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AceofKY

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  1. Thoughts on PDAC 2013

     

    · Crowd was very good – just as many as last year. I believe that the conference organizers did a better job of handling the crowd because it seemed like lines (such as coat check, food lines, etc.) were much shorter this year.

     

    · I had expected to see some empty booths due to junior explorecos not being able to make the trip. However, I was wrong. All the booths were full. There is a good chance the PDAC is the last gasp for many of them as it was noted that over 30 companies exhibiting had less than $200k working capital left.

     

    · Exploration activity seems to be slowing with the downturn in finance for the sector. There seemed to be many more junior Geos looking for a job than I remember from previous years.

     

    · I met multiple people who were “First Nations Representatives” (consultants/mediators, etc) of one sort or another. This seems to be turning into a big industry. Not sure what to make of that.

     

    · Toronto is still cold as hell in early March and I don’t understand why PDAC doesn’t move this convention to Cancun or somewhere warm. I did learn why the conference is held at this time of year. In the old days the explorers up North could work in winter (water was frozen) or summer (via boat) but not when the ice was breaking up in early March. Hence – they had nothing better to do then go to the conference.

     

    · The big “World’s biggest mining party” on Tuesday night (sponsored by Renvest this year) was even more crowded than last year. The Dave Murphy band is awesome, but they’re going to have to do something to reduce the crowd next year (or move it out of the Royal York). Keeping the students out would be a good start, I think.

     

    · I attended several of the newsletter writer presentations. I had kept some notes but unfortunately lost them when someone picked up my binder (probably by mistake) during the party on Tuesday night. Here are the ones I remember:

     

    o Ian McAvity – believes we’re only weeks or maybe days from a bottom

     

    o Taylor Thoen – this was a new speaker this year. Apparently she is a tv personality (not a gold/investing expert) in Canada and does a lot of CEO interviews. I enjoyed her presentation and remember that her website is: www.ceoclips.com. Also she was better looking than all the other newsletter writers combined.

     

    o Chris Berry and at least one other speaker were bullish on uranium

     

    o Keith Schaefer was bullish on oil refineries along the Mississippi River corridor.

     

    o Rick Rule – was in typical form (no powerpoint needed). His thesis was that the good stuff is cheap enough even though the sector as a whole will still trend down for a while. He likes PGMs (i.e. Sprott’s new physical fund) and gave a plug to Friedland’s new promo Ivanplats (Friedland apparently gave a presentation at PDAC but I missed it unfortunately).

     

    · Here are notes from either presentations or conversations with companies:

     

    o Hecla announced its bid for Aurizon on Monday morning and Phil Baker gave his presentation that morning. Supposedly the offer is accretive on all the metrics except for EPS which won’t turn accretive till 2014. There was (supposedly) no quid-pro-quo with respect to keeping Aurizon management or Board members in the merged company. I didn’t see his presentation but apparently Alamos CEO McClusky slammed Hecla pretty hard afterward.

     

    o Midas Gold – this project looks interesting but I’m worried it will take a long time to get permitted

     

    o Silvercrest – this story keeps getting better and better. The expansion of Santa Elena is underway and an updated resource estimate & production schedule will be forthcoming. I was originally skeptical about the low grade La Joya project but I’m now confident that they have a plan to develop it successfully. Metallurgy still needs to be confirmed, I think. Production should double for Silvercrest with the Santa Elena expansion and then double again when La Joya is brought online. I already have a large position (due to ~500% capital gains over the past years) or I’d be buying more of this one.

     

    o Sandstorm Gold – Nolan Watson promised he would never do another deal similar to the Entrée/Mongolian deal due to significant shareholder complaints.

     

    o Continental Gold – I first became aware of this Columbian project at last year’s PDAC but didn’t buy in as I thought the market cap was too high. The price has come off some since then but I think it’s still in that “boring” part of the construction/development phase where the stock price continues to drift down. The project itself is very high grade and they are spending a lot of money developing it right now. This is one to keep an eye on for next year.

     

    o Rob McEwen/MUX – still promoting his S&P 500 by 2015 goal. I don’t think he’s going to achieve that in the timeframe left with no better assets then what he has. Still trying to sell the big copper project. Will need more financing for the gold projects this year. Not interested in a stream deal and was critical of mining companies who resort to this type of financing.

