Admittedly you make a good point and I have no idea why no one else is concerned that the company is spending money in the Treasury to fund the company while paying out the majority of revenue in the forma of a dividend.
I have no interest in shorting this company as I think it's very dangerous but you address legitimate concerns that are seemingly ignored by the majority of long term shareholders from what I can tell. I'm not encouraging you to "bash" but, as someone who used to hold a substantial amount of shares(tens of thousands of shares) I am willing to admit that you bring up very valid issues.
Perhaps GORO will be able to ramp up production to a point where $.04/month is a feasible payout based on 1/3rd of FCF but at this point it is more than bothersome, to me at least, that the company is blowing the money from the private placement in order to keep up the appearance of paying out a legitimate dividend. They are clearly wasting the Private Placement money on things other than what they were originally stated for and I personally understand, for once, why someone like you is pointing to such issues.
As a point of advice though, if you're going to "short" the stock, perhaps you should just buy Puts so you know your loss ahead of time because it's highly possible that GORO will not go down due to the share structure and holdings of large entities. Again, I wouldn't normally concur with someone of your ilk but you bring up very valid points and I think it's somewhat telling that those who dismiss you don't have answers but instead point to the dividend which itself validates what you're saying strangely enough.
That being said, you'll never influence a stock by bringing up these issues on a message board if that's what you're attempting to do, although I'm not saying that that is your sole purpose of being here.
Good luck shorting this stock; from the looks of it you may need it. :)
This is based on an extrapolated interpretation of Slide 46 of:
EL AGUILA PROJECT PROGRESS PHOTOS
February 17, 2011: As the El Aguila Project develops view progress photos. (7MB download)
"Slide 46 Drill station testing depth extension of the Arista deposit"
Since other presentations showed slides giving present open strike length of 500m and present open depth of 500m, testing depth extension would mean drilling below 500m.
The 5/11/2011 earnings call said that the water had been pumped out, but mud still remained to be removed as of that date. Wirings, ventilation piping and such were damaged and they had to be replaced. There were equipment flooded. They were brought to the surface for repairs. New equipment orders were made. It was not said whether the Jumbo Drill was damaged, and if so how long to fix and to get parts. It was not said how long to get deliveries of the new equipment orders. The Jumbo Drill was shown in Slides 35