Mining Minerals & Metals Share Discussion Threads

[robbi123] 23/3/2009 23:14

Hate to post old news but still a good article and we are also at the 4p level when it was written:

October 23, 2008

Glencar Proves Up Well Over A Million Ounces Of Gold In Mali And Looks Set Fair To Increase Its Resource Still Further


By Alastair Ford



"It's unfortunate to be reporting good news in such weak markets", says Hugh McCullough. On the other hand, he adds, rather philosophically, "it's better to be reporting good news than bad news". Glencar has just delivered an updated resource estimate for its combined Komana East and Komana West project in Mali. The numbers, well worked over by SRK, come in at a healthy 1.25 million ounces grading 1.6 grammes per tonne. SRK also reports that selective mining could push the overall grade up to two grammes per tonne, so Hugh McCullough has plenty to feel good about, even if the share price bounce isn't quite what he might have hoped for last year on delivering the same news.
Conceivably the company could switch off the exploration rigs now and move straight into feasibility on a projected 10 year mine life producing over 100,000 ounces per year. That's not the plan, though, for a couple of reasons. The first is that in terms of rating, Hugh doesn't reckon Glencar will get any more support from the market if serious feasibility work starts at Komana. "I don't think we'll be stopping now and going to feasibility", he says. "We know what the potential of this is. The market probably does know too, but isn't interested. Other companies out there are interested too". Which brings us on to the second reason why Glencar isn't pushing the button on a feasibility study just yet.

At 4p per share, Glencar boasts a market capitalisation of a mere £11 million. That's a level that's just about beyond the reach of Hugh, and any merry band of fellow travellers he may care to gather together, taking it private. On the other hand it's plenty cheap for a larger cashed-up miner that's all of a sudden feeling predatory. Glencar is vulnerable in two ways. First, larger gold miners have been coining it in with gold up at between US$800 and US$1,000 for most of the year, but they haven't in any serious way replenished their reserves. Hugh estimates that in total the big boys are taking 80 million to 90 million ounces out of the ground every year, and there's no way reserves are being replaced at that level. On the other side of the same coin, recent deals in Burkina Faso were done on the basis of an average gold in the ground valuation of around US$60 per ounce. But Glencar's current market valuation gives its own ounces a valuation of just US$13 each. That's cheap enough to attract some predatory interest, although obviously Glencar's shareholders, who are generally supportive, would have something to say on the matter if any bid came in. Taking the Burkina Faso deals as a benchmark, then Glencar's shares ought to be worth 18p each.

Perhaps more significantly, Komana is by no means drilled out, and Glencar is by no means running out of money. Taken together, those two factors mean that Hugh is going to keep punching holes into the ground until well into next year, with a view to pushing the resource base up to the two million ounce mark. He feels that the more ounces he can get under the company's belt, the more value he will force out of anyone who comes at him with a bid. Whether that turns out to be the right decision, or whether a hell-for-leather dash for production might have been a better choice, only time will tell. But in any case the company won't drill forever. At some stage next year it will need new funds, and the new money will, says Hugh, be deployed into a feasibility study. The world may be a very different place by then, but one way or another, gold will still probably be strong relative to most other metals. Whether that means it will be at US$1,000, or US$500 is another matter, but either way with any luck Glencar will be one step closer to building a mine.

[share_shark] 23/3/2009 22:34

Thanks chaps.

Very encouraging for us then.

Good luck all.

[1waving] 23/3/2009 22:04

S-S
Saw that piece where falling off a cliff was mentioned and picked up on it straight away as media spin.

The corruption on the CRIMEX/COMEX instituted by the US Government to manipulate the gold price and paint the chart in a negative way means that in current markets trying to measure gold against the USD, Oil or any other measure has proved unreliable.

In today's announcement of adding to the bailout package the USA are giving $100bn of taxpayers money to take out up to a trillion of toxic debt. That is less than a drop in the ocean of the toxic debt out there.