     

    o Rambler – their production dropped somewhat early in the year due to some equipment problems. The solution is not yet in place but shouldn’t be very expensive. The loan with Sprott will be renewed/refinanced as they can’t pay it off yet. The hot IR chick from last year is no longer with them (big disappointment for me.)

     

     

    That’s about all I’ve got time to write up.

  2. I had a coffee today with two guys who have been following KGC more closely than I.

     

    I asked them, "Why is Kinross so cheap?"

     

    Their answer:

     

    Kinross keeps dilluting their shareholders. They are so keen to grow, that they pay too much for their acquisitions. The latest example was Red-Back Mining where they paid a ridiculous price for a company with a deposit in Mali. Is that really where you want to be building an expensive mine.

     

     

    Bubb,

    That's what I thought too when the acquisition was announced. But Tasiast keeps growing exponentially. M&I resources are already past 16.5MM ounces. When I was a Rio Narcea shareholder back in ~2006 this was a sub 1MM oz deposit. I'm still mad at the RNO directors for selling what has turned out to be a world class asset so cheaply.

    So now I'm starting to wonder if Kinross knew what they were doing with this acquisition after all. I'm going to be reassessing Kinross in the near future.

  3. PS:

    Santa Fe Gold

    neg. working capital $17 Mio

    convertible loan $7,6 Mio

     

     

    I believe $15.9MM of the negative working capital is a liability related to warrants that will be non-cash??

     

    I've been selling Columbus as it looks like they're having difficulty executing the buy-out. I don't want to be stuck with Columbus if the transaction doesn't go through - would rather hold SFEG here so I'm taking a little loss.

  4. Hi folks, I haven't posted here in a very long time just due to being very busy with running my business. I was fortunate enough to see Dominic at PDAC and resolved to try to come back here more. Hopefully everyone is doing well.

     

     

     

    Here is what I currently have in my portfolio in order of largest to smallest positions:

     

    1. Gold Resource Corp (GORO): I've sold about 1/3 of my position since this went up about 500-600% for me. Pretty expensive stock now. Pays a monthly dividend.

     

    2. Fronteer Gold (FRG): This equity is being taken over by Newmont but I'm still holding to get the free shares of the spinoff company. Probably not worth buying now that the takeover has already been announced. Watch for the spin-off explorer that will be called "Pilot Gold" and run by the same guy Mark O'dea.

     

    3. Hecla (HL): This is a good mining company in the Silver Valley & Alaska, primarily silver but also big amounts of gold, lead, and zinc. I think they are still undervalued and I wouldn't feel bad about buying some right now.

     

    4. Alacer Gold (ASR.to): Gold miner in Turkey & Australia. Probably still a buy but not spectacularly undervalued.

     

    5. Silver Wheaton (SLW): This is a good company but very expensive. I wouldn't buy it now. My position came from the takeover of Silverstone several years back. I've been selling this position down. It will basically track the price of silver with approximately 1.5x leverage.

     

    6. Santa Fe Gold (SFEG.ob): A junior gold/silver miner in Western U.S. I think this company is a good buy right now but their performance is still unproven so it could go either way. If they are successful it will be a 3 to 4 bagger at least. They are currently taking over Columbus Silver and I've been buying shares in the latter to capture a few % in arbitrage.

     

    7. Nevsun (NSU): This is a copper/gold miner in West Africa. I bought more of it in the past few weeks as the price took a big dip. I'd say it is a buy anywhere under $8/share.

     

    8. Rambler (RAB.v): This is a copper/gold junior building a mine in Newfoundland. I've been buying it over the past couple months. Be prepared to wait for a couple years for the payoff. Very small and illiquid.

     

    9. Rio Novo Gold (RN.to): Junior gold miner in Brazil that I just became aware of after the PDAC conference a couple weeks ago. I think it's a buy.

     

    10. Silvercrest (SVL.v): This is a junior silver/gold miner. I'd rank it a hold right now as the price has already gone up substantially. Performance still unproven.

     

    Good luck to all,

     

     

    Ace

  5. For funds, or stocks with similar historic action, have a look at:

    + Endeavour / EDV.t

    + Canaccord / CCI.t (a Vancouver broker)

    + Us Global Investors / GROW* (a fund mgr. involved in EDV.t)

     

    * there are traded options

     

    Perhaps Longview Capital Partners is worth consideration - Ticker "LV" on the TSX

     

    I haven't done any research yet, but at least their investee list is manageable. Nevada Copper is the real deal; a good long-term investment. The others I'm not familiar with:

     

    LV Portfolio:

    Buffalo Gold

     

    Finavera Gas

     

    MacArthur Minerals

     

    Oriental Minerals

     

    Waratah Coal

     

    Nevada Copper

     

    AMI Resources Inc.

