Bayhorse Silver Inc V.BHS

Debt

[Henrich428]

Somebody recommended an interesting video series to me lately which I thought that Sage and everybody else here might be interested in. We all know that the only reason why Bayhorse couldn't produce before now was a lack of working capital. In one of his previous posts, Sage wrote: "One of the reasons why Graeme never had any money is that he never borrowed more than a month's worth or so at a time. Never understood that."

Well, this new video series will explain why. It's called "Why I hate the miners" by the brilliant Mariusz Skonieczny. Skonieczny goes over ten different mining companies which all seemed like "sure things" at the time. Their prospects could not have been better, and these companies also had the backing of people like Sprott and Lundin and Rick Rule, or were headed by Newmont or Barrick people. They were the hottest stocks of the newsletter-writers, and the darlings of the industry. And yet they all lost most of their value or went bankrupt. Skonieczny personally lost $500,000 in miners along with 5 years of his life, and only made his fortune recently in Oroco Resources, whose potential he was able to identify simply owing to a long and painful career of previous experience. (Oroco reminds me of Bayhorse actually--very underlooked, historic resource, and in the first article which Skonieczny wrote about it, he said that it had "100x potential," which caused many people to call him a pumper. He has since made 66x.)

Skonieczny shows that, when you take on even the smallest amount of debt, you are liable to lose literally everything when things go even slightly wrong, even when your prospects could not seem more brilliant. A good first video to watch in this respect is the one on Yukon Nevada Gold.

https://www.youtube.com/watch?v=CNAlRHSb7bY

The Aurcana video is also fascinating, given that Aurcana are another alleged "near-term" silver producer. They were making the same boasts of imminently being able to do 6 million ounces a-year even ten years ago. But they took on debt to do this, and when things went wrong it caused their producing La Negra mine eventually to be seized. The other interesting thing is that La Negra was originally thought to have 200 million ounces; it later turned out to have only 20 million. So much for what Bob Moriarty contemptuously calls "blessed 43-101s."

https://www.youtube.com/watch?v=XMTKmH41Az8

Same thing goes for Midway Gold, the hottest stock a few years back, which went to zero simply because the feasibility study turned out to be wrong, and said that the gold had slightly more grams per ton than it really did. Debt then brought about bankruptcy.

https://www.youtube.com/watch?v=xuemkCy3fHY

Far from turning me off mining stocks, this series has really given me a newfound respect for what Graeme has been doing. Bayhorse is a unique case relative to these companies because everything has been about setting up the mine on a pay-as-you-go basis and avoiding debt as far as possible. When Skonieczny talks about these companies taking on debt to avoid dilution and then spectacularly failing, it always reminds me the whiners who claimed that Graeme was selling shares and keeping the share price depressed in order to try and accumulate warrants through the PPs. But the company literally wouldn't exist without the PPs. Again, I respect Graeme enormously more for the fact that intends to explore and produce the same time (like the miners of old) in order to save money. I'm actually amazed also that Bayhorse have got so much done under such impecuniary circumstances.

[sage4050]

impecuniary is not even a valid scrabble word.  I am impressed.

[Henrich428]

A word that was good enough for Lamb and Byron is good enough for me.

[wanderer9641]

Sage, In your nitpicking you lost the impotant part of the post.

[sage4050]

I was only joking.  I got the point and it is well taken although I feel the debt has to be fairly massive to destroy the company.  I am just so sick of constant delays, valid or not.  Just give us a date when  things might begin to move.  At this stage of the game it should be known unless G is still planning ONE MORE THING.

[Henrich428]

As I say, just watch one or two of these videos for yourself. They're some of the best things I've ever watched. Yukon Nevada Gold for example in the first video had the potential to be more than a ten-bagger. Market cap was only $300 million and had the potential to go 15x, to $4.5 billion. Had an irreplaceable strategic asset (Roasting Facility) recently remodelled with $200 million, and

[Henrich428]

Mariusz on Energold: "They barely, BARELY had any debt--and that little debt killed them." https://www.youtube.com/watch?v=4X7ObZSwtHE

[Gold64K]

Yup. I held 5k shares of Midway Gold (@about 1 buck a share). I thought it was the safest small cap miner I held and lost it all as it dropped about 85% in a few hours after they released their 4th quarter (first ever) production NR. 

[Henrich428]

Thanks Gold64k, very interesting to hear. And as Mariusz says in the Midway video: "The problem is that when something goes wrong, any debt is going to kill you."

[CaptainDuff]

Just back from moving...Insightful as always Henrich. Bayhorse is on the verge of production with no significant debt (there is still a lease to pay on the ore sorter) and with the CAPEX entirely paid for.  What this actually means is that GO has positioned the company so that revenue goes directly to the bottom line. It will take a few months of production to have an accurate idea of the

[Henrich428]

Thanks for the post Captain Duff, loved reading it. Also, just realised that Sage was talking to Gold64K but my points still stand in any event.