The US taxpayer puts in one dollar and an investor puts in a dollar then a further ten dollars are lent by the Fed/Taxpayer. That's $11 put up by the taxpayer to just one from the investor to buy out toxic debt at inflated prices, which the investor can do pretty safely with the leverage there, but the taxpayer's risk is massive. So nearly a trillion more USD added to the Trillions already committed to the bailout ---- More dollars to be created with the touch of a button. That will add to the negatives for the USD and add to the positives for gold - but don't expect close correlation between gold and the USD/oil etc. in this market.

Back to GEX -- BT18 seems pretty confident of a good move up tomorrow - inside track ??

[deka1] 23/3/2009 21:59

SS hi, look at the dow tonight up nearly 500 points, the money is going to equities, for now !!

[stenick] 23/3/2009 21:37

I found this interesting.

I must agree that money should be based on something.

[share_shark] 23/3/2009 21:00

Point of view from another thread(much the same as my own,I have to say).

What do you guys and gals think?.

77spud - 23 Mar'09 - 20:48 - 16343 of 16343


amazing, just watching bloomberg and one week after the fed announces it is going to magic up $1 trillion out of thin air they pretty much said gold was falling off a cliff now that investors are abandoning safe havens. they were debating whether this was the start of a bull market!! also, ive been trying to work out the relationship between oil, gold and the dollar and it was suggested that gold would drop with the falling dollar, i don't understand that. surely if the dollar (a currency) falls, then gold would be more attractive(?) in the sense it is a store of value.

[robbi123] 23/3/2009 20:57

bartender - I certainly wouldnt bet against it, but I am happy to see a steady rise rather then the odd spike here and there. Volume is encouraging and this is still very much under the radar for many, despite the obvious potential and low m'cap.

[share_shark] 23/3/2009 20:44

and he thinks we do not notice deka.

YEARS and YEARS of practice !,

[share_shark] 23/3/2009 19:38

LOLS.

Now I only spoke to Hugh and nothing else.

It is you who has done so much for this bulletin board and always given tirelessly of your time, in attending the AGM's and reporting back, so promptly here, even though I have teased you,mercilessly, about the fall in the share price, from its heady days of years gone bye.

Now we have some other excellent contributors to assist your "lone ranger" act.


Mind it never really escaped me when you mentioned that a stunning woman always attended the AGM's either. ;o)

[bongo bwana] 23/3/2009 19:31

I think we should all get on our knees and express our appreciation of the intercession of Saint Share Shark on all our behalf's.

It is she who is the real miracle worker in this domain.

I am merely a plucked pleasant pheasant in purporting to be in possibly purile purgotory, hic!

[stenick] 23/3/2009 18:53

Thanks haydock for your prayers and I would also like to thank the experienced people on here for thier valued comments without which I would be in the dark.
Allelujah! Thanks Stenick.

[bartender18] 23/3/2009 17:21

This will hit 5p tomorrow (tues) who wants a bet

[share_shark] 23/3/2009 16:29

oh thank goodness for that then !.

In these torrid times, we need all the help we can get, so lets see if at long last, Glencar can reap rewards for us all.

[1waving] 23/3/2009 16:28

Well it's finally moved the share price !!

[share_shark] 23/3/2009 16:26

pension funds movements, I think I waving. Happens most years.

I would like to think I am wrong though.

[1waving] 23/3/2009 16:24

Now 2m in big blocks of apparent buys -- no share price movement. Institutional fund/s moving shares around at the end of the financial year ??

[robbi123] 23/3/2009 16:23

BB - very interesting indeed....

[bongo bwana] 23/3/2009 16:19

Purchases out number sales by greater than 30:1 and the Bid - Offer price remains unchanged.

These late in the PM buys suggest that news is on the way from some quarter and its obviously good news.

[1waving] 23/3/2009 16:15

That is serious buying still going through !!!

[bongo bwana] 23/3/2009 16:04

Thanks for flagging that Robbi - and the sizeable purchases are VERY encouraging but it also points to the availability of GEX stock on the market.

I have counted myself as been very fortunate to be able to double my holding here in recent times - just before the share price advanced and then settled back to current levels.