     

    Pacific Coast Nickel Corp.

     

    Pencari Mining Corporation

     

    Cue Resources

  6. A drop to $650 would be great for anyone wanting to buy on the dips. Same for any falls in other metals and commodities.

     

    We've already had huge falls in base metal stocks and some base metal prices as everyone is pricing in a recession.Check out this link (click on "metal producers") for charts that show that the money flow into the base metal stocks has turned around and is now going up. Will prices follow?

     

    http://www.willain.com/EV/index.html

  7. I suspect I'm going to miss the boat on it anyway.

     

    The boat hasn't even fueled up yet. I have several juniors down 20-30%, and one down 50%, and that's from where I bought them which was well off of their highs. Volume is still low to non-existent.

     

    Look at SRZ.to, for example. They are fully financed and will be producing concentrate by the end of this month. They should FREE CASH FLOW somewhere around 25 to 30million THIS YEAR. Their market cap is only $100 million, and a big chunk of that is cash in the bank.

     

    Granted, SRZ is a high cost miner, is very highly leveraged to zinc price, and they have some debt. But by approximately mid '09 they should have a process in place to recover gallium and germanium which will drive their cash costs of zinc production very low. Management owns a significant chunk of the shares, and the CEO just bought another 10k on the open market. SRZ's costs are all denominated in $US.

     

    And who really thinks zinc price is going down with the world's central banks flooding the economy with freshly manufactured $$?

  8. I have been tempted to stick my nose in to this subject. It's not something I know much about, but I have heard the odd thing.

     

    It seems from what I've heard that the junior mining area is much more risky, and requires money to fund them until they start making money.

    The thing I heard is that when markets crash, and people need cash, they will sell things like junior mining shares. That will reduce the money available, making it impossible for some of them to continue. Only when there is money available again, will they be able to continue.

     

    Many juniors, and certainly most exploration stocks, ARE dependent on large amounts of financing. However, there are also many that are near-term producers that already have enough financing in the bag to carry them through to positive cash flows. These juniors may be helped by a tightened financing environment, since it will reduce the amount of mines coming online in the future.

     

    My impression from what I've heard is that owning junior mining shares is not anything like owning gold because of the above. You're not investing in the gold they haven't got out yet.

     

    Just because they haven't extracted the gold yet doesn't mean that it's not worth anything. The majors will pay over $200/oz for a good-sized proven deposit in a safe area. One rule of thumb is not to buy a junior for more than 10% of in-situ deposit value.

     

    Oh, and because of the risk you need to buy lots of companies, as many will fail. Like penny shares.

     

    Any company can fail. The most important factor in determining whether a gold mining junior will fail or not is the price of gold which can and has (in the past) gone down to very low levels. So to say that it's better to buy gold because a gold miner may go bankrupt is not really good logic. In general and over the long term, buying a gold miner gives you leverage to the price of gold - similar to options but without the timed expiration. The reason for this is that companies are valued based on anticipated future profits rather than the price of the underlying commodity. A 10% rise in the price of gold may yield a 20% rise in the miner's profits (and vice versa.) Also, a good well-managed mining company can still generate shareholder value over the long term even if metal prices stagnate or fall (as long as they don't fall too far.) GORO, I think, will be able to make nice profits even if gold goes back to $600-700/oz.

     

    That being said, lately the miners have lagged gold's price rise, the explanation of which is the purpose of this thread. One thing is for sure: the junior mining market is NOT an efficient market. The market caps of these companies fluctuate much, much more than typical large-cap stocks. I'm not sure if anyone has ever attempted to calculate the average beta of, say the CDNX versus the S&P500 but I suspect it has a beta of at least 2 or more. It gives you an opportunity to find values that just isn't possible if you're dealing with companies like Proctor & Gamble or GE.

  9. Notes on Stillwater:

    * In general, Stillwater looks like a good buy if one expects platinum to maintain current high levels.

    * They have plenty of proven/probable reserves at decent grades. Current market cap is about $33/oz of P&P PGMs (80% of which is palladium.)

    * Stillwater is highly leveraged to PGM prices, and specifically palladium. Platinum is only 20% of production.

