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AceofKY

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  1. 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 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.
  2. 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.
  3. The majors (at least some of them) are at a valuation level that we haven't seen since at least 04 when I got into the sector (except maybe for a brief moment in late 08). Sure their performance has been bad over the past decade. That's largely because a higher gold price was already baked into the valuations. Now we have the curious case where the gold & silver price have done exactly what we expected but the equity prices are sinking. Something will give eventually - either gold/silver prices will fall or equity prices will rise. I'm betting on the latter. Bubb, I'm going straight to the source so I don't get all the baggage that comes with ASA. Hecla and Newmont are two that I think are outstanding buys right now. I wouldn't want to own several of the majors in their portfolio - not worth the 10% NAV discount I think.
  4. Newmont is looking appealing here. Trading at ~US$26B market cap, ~6.5x cash flow, ~12.5x PE, ~2% dividend. My very rough estimate of NAV: ~US$45B at 1500 gold, 3.50 copper, 5% discount. I haven't bought a senior gold producer for a very long time. I think the last one was Goldcorp in 04, although I don't think it was considered a senior at the time.
  5. ASA holdings from the latest SEC filing: Agnico-Eagle Barrick Gold Compania de Minas Buenaventura Eldorado Gold ETFS Palladium ETFS Platinum Goldcorp Inc. Golden Star IAMGOLD Corp Kinross Gold Newmont Mining NovaGold Randgold Royal Gold Inc.
  6. 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.
  7. Interesting thread. Charlie, you mentioned that some of the investors weren't particularly good at analyzing fundamentals. Did any of the investors achieve their wealth via technical analysis of equities or markets in general?
  8. AceofKY

    Mining Valuation Model

    1. Options/Warrants: I just calculate the exercise value; i.e. the cash that the company will receive. Then I use the fully diluted share count in per share valuations. 2. Profits: I don't calculate profit. Cash is what's important. Profits are just an accounting gimmick. My guiding principle is that a company is worth a sum of its future free cash (which could be distributed to shareholders), with the sum being discounted somewhat for risk & time preference. 3. Taxes - I call or email individual companies to get this info. It varies widely.
  9. 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
  10. AceofKY

    Jaguar Mining

    Volume has been very good for the last couple of days. Rumours of a takeover, apparently, from what I gather from the Stockhouse board. I wouldn't put much faith in the rumour; Yamana has its plate full for a while and I can't imagine who else would be interested in JAG's fairly small Brazilian assets. I am ready to take some profits on this one, but I might hold on a little longer with this volume...
  11. AceofKY

