Mining Minerals & Metals Share Discussion Threads

[deka1] 26/11/2008 20:53

hi serp yes , it all hinges on goldfields , it might not get everything back but will go a long way towards it , it would do me mate, btw are you in cey

[serpicouk] 26/11/2008 20:33

1W - I've just taken a closer look at the Sankarani framework. I didn't appreciate that Glencar had the right to extend a further 5% ownership to Goldfields to activate a free ride. That certainly changes things as I was working to the assumption that they would have to finance their 35% capex.

If they can work a similar agreement for Komana and bag a few million to develop other targets then this still might work out alright.

30% royalties from Sankarani and Komana plus exploration of other local targets would be a comfortable situation to be in in 5 years time. Deka - you and the rest of us might well break even yet =)

Of course, at current market cap and with cash running out, it would be a lot cheaper for Goldields to buy GEX. But I doubt that would get many of us our investment cash back.

Apologies for being so bleak but external market factors have conspired to scupper Glencars plans before and there is still a very real threat of deja vu.

[1waving] 26/11/2008 10:13

deka - I never expected GEX to retain 100% of Komana - if they do retain and develop it to the full it would be very large and positive surprise.

[deka1] 26/11/2008 10:01

hi wave, i hope you're right as for myself i would be overjoyed to break even, as you know i have taken my biggest ever loss lately on MCR and they were producing, but lack of cash in the attic(i wont say bank for obvious reasons) has all but put them under, there will be many more go the same way , only time will tell if GEX is one of them ---- edit if gold fields does buy in more i agree that Komana will be the main part of any deal, but 50% of something is better than 100% of fa

[1waving] 26/11/2008 09:42

I think a viable option/fall back is for Gold Fields to buy into Komana and GEX to develop Solona. Serp paints an overly bleak picture and forgets the assets of Glencar which include the three licences at Sankarani which we have a free ride on, Uganda and Ghana, then Komana and Solona.

I think it is just how and when will Komana develop that is on investors minds. That is just one license area that all is likely to happen is that it will go into a JV earlier than we might have liked.

.

[deka1] 25/11/2008 23:18

serpicouk hi , my hope is for gold fields to take them out, IMVHO that is the only hope

[serpicouk] 25/11/2008 21:48

deka, unfortunately I think you're right to be worried.

Whilst it may be no reflection on GEX the cold harsh reality is that the liquidity trap looks to be a terminal event for a large proportion of junior miners. 1H09 will probably resemble a graveyard for 'potential mining giants'.

I also feel we've got to the point where positive drill results will most likely be meaningless and so we wait to see what will happen to GEX in Q109. Either they will be able to raise finances somehow (either by giving a % of Komana/Sankarani to a partner), raise it in the market with massive dilution to existing shareholder (or may be a rights issue?), or they'll stumble to acquire money and cut back all exploration and stall for as long as the cash allows (which would most likely end with the share price around 0.1p and the fire sale of Komana and Sankarani).

As 1W, I suspect Komana and Sankarani will both be commercial mines...what I'm less clear about is who will be profiting from them...

With each drop in share price, value here certainly increases, but the risk that GEX won't be able to hold onto its concessions also increases.

Then again, may be they'll JV on good terms, prove up and huge resource and we'll all look back in 5 years time and wish we bought all we could at 3p.

Scary times for all - the gold price feels like salt in the wound. =)

I look forward to a drill report to take my mind of the market problems.

[1waving] 25/11/2008 20:45

I think when the results start coming through from Komana AND the three Sankarani licenses we'll have further evidence of major deposits.

Gold Fields have an aggressive drill programme and in the main are resource drilling on known deposits, plus further RAB drilling on earlier stage targets. We're at the end of the 'rainy season lack of news blues' now drilling has been underway for a few weeks.

Started drilling earlier than normal at Komana also, we'll have good news flow soon enough now.

[deka1] 25/11/2008 19:10

1waving, thanks for your response, sorry for being downbeat, 60% down here, and cant see an easy way forward for these small miners the way things are today

[1waving] 25/11/2008 18:39

deka, there are more options for cash than an equity placing as myself and others have posted several times. Hugh has been around for long enough to know what is best for the company and shareholders.