    * They have some hedges in place (at $1035/oz) on ~1/3 of platinum production between Oct 07 and June 08. Some of the loss was already taken last quarter. I suspect there will be another $5-10MM hedging loss taken for Q407.

    * They have the assets in place to make a lot of money, but they are a high cost miner and thus highly leveraged to the commodity price. My model indicates that constant platinum price of $1350 and Palladium of $300 would support the current market price. Platinum at $1500 and Palladium at $360 (constant over time) doubles the intrinsic value.

    * They should cash flow around $2/share in 08 (at current prices) which could support a $20 share price.

     

    I'd like to compare to other PGM producers, and research supply/demand fundamentals of palladium market, prior to reaching a conclusion on this one.

     

    Stillwater is up about 60% since I posted this a couple weeks ago. If I had bought it, it would have went down 60% instead.

  10. Well done AceofKY.

    What is your take on the value of the junoirs now ?

     

    Most of them are much better values now than they were at the end of July 07 or Oct. 07! But, generally speaking, the gold juniors didn't sell off nearly as hard as the base metal juniors.

     

    I think GORO is a slam dunk for a double here once they reach full production in a year and a half or so. Possibly a triple if drill results keep coming in good.

     

    My base metal favorites (SRZ.to, GMC.to) got beat into the ground over the last few months, but I still think they're both good buys. Also, I like Victory Nickel (Ni.to) at current prices even though it didn't fall much.

     

    I guess my feeling is that the Fed is going to try to inflate its way out of this financial crisis. Thus, I'm not too concerned about holding base metal stocks. At some point, they will need to be sold when the fed no longer has the tools or the political mandate to continue devaluing the dollar, but I don't think we're there yet.

     

    What we really need are some acquisitions by the majors to reignite the market in base metals. Ni.to and GMC.to are excellent takeover prospects, in my opinion.

  11. Notes on Stillwater:

    * In general, Stillwater looks like a good buy if one expects platinum to maintain current high levels.

    * They have plenty of proven/probable reserves at decent grades. Current market cap is about $33/oz of P&P PGMs (80% of which is palladium.)

    * Stillwater is highly leveraged to PGM prices, and specifically palladium. Platinum is only 20% of production.

    * They have some hedges in place (at $1035/oz) on ~1/3 of platinum production between Oct 07 and June 08. Some of the loss was already taken last quarter. I suspect there will be another $5-10MM hedging loss taken for Q407.

    * They have the assets in place to make a lot of money, but they are a high cost miner and thus highly leveraged to the commodity price. My model indicates that constant platinum price of $1350 and Palladium of $300 would support the current market price. Platinum at $1500 and Palladium at $360 (constant over time) doubles the intrinsic value.

    * They should cash flow around $2/share in 08 (at current prices) which could support a $20 share price.

     

    I'd like to compare to other PGM producers, and research supply/demand fundamentals of palladium market, prior to reaching a conclusion on this one.

  12. Why is this sectors miners regardless of sixe,listing country or stage of production all suffering negative performance, when there appears a shortage of platinum and the price is at record highs?

    What's held these back, the same doesn't seem to apply to gold stocks?

     

    Good questions, but it's not just platinum stocks. Base metals miners/explorers and many gold juniors are also trading well off of their highs despite high commodity prices. See Frizzer's recent thread regarding why juniors haven't responded yet to gold price for potential reasons.

     

    That being said, I think you are asking the right questions. I'm going to take a look at Stillwater again this weekend. It seems to have fallen to an important support level this past week. Let me do a little research on fundamentals and report back.

  13. Hello, I was invested in Ridge Mining for a while

    LSE:RDG

     

    looking for another near-term junior-producer too.

     

    I studied Ridge Mining for a while some months ago, but they wouldn't send me their feasibility study (it had not been made public). I'm not sure what they have to hide. It's unlikely the big fund from China made that big investment without getting a copy of the feasibility study, and I don't like having less information. Canadian companies don't get away with that stuff. I took a pass on Ridge, although it looked like they had good assets.

     

    A trusted friend of mine likes Eastern Platinum, but I think they've already had a big run in the share price.

     

    Let me know if you find a junior producer or near-term producer.

  14. Why is this?

     

    Were they overvalued before? I don't think so.