    Geovic Mining

    Geovic Mining (GMC.v on the TSX venture exchange) looks very interesting. First, Geovic owns a 60% share in the world’s largest cobalt resource in Cameroon. There is also a significant amount of nickel and manganese in the deposit. A large percentage of the remaining 40% share is owned by a corporation that appears to be controlled by the Cameroon government, so there is significant incentive for the government to advance this deposit. The first of seven deposits has been evaluated through the prefeasibility stage and this report can be downloaded on SEDAR. The prefeasibility uses conservative numbers, $16.83 Co and $5.78 Ni, for the base case economic evaluation scenario. Even better, the reserves of the deposit were calculated on $12 Co and $3.50 Ni yielding a 21 year mine life. The in situ value of the first deposit is about $12.8 billion using the base case numbers. This is very misleading, however, since the net payable metal recoveries will be very low (~57.2% for Co and 15.4% for Ni). I was hoping that these recoveries were conservative assumptions too, but the COO confirmed that we will not likely see much more than 58% for Co and 17% for Ni due to metallurgical issues and the proposed process that maximizes Co extraction at the expense of Ni extraction (which yields the optimum NPV & IRR). Base case NPV (Geovic’s 60% share) is about $317M and IRR is about 77%. This does not include any debt financing, but they will definitely be financing a portion of the project via debt which will increase the NPV and IRR. Capital costs will be very low at around $111M. Financially, this is a low risk high return project. Compare to projects such as Novagold’s Galore Creek where it will take a $2 billion capital expenditure to generate approximately the same NPV and with a low IRR. There are 6 other deposits, one of which (Mada) has a NI43-101 compliant inferred resource. Let’s take a stab at a very conservative valuation. The objective here is to find the absolute minimum this company’s assets are worth. If we can buy the assets alone for less than they are worth, then there is very little risk to our investment. The rest is upside. Numbers are in US dollars. #Shares Out: ~101M of which ~11% is owned by management #Shares FD: ~135M (no more equity is needed to finance the project) Working Cap, FD: ~$156M or $1.15/FD share No debt (yet) Nkamouna deposit base NPV from prefeasibility (x 60%): $317M or $2.34/FD share Mada deposit value: This is the 145M tonne inferred resource which hasn’t been thru feasibility yet. Looking at the nearby Nkamouna deposit, the NPV ended up being about 4% of the in situ value of the deposit. Let’s be conservative and use 2% of the Mada in-situ value. This yields $242M or $1.79/FD share. It should be much higher since they will share the same infrastructure. Base case value: Working Cap – Debt + Nkamouna NPV + Mada Estimated NPV = $5.28/FD share. Geovic is currently trading at approximately US$3.3/outstanding share. Conclusion: We can buy Geovic for approximately a 37% discount to a very conservative estimate of its asset value, which implies a minimum share price appreciation of 60% needed just to get back to a reasonable valuation of assets. All of the upside with respect to high commodity prices, additional deposits, reinvestment of free cash flow, etc, is a bonus. This is not a marginal resource that can be mined only when commodity prices are high. This is the type of resource that the big boys look for. The only significant risk seems to be Cameroon, and it seems to be one of the more stable countries in Africa. Ace
  12. FR - high cost miner; current prices likely have all three of their mines operating in the red. Options on silver price would likely be safer. EDR - I don't follow GPR - I haven't reviewed their status lately SLW - Watch out for counterparty risk. Highly liquid if you are a trader rather than an investor. Bill Cara likes them. SST - I own some of this. Neves-Corvo may shut down if copper keeps falling but I think the Minto and Capstone streams should be safe due to hedges in place. Much less debt than SLW. SSRI - I haven't reviewed their status lately. PAAS - be careful here, PAAS doesn't give sufficient disclosure to determine how exposed their mines are to base metal price plunges CDE - A bunch of crappy assets and are in danger of losing their NYSE listing You are missing Hecla on your list. They currently have a financing/loan problem but if they get that straightened out then I think Hecla will emerge as one of the stronger silver miners b/c they have two great assets in Greens Creek & Lucky Friday with costs in US$. Also you are missing GORO which is basically half gold half silver. You have to be very careful with silver miners right now because many of them are dependent on lead, zinc, or copper for a big part of their revenue.
  13. Yes, this is the regulatory paperwork needed to pull down an equity financing open to the public. They do need cash as they are basically out of working cap & at their credit limit, but they don't need nearly $200MM. Dolores should be cash flow positive very soon. I think Mark is getting his ducks in a row for an acquisition.
  14. 1. Good pick with Minefinders 2. I concur strongly with Frizzers (I'm having trouble with the new name) on GORO; it is my largest holding 3. I like Hecla better than First Majestic here. They have better assets IMO and lower production costs (although you will see their cash costs go up due to the base metal credits). First Majestic has been executing well and it is on my watchlist, but I'm waiting to see if they can convert all that drilling they've been doing into mineable resource. They really need some more reserves. 4. I like Silverstone here too, and I think the forthcoming bad news of Aljustral shutting down is probably already priced in. Same business model as SLW. 5. Fronteer (FRG) is another I've been buying; they're more of a pure explorer but they have huge cash on hand (~$84MM) and the burn rate is probably only $15-20MM/yr. EXCELLENT assets that are extremely undervalued right now. It is starting to look more and more like they've found another big gold trend in Nevada (Long Canyon) separate from Carlin & Cortez. Pretty much everything is cheap right now.
  15. AceofKY

    Victory Nickel

    Xstrata has announced a friendly takeover offer for Jubilee Mines. Subtracting out Jubilee's cash position, the offer amounts to about US$2.47/lb of in situ nickel resource. Using this metric applied to Victory Nickel's resource, and subtracting out about $300MM necessary for construction costs, yields a share price of $7.70. Victory can be purchased right now for about Cdn$0.64/share. The comparison is not apples-to-apples as Jubilee probably has better exploration potential and lower cash costs. I think, however, it demonstrates that Victory is significantly undervalued. I also like Crowflight Minerals.
  16. AceofKY