[deka1] 25/11/2008 18:30

hi wave , the last results did not do anything for the share price , what makes you think the next one will be any better, this market is not likley to change much for the small expos, the producers or near producers maybe- with a rising pog, things will probably stay this way for quite a long time imo, and our gex is in the same leaking boat as the rest of the small explorers, new funding may prove difficult to get for next season

[1waving] 25/11/2008 17:10

RC/Diamond drilling has been going for 7 weeks and RAB just a few days less at Komana. Samples will have gone to the respective labs for assay for both by now so if the turn round time is quite reasonable as Hugh has mentioned, not too far away from results unless they are saved for a pre-Xmas report. Would think Hugh wants results out soonest to benefit share price

[deka1] 25/11/2008 16:00

marked down almost another 4% on no vol, going to be in the 2p range soon, very vulnerable, if the next resourse upgrade is good we might see a move by one of the big boys imo, anyone know when the money might run out , i think its around feb/march , if they have to raise capital through shares at 2p the dilution will be severe

[haydock] 25/11/2008 09:05

For another example of potential M&A keep an eye on SRB this week, seems they may be trying, perhaps like many, to part with their mine?

Certainly lights the wick in the engine!!!

[haydock] 25/11/2008 08:44

It may not have been a serious comment, but it highlights what will begin & is beginning to happen.
It is cheaper to buy ounces than find them.

The next phase is not digging it's M&A.
Kinross bought a gold prospect in Chle this week.

[serpicouk] 24/11/2008 20:49

I wasn't being 100% serious mind. Obviously Goldfields are currently interested in proving up a resource at Sankarani and will up their stake as part of the earn-in agreement with exploration expenditure. I was just highlighting the fact that for a fraction of the cost they could buy 14% of the whole company =)

$250m for 6m oz? I don't know what the economics of that project are (1.7g/t) but at ~$40/oz or just 5% of current gold spot it seems cheap as chips for such a large deposit. Of course, even that price would value GEX at a lofty 12.4p with more to come this drill season.

[haydock] 24/11/2008 15:46

Mineweb:

GOLD SPEAKS
Kinross Gold on the march
Reinforcing its leadership of the global Tier I gold sector, Kinross splashes out USD 250m on a 6m ounce deposit in Chile.

Author: Barry Sergeant


M&A setting price ?

[haydock] 24/11/2008 08:31

Good thinking S.
Either Goldfields are not thinking, as the expenditure is surely far less.

Or its a case of suck it & see being the really nailed on safe root.

In other words they cannot be sure, of the whole range of projects, so they have to spend to be certain.

Skewed or being run by diggers, not accountants?

A whole range of possibilities.

[serpicouk] 22/11/2008 17:13

Interesting how skewed things are at present. Take Goldfields 51% stake in Sankarani. Earned through expenditure of around £2.7M.

Goldielfds can enlarge their stake to 65% with a total expenditure of £8.1M.

So that's £5.4M to gain a further 14% in JUST Sankarani.

If they wanted an extra 14% of Sankarani they could buy 14% of GEX for just
£1.2M...AND they'll get 14% of Komana AND all other concessions thrown in for free...

As is true through out the whole mining sector - it's far cheaper to buy a company than actually carry out the work yourself. MKt Cap < Cap ex. That's if you have the cash! When credit frees up and companies don't feel a need to hoard cash those with the cash reserves will go shopping in the sale of the century.

[share_shark] 22/11/2008 14:34

sentiment looks good for gold stocks.

"Now, it's time to invest in undervalued stocks - SF t1ps Smaller Companies Growth Fund buys tech and gold stocks: A recommended offer from UK-AnaIyst.com‏; "

I am not a subcriber to above but others may be.

[haydock] 22/11/2008 12:32

Forget conspiracy theories from now on?
Borrowed from the Really useful gold thread.


Hyper Al - 21 Nov'08 - 21:52 - 53842 of 53865


I am amazed this has not been reported on this thread yet



"Wang Ruilei, a Shanghai-based analyst, considered the SGE's decision as a breakthrough since it was the first time the exchange allowed individual investors to participate in the spot transaction of real gold."

Won't this increase demand?

[haydock] 21/11/2008 17:48

Borrowed form CEY.
Link to Bloomberg Hambro interview today -
Very, very bullish Gold!!!