     

    1. I think most gold stocks were valued very highly until August 07. I assemble discounted cash flow models on every miner that I research, and prior to August it was impossible to find a gold miner in a safe country that traded at NAV or lower. Most, in fact, traded at prices at least 2 times NAV. The market was already pricing in a big jump in gold price.

     

    2. I know I've been beating this like a dead horse, but the mining companies haven't been increasing their profits during this period of high prices. Construction costs and operating costs are rising as fast (or faster) than the gold price. Since corporations are valued based on expected future profits (rather than a simple proportional relationship to gold price), there has not yet been sufficient justification to bid up the already high valuations. Even things such as the acid used in heap leach operations are experiencing significant cost increases.

     

    If/when the U.S. goes into a recession, this may relieve the pressure on the cost side of the equation and allow the miners' margins to increase.

  15. This is good news. Now they can get everyone under contract so capital costs are mostly locked in.

    No warrants on the PP, and the stock price didn't budge even though the placement was 10% under market value.

    The Reids are definitely managing this to benefit shareholders. That's why it's important (I believe) to invest in companies with substantial management ownership. Now if only the share price would fall so I could pick up more GORO. Seems like every junior is falling except for the ones I want more equity in.

  16. When one invests in PP's shares and warrents are then owned. Where can we track the warrent price in order to make a valuation of a previous PP?

     

    I had a look at Stockhouse and could only find the share price being valued.

     

    Arn

     

    If the warrants are not traded on an exchange (and most of them aren’t) then I guess you could use a Black-Scholes calculator to get a “theoretical” value. Of course, you can exercise and convert to shares at any time after the hold period, right?

     

    Which brings up another question: Is it legal to buy/sell non-exchange-traded warrants privately? Or do you have to exercise the warrants?

     

    From what I have noticed watching many of these juniors, it seems like most people just short the common when they want to lock in profits on their warrant positions.

  17. (This is good news but I think GORO is a hold at current price and market conditions. I was hoping to pick up more shares below $3.20 but that may not materialize now. Also I wonder why they are calling it an "internal analysis" since I know they had retained an independent consultant to prepare resource estimates? - Ace)

     

     

    Press Release Source: Gold Resource Corporation

     

     

    Gold Resource Corporation Increases Ounces at Its El Aguila Project in Oaxaca, Mexico

    Tuesday October 30, 10:38 am ET

     

     

    DENVER, CO--(MARKET WIRE)--Oct 30, 2007 -- Gold Resource Corporation (GRC) (OTC BB:GORO.OB - News), (Frankfurt:GIH.F - News) announced results from an internal analysis of its drilling to date at its 100% owned El Aguila Project in Oaxaca, Mexico. Estimates of mineralized material equal 1,836,497 tonnes grading 2.57grams/t gold (Au), 188.24 grams/t silver (Ag), 1.08% Lead (Pb), 2.91% zinc (Zn), 0.26% copper (Cu). This equates to 773,355 gold equivalent (AuEq) ounces, as detailed below. This mineralized material does not meet the SEC definition of Proven and Probable Reserves but would be equivalent to an estimate of Inferred Resource in Canada. Gold Resource expects to commence production at its El Aguila Project mid-2008, subject to obtaining remaining permits and regulatory approvals, completing necessary financings and equipment deliveries.

     

    Gold Resource Corporation's president William W. Reid stated, "We are pleased to have more than doubled our April 11, 2007 mineralized material estimate of 290,500 gold equivalent ounces to 773,355 gold equivalent ounces. Equally, based on the fact that our drilling continues to confirm and expand this very robust, high-grade epithermal system, we feel the exploration potential at El Aguila is great and may soon increase our gold equivalent estimate to over 1 million ounces."

     

    The mineralized material number is an in-place number without regard to recoveries. Gold Resource, like many in the industry, subscribe to the use of gold equivalent or AuEq as a means to present the aggregate value of polymetallic ore. Gold equivalent valuation quantifies the base metal percentages and precious metal ounces of polymetallic ore into one value. This calculation converts the metals quantity into its dollar value and converts that dollar value back into an equivalent gold value. Gold equivalent is a valuation calculation that places the emphasis on the total dollar value for polymetallic ore. The following mineral values were used in this gold equivalent conversion: gold at $650/ounce, silver at $13/ounce, lead at $1.60/pound, zinc at $1.30/pound and copper at $3.60/pound.