    Victory Nickel

    Better volume for NI also. Is this due to RTP's statement that they are looking to acquire nickel assets? I would think NI is too small for RTP. VICTORY NICKEL INC COM NPV(Toronto: NI.TO) Last Trade: 0.17 Trade Time: 3:59PM ET Change: 0.01 (6.25%) Volume: 600,500 Avg Vol (3m): 143,047
  17. AceofKY

    crowflight

    Finally a nice high volume day for Crowflight: CROWFLIGHT MINERALS INC. (Tier2(CDNX: CML.V) Last Trade: 0.2150 Trade Time: 3:59PM ET Change: 0.0550 (34.37%) Volume: 2,159,355 Avg Vol (3m): 524,542 It has been a long ride down with this one. Glad they have those hedges in place as it looks like nickel is going to sit at marginal cost for a while. Sep 24/08 Sep 24/08 Humphrey, Raymond Bruce Direct Ownership Common Shares 10 - Acquisition in the public market 300,000 $0.195 Sep 24/08 Sep 10/07 Humphrey, Raymond Bruce Direct Ownership Common Shares 00 - Opening Balance-Initial SEDI Report Aug 01/08 Aug 01/08 Ladd, Anna Man-Yue Indirect Ownership Common Shares 10 - Acquisition in the public market 4,000 $0.345 Aug 01/08 Aug 01/08 Ladd, Anna Man-Yue Indirect Ownership Common Shares 10 - Acquisition in the public market 16,000 $0.340 Aug 01/08 May 26/08 Ladd, Anna Man-Yue Indirect Ownership Common Shares 00 - Opening Balance-Initial SEDI Report Aug 01/08 Aug 01/08 Hoffman, Michael Indirect Ownership Common Shares 10 - Acquisition in the public market 300,000 $0.330 Jul 03/08 Jul 03/08 Collins, Gregory Direct Ownership Common Shares 10 - Acquisition in the public market 40,000 $0.480
  18. AceofKY

    Silver Wheaton

    I like Silverstone (SST). They have the same business model as SLW but a much cheaper valuation.
  19. AceofKY

    Victory Nickel

    It's a no-brainer for INI shareholders. For NI shareholders, we just get diluted for a 4th asset when the first 3 aren't even close to being developed yet. All junior shares are worthless now anyway, so I guess it doesn't even matter anymore.
  20. Anyone know these directors? Victor Wyprysky, President, CEO & Director • Managing Principal of Toronto-based Crescent Financial Corporation • Founding partner, past President and CEO of Harris Partners Inc. • 25-Year Investment Banking Career with Burns Fry, Gordon Capital and Scotia Capital Paul Carroll, Chairman • Chairman and CEO of Diadem Resources Ltd. and President of Carnarvon Capital Corporation Bill Shaver, Vice Chairman • Co-founder of Dynatec, with over 40 years of mine development experience with Inco, Falconbridge, Barrick, Newmont, Goldcorp, Aur Resources and FNX Mining • EVP, Denison Mines Ian MacNeily, EVP, CFO & Director • Former CFO of North American Palladium Ltd. Past CFO of Tiomin Resources Inc. and Pangea Goldfields Inc. Jim Roxburgh, VP Project Co-ordination • Over 40 years in the minerals industry – has developed a track record of project evaluation, acquisitions, operations, and executive responsibility • Previous experience with Rio Tinto and Dynatec Ken Gum, General Manager • Previous MTM General Manager under Pasminco • Will oversee restart of Cumberland, Gordonsville, and East Carthage mining and milling operations John Thompson, VP Resource Development • Over 30 years of experience as a geologist and geological engineer • Has supervised and evaluated major greenfield exploration and mine development programs worldwide
  21. Second quarter financials are out on SEDAR now. Gentlemen, I think we can officially write SRZ off as a failed company now. My sole hope over the past few months was for some decent operational performance which might allow SRZ to at least continue as a going concern until zinc prices turn around. Instead we got bad grades, low recoveries, insufficient grinding capacity, and less than 25% of forecast production. More capital is needed to solve these problems. SRZ needs to raise $40MM right now to avoid bankruptcy. That's not going to happen with zinc prices this low. She has substantial debt, so there will be nothing left for shareholders even if the assets are sold. SRZ's proposed 125MM lb/yr production will not materialize and it will become part of the zinc supply destruction that will (eventually) contribute to a rise in zinc prices. SRZ is a dead fish, and yours truly is a bagholder. Hopefully other GEI members can at least learn from my mistake, the principle mistake being (I think) buying a high cost miner with no hedge and no exit plan in case the underlying commodity falls.
  22. AceofKY

