strike price?).
- Yes, we do need new management, a new CEOto run the company (not EO, since he's been at it for more than 10 years with no results). A good CEO can probably turn this company around in about 2 years. At least, that is how long I am willing to wait.
Patience does have a limit.
Cheers,
GH