     

    Gold Resource Corporation's April 11 production decision was based on a targeted initial three year mine life and a capital payback of 6 months. Because of the increase in total ounces along with certain higher grade areas, such as El Aire Vein #2 which averages 0.83 AuEq oz/tonne and La Arista Vein #1 which averages 0.63 AuEq oz/tonne, GRC now targets 6 years of mine life with annual production targets of gold or gold equivalent levels as follows:

     

    Ounces in Gold (Au) or Gold Equivalent (AuEq)

    Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

    70,000 100,000 120,000 120,000 120,000 120,000

     

    Gold Resource Corporation continues to move forward on all fronts as an emerging low cost gold producer.

     

    About GRC.......

  18. Great Panther (GPR) has fallen back again.

     

    Nes needs checking, but it could be cheap here

     

    GPR posted production increase last quarter: Great Panther Press Release

     

    I haven't checked the fundamentals on this one, but it looks like it's getting hit by a double whammy of lots of el cheapo warrants expiring near the end of the year and probably tax loss selling too.

     

    Need to add this one to the research list for possible end of year bargain...

  19. DrBubb said:
    and a good announcement today too

     

    Yes - the surface rights risk just went away this morning, not to mention the good drill intercepts.

    I think I forgot to mention above that, outside of the initial El Aguila open pit deposit which is just gold/silver, there are significant potential base metal byproducts (zinc, lead, copper). GORO intends to finance a recovery circuit for these base metals using cash flow from the open pit deposit.

    Ace

    Press Release Source: Gold Resource Corporation

    Gold Resource Corporation Updates Progress at Its El Aguila Project in Oaxaca, Mexico

    Monday October 8, 6:00 am ET

    DENVER, CO--(MARKET WIRE)--Oct 8, 2007 -- Gold Resource Corporation (GRC) (OTC BB:GORO.OB - News) (Frankfurt:GIH.F - News) is pleased to announce the signing of the important local Ejido (agrarian community) agreements to allow for mine development at its El Aguila Project in the southern state of Oaxaca, Mexico. Additionally, drilling continues to return high-grade intercepts from its El Aguila Project. These high-grade intercepts include 11 meters of 19.57 grams/tonne (0.63 oz/tonne) gold equivalent at its La Arista area; 6 meters of 16.47 grams/tonne (0.53 oz/tonne) gold equivalent at its El Aire vein; and 1 meter of 43 grams/tonne gold and 359 grams/tonne silver (1.63 oz/tonne gold equivalent) at its El Aguila open pit deposit. The El Aguila Project is targeted for production mid-2008 subject to timely obtaining all required permits and regulatory approvals, necessary funding and equipment delivery schedules.

    The agreements between the local San Pedro Totolapam Ejido and Gold Resource Corporation's wholly owned Mexican subsidiary have been signed and filed with the National Agrarian Court and provide for an initial 20 year operation with the ability for extensions. These agreements represent local approval and support for Gold Resource Corporation's development of a mine at its El Aguila Project. This local approval is a necessary and important step to obtain federal mining permits.

    Recent drill highlights include:

    La Arista area;

    Hole 7083 (-45 deg)

    -- 11 meters of 2.64 g/t gold, 167 g/t silver, 2.97% lead, 6.66% zinc (or

    a gold equivalent* value of 19.57 g/tonne or 0.63 oz/tonne)

    El Aire area;

    Hole 7285 (-60 deg)

    -- 6 meters of 4.91 g/t gold, 274 g/t silver, 1.22% lead, 2.85% zinc (or

    a gold equivalent* value of 16.49 g/tonne or 0.53 oz/tonne)

     

    El Aguila open pit deposit;

    Hole 7229 (90 deg)

    -- 1 meter of 43.10 g/t gold, 359 g/t silver (or a gold equivalent* value

    of 50.69 g/tonne or 1.63 oz/tonne) and

    -- 2 meters of 9.59 g/t gold, 125 g/t silver (or a gold equivalent* value

    of 12.13 g/tonne or 0.39 oz/tonne)

    Source: Gold Resource Corporation

    (click to enlarge)

    Recent drill intercepts

    Assays by ALS Chemex, Vancouver, BC Canada

    Gold Resource Corporation's president William W. Reid stated, "Our drilling continues to expand the high-grade El Aire vein which is still open in both strike and depth. The La Arista area shows both open pit and underground mining potential. We continue to be impressed with the area's multiple high-grade drill holes with intercepts of over one half ounce gold equivalent per tonne. This expanding area is also open in all directions and has the potential of becoming GRC's third high-grade deposit at our El Aguila Project."