    Victory Nickel

    Crowflight is showing some interesting insider buying activity, including the CEO for almost $100k. Even the new CFO lady is buying: Aug 01/08 Aug 01/08 Ladd, Anna Man-Yue Indirect Ownership Common Shares 10 - Acquisition in the public market 4,000 $0.345 Aug 01/08 Aug 01/08 Ladd, Anna Man-Yue Indirect Ownership Common Shares 10 - Acquisition in the public market 16,000 $0.340 Aug 01/08 Aug 01/08 Hoffman, Michael Indirect Ownership Common Shares 10 - Acquisition in the public market 300,000 $0.330 Jul 03/08 Jul 03/08 Collins, Gregory Direct Ownership Common Shares 10 - Acquisition in the public market 40,000 $0.480 Jun 05/08 Jun 03/08 Wilson, Bernard Direct Ownership Common Shares 10 - Acquisition in the public market 19,000 $0.640 Hopefully this means the startup is going well. Or maybe a potential acquisition in the works? Both FNX and Xstrata have publicly announced that they're looking for acquisitions in nickel. Crowflight seems rather small to me to be of interest to these operators, but they are on the edge of production and their equity has been obliterated so who knows?
  23. AceofKY

    Selling Lead Mine

    Teck's smelter at Trail is likely closer to you, but I doubt if they'd be willing to accept your offtake unless you're talking sizable quantities. You have to be very careful in the States, especially with lead. Look at all the hoops Mines Management is jumping through in Montana, just so they can drill! What you really need is some data to indicate the scope of the project. Did his grandfather have any drilling performed? I'd recommend hiring an experienced consultant to evaluate your grandfather's files, the property, and perform some sampling, etc. They will then be able to make a recommendation on whether to proceed to the next step, or go to plan B.
  24. Hi Daniel, I put in a bid for Photochannel the other day after reading your writeup and doing a little DD. Not sure if the order filled or not; I don't log into my brokerage account these days since it's too depressing. I'm just concentrating on my primary business and waiting for the market to turn around. I don't want to talk about SRZ right now.
  25. AceofKY

    Geothermal heat pumps

    I'm not sure about seismic activity, but poly pipe is very forgiving and will bend/flex long before it will crack. I never use expansion tanks on this type of piping because it will expand itself much more than other types of piping. Yes, the heat pumps heat in the winter and cool in the summer from the same water loop and using the same air system. There is a reversing valve in the refrigeration circuit that switches automatically from one to the other based on the thermostat setpoint and mode. All of this is packaged into the water source heat pump. All the homeowner has to do is connect up the piping, electrical, and duct. Except for the geothermal water loop, it is basically a drop-in replacement for a standard central air conditioning system with air-cooled condenser. There is no need to warm from low level unless you have really high ceilings. We use ceiling diffusers almost exclusively on ceilings from 8 to 12 feet without having any heating problems. You can also get ceiling diffusers with adjustable vertical throw if needed; I use these when designing HVAC systems in gymnasiums which have higher ceilings. Remember, with the typical geothermal system, you don't get "hot" or "cold" water and thus it won't do any good to run it through the floor or through ceiling beams unless you use some sort of secondary chiller or heater. The ground stays at about 50-65 degrees F year round. The water loop will range from a low of around 40 degrees F in the winter to a high of around 95 degrees F (if properly designed) in the summer. You must use a heat pump (which is basically the same refrigeration cycle as a refrigerator) to push the heat into the water in the summer or extract the heat in the winter. The cheap way to do it is using the standard water-source heat pump with packaged air heat exchanger and supply fan and duct the air to the rooms in the exact same manner as the traditional central air conditioning system.
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