[1waving] 21/11/2008 17:44

and gold up to $800 oz to order and in quick order !!

[share_shark] 21/11/2008 17:30

If this has been posted before I am sorry.

From Money morning 21st.Nov.2008



In recent months it's been widely and repeatedly reported that retail demand for physical gold and silver is insatiable. The price may be falling in the futures markets, but retail dealers in North America, Europe, Asia and Africa have all described the situation as 'unprecedented'.

There's a shortage of coins, few people are prepared to sell the coins they have, and manufacturers of coins and bars do not have the fabrication capacity to meet current orders, causing longer and longer waiting times.

This has led to numerous theories about shortages of metal. I wanted to get the 'view from the street', so I spoke to Tony Baird, founder and boss of Baird and co (www.goldline.co.uk), the UK's biggest independent coin and bullion dealer...

--------------------------------------------------------------------------------

Demand for coins is enormous

The first thing to note is that retail demand really is unprecedented. Baird founded Baird and co in 1967, and so was dealing bullion and coins as gold fever spread in late 1970s. Yet he describes the last four months as the busiest he's ever known.

"It's been building up over the last two years", he says. "Then it sped up with Northern Rock and Bradford & Bingley. But in the last four months or so since Lehman Brothers, there has been a massive movement of money out of banks and into physical bullion, which people are taking home and putting under the bed. This is the busiest I've ever known."

A quick look at coin dealers' websites in the US, in the UK and in mainland Europe shows that many have run out of coin supply altogether and have had to stop dealing. Baird is among them. "We normally carry millions of pounds' worth of coins," he says. "We're big stockists and our stock has been going one way - and that is out of the door. There is huge physical demand. We're experiencing great difficulty buying coins in any volume anywhere in the world.

"Whether it's America, the UK or Europe, there are no sellers. Our stocks are low and we don't know what replacement premiums to charge. The replacement premium isn't apparent because there are no sellers, so we've stopped taking orders until the market settles down."

I notice even on Ebay that coins are trading hands at huge premiums to the spot price. It is not uncommon for American Eagle 1oz silver coins to sell for more than $20, even in the US where they do not have VAT. That's more than a 100% premium to the spot price of around $9.30! Surely this is unsustainable, in the short term at least?

If things get worse, gold banks will empty

Baird agrees. He describes the last four months as a "mad surge" and his stocks are now slowly building up again. "We should return to normal levels fairly soon". I would agree – though with a big 'if'. We may return to normality if this banking crisis doesn't escalate and stock markets find a bottom at these low levels. But if things get worse, this run on the gold banks will leave them empty.

But here's the biggest question of all. There's certainly a shortage of small bars and coins, but is there a shortage of the actual metal? James Turk of Goldmoney says his firm has experienced no supply problems, as they buy large LBMA bars. Baird concurs: "There is no shortage of metal. We have no difficulty finding physical supplies of large market bars. In small bars and coins there's a hold up. Kilo bars are in short supply because of manufacturing capacity. I haven't experienced any shortage of silver."

It seems that the shortages are not related to metal supply, but refining and manufacturing capacity. Baird says, "Our bars are manufactured by us and the volumes of business have increased so much that our manufacturing capacity is now stretched."

So why has the price of gold and silver been falling?

I spoke at the World Money Show last week and I got the impression that I disappointed a lot of people in the audience because I wasn't as bullish on commodities as Jim Rogers had been earlier in the day.

For the record, I expect some kind of a bounce from here into the spring, perhaps re-tracing 30-50% of the falls. But we have seen in the last five or so months that the impact of global deleveraging - i.e. paying down debt - has caused forced selling in all asset classes. Mr Margin - that's the man who demands you stump up extra cash as your leveraged investments lose value - packs a far greater punch than the supply problems, the China story or any of the other attractive fundamentals behind the commodity story.

In fact, as Baird suggests, it may be that the physical demand is what has stopped the gold and silver markets from collapsing altogether. The magnitude of this credit bubble, this lending bubble, this leverage bubble never ceases to amaze me.

But let's end on a positive note for gold and silver investors - a view from Baird with which I agree: "Eventually when the forced paper sales stop the physical buyers will prevail and gold will take off. And so will silver".

Perhaps very good thought to end the week.

[stenick] 21/11/2008 11:14

If only 1waving......