    Mr. Reid added, "Additional mineralization, as high as 43 grams per tonne gold and 359 grams per tonne silver over 1 meter, has been intercepted with infill drilling at our El Aguila open pit. We are also adding ounces with step out drilling. The El Aguila shallow high-grade open pit is where the initial production will come from."

    "We are very pleased with the local support for our mining project and embrace the opportunity for our project to benefit the local communities. And drilling continues to bolster our belief that the El Aguila Project is potentially a very large, robust and high-grade epithermal system. We are consistently adding ounces and moving forward on all fronts as an emerging gold producer," concluded Mr. Reid.

     

    About GRC

    Gold Resource Corporation is a mining company focused on production and pursuing development of gold and silver projects that feature low operating costs and produce high returns on capital. The Company has 100% interest in four potential high-grade gold and silver properties in Mexico's southern state of Oaxaca. The company has 28,249,552 shares outstanding and no warrants. For more information, please visit GRC's website, located at www.Goldresourcecorp.com and read the Company's 10-KSB for an understanding of the risk factors involved.

     

    This press release contains forward-looking statements that involve risks and uncertainties. The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. When used in this press release, the words "anticipate," "believe," "estimate," "intend" and "expect" and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements include, without limitation, the statements regarding Gold Resource Corporation's strategy, future production, future expenses and future liquidity and capital resources. All forward-looking statements in this press release are based upon information available to Gold Resource Corporation on the date of this press release, and the company assumes no obligation to update any such forward-looking statements. The Company's actual results could differ materially from those discussed in this press release. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the company's 10-KSB and Form SB-2 filed with the Securities and Exchange Commission.

     

    Image Available: http://www2.marketwire.com/mw/frame_mw?attachid=596243

     

     

     

     

    Contact:

    Contact:

    Jason Reid

    Gold Resource Corporation

    303-320-7708

  20. Gold Resource Corp. (GORO)

    UPDATE - 3/15/2019

    GORO / Gold Resource Corp... All : 10-years : 5yr-W : 2yr-D : 6mo /10d : vs-etc - Last: $3.96

    YseO0Vi.gif

    Sym : Price: MktCap EntVal : Ebitda : EV/eb.: Earns : PER-: Div. : Yield : BkVal : P/BV :
    Gold : 13.01: $22.7b : $29.4B: $3.06b: r:9.60 :  (1.32): N/a- : $0.16 : 1.22%: $6.50: 200%:
    NEM : 33.15: $17.7b : $20.2B: $2.74b: r:7.36 : $0.64: 51.8 : $0.56 : 1.68%: 19.70 : 168%:
    Goro: $3.96: $243M: $239M: $33.2M r: 7.18 : $0.16: 24.8 : $0.02 : 0.51%: $2.16 : 183%:

    Ace of KY writing:

    (the following is an excerpt from an Update I have prepared for family and friends. GORO should be known already amongst GEI investors as it has been mentioned several times in the past on this forum - Ace)

    Introduction

    Gold Resource Corporation (ticker: “GORO”) is a junior gold exploration and development company headquartered out of Colorado, USA. GORO shares are currently trading on the over-the-counter bulletin board market. Their website address is: www.goldresourcecorp.com

    Capital Structure and Chart

    GORO currently has 28.2M shares outstanding, 2.6M unexercised options, and 0 warrants for a fully diluted 30.8M shares. Current market capitalization is approximately $107M. The company intends to list its shares on the AMEX exchange, but this will likely not happen for at least a year.

    <chart omitted in this forum due to author's incompetency with respect to adding images to a post >

    Management

    GORO was founded by and is managed by the Reid family which managed US Gold prior to being bought out by Rob McEwen. I have not personally met the Reids, although I did spend some time on the phone with Jason (the CEO Bill Reid’s son). He was very forthcoming and answered all questions professionally. The Reids are spoken highly of by <Frizzers>, and their recent activity and shareholder register indicate that they know how to raise money in London and the European capital markets. The Reids hold about 32% of the outstanding shares of GORO, so they will share their shareholders’ fortune (or pain). Also, Jason (and the latest GORO presentation) insists that they are committed to paying dividends as soon as they are able.

