Resource Capital Gold Corp GDPEF

Couple of thoughts

[lmcbain]

Between travel and work I haven't had much opportunity to post of late. Here are a couple of items to ponder:

• there has been quite a bit of bipolar reaction to RCG of late due to a complete lack of quality information. A good example is we know that Sprott sold a good chunk of shares and there are a couple of ways to look at this:
  • panic could set in because Sprrott sold a bunch and may have lost interest in the company or at least decided to cut his losses on the project - that would not be good for the company in general. I have heard it said that he sold for nothing more than tax loss. This concept is possible, but odd, because he didn't sell all, nor did he sell enough to get below where he would have to report his transactions.
  • interestingly enough he sold the shares privately to only 2 buyers, this would typically suggest that the buyers were non-arms length from Sprott and had some reason to believe that they were going to see a return on their money. Now it is also possible that Sprott sold his shares to 2 parties for the teax loss and bought something from them as an offset to provide the other party the same sort of tax loss on another venture. Again, the fact he sold does not provide a definitive assessment of where things are at.
• To be clear I was unable to attend the AGM, although I certainly would have liked to attend. When the date got changed to later in the month attending the meeting was no longer an option.
  • I have kept in contact with Jack and while I can't tell anyone that I received any earth shattering information he has continued to iterate that he does not believe bankruptcy is in the works. He did go so far as to inidcate that his last trip to Toronto was good - what I can't tell you is what was good about it - could have just been a good flight, could have had additional meetings unrelated to RCG that went well, etc - I simply can't say, but he was well aware I was asking from an RCG perspective when I asked.
• Right now the company is trouble, of that there is no question. As I understand it they have about $6m in debt, they have no ability to generate revenue and they need another $3m-$5m (minimum) over and above the debt to get the Dufferin going in a meaningful manner. The ffedback I have from a couple of sources is that the Dufferin is still believed to be economic, but RCG is struggling with the economics of startup and with operational management. Sprott Lending is unlikley to come to the rescue, because RCG has no additional assets to use as colateral to guarantee the funds with and given the current market and state of operations, may have a tough time selling the properties for enough to cover the current debt load. The picture is not pretty.

I intend to try to check in with Jack, as I am overdue and will see if there is anything new worth adding to the discussion. I understand even Jack has indicated that they really should have accepted the acquisition offer that was being discussed with Anaconda many months ago.

Salut,
Leigh McBain