    Assets

    GORO’s primary assets are a group of gold/silver deposits in Oaxaca, Mexico. The most advanced of these is the El Aguila deposit. GORO made a positive production decision on El Aguila earlier this year. A feasibility study has not been commissioned on the El Aguila project, but an independent scoping study from 2004 is available by contacting Jason Reid. GORO insists that there are currently 3 years of mineable resource, although the lack of a feasibility study has prevented them from classifying any of the resource as reserves. Additional resources are currently being proven up by drilling, and an updated resource report is due any day now from their consultant. There have been several nice intercepts over the past few months, and Jason indicated that drilling will continue for the foreseeable future. Production is currently envisioned at 70k, 90k, and 100k ounces for the first three years, respectively. The scoping study indicated that the average cash cost of gold production would be approximately US$107/oz. Costs have escalated substantially since 2004, but it should also be noted that the project is very sensitive to ore grades and the drill results subsequent to 2004 indicate that the ore grade should be in the 11g/t gold equivalent area. The scoping study indicated $82.4/oz costs at these grades, so GORO’s forecasted $100/oz cash cost appears to be reasonable. Also, the scoping study was performed using a 750t/d production rate whereas GORO has decided to increase the capacity to 850t/d. Capital costs have increased significantly. The company is currently forecasting $20M in capital spending to bring the mine into production versus the $11M scoping study estimate. Unfortunately, this type of inflation has been experienced by all in the construction industry.

    Financing

    Jason indicated that the construction of El Aguila will be 100% equity financed (and that there is significant interest from existing institutional shareholders to participate in this financing.) Management believes that their first mine should be equity financed due to the terms required of a company with no current cashflow (such as hedging and high interest rates) and also to avoid any problems if startup delays are encountered. Future mines would include debt financing on better terms. My estimate is that GORO will need to raise at least $25M by the end of the year to finance the construction of El Aguila and continue drilling. Let’s assume $30M to be conservative and to account for any subsequent financing needed next year to carry them through to positive operational cash flows. Since their shares have been trading at around $4 for the past few months, my estimate is that approximately 8M shares will be issued along with 4M warrants. This would bring GORO’s fully diluted share count to 42.8M shares, which (with only 4M warrants) would still be very tight for a 100k oz gold producer.

    Valuation

    Since there has not been a formal feasibility study prepared for El Aguila, I created a valuation for the project based on the discounted cash flows (DCF) method. The valuation revealed that the first three years of production do not justify the current stock price on a DCF basis. They need to prove up approximately 500k more gold equivalent ounces to justify the current stock price on a DCF basis. This seems reasonably achievable with the drill results that have been released this year (there are multiple deposits that would supply feed to the El Aguila mill.) Most gold producers (especially low-cost producers) are valued at a significant premium to DCF or net asset value (NAV). Thus, it would not be unreasonable to expect a double in the stock price if and when GORO has proven it can produce low-cost gold and increases its resource (potentially by late next year). Assuming $700 gold and 42.8M shares, GORO is currently trading at about 3 times anticipated 2009 cash flow.

    Risks

    GORO is a risky investment for the following reasons:

    1. GORO’s resources are non-NI-43-101 compliant. Thus, even though they have retained an independent consultant to evaluate the resources, it is unlikely that the deposit will attain the same market value that a 43-101 deposit would carry. It is obvious that the Reids are managing GORO to become a producer rather than a takeover target.

    2. GORO only has one independent director. This concern is somewhat mitigated by the fact that management owns almost 1/3 of the outstanding shares. Jason did indicate, however, that they would likely bring on an additional independent director within the next year or two.

    3. Permits and surface rights are not yet in place. This is a concern with all mining companies. GORO does not anticipate any problems obtaining their permits in a timely fashion, however.

    4. Price of gold is currently at 30 year highs. A correction is likely as the central banks try to keep the price of gold under control. Depending on the price of gold, one may likely be able to purchase GORO at a lower price within the next few months prior to construction completion.

    Investment Decision

    I purchased a small position in GORO this past week. GORO has had a significant appreciation in share price this past year. I would like to see the share price correct some prior to securing a larger position. Unfortunately, with gold well over $700/oz it is difficult to find any good purchases in the sector. If we get a good correction in the price of gold over the next month or two, it may result in a better opportunity to purchase GORO. The primary reason for being careful with GORO, however, is the low quantity of in situ resource it currently has on the books. The upcoming resource report will give us a better picture of GORO’s future cash flows beyond the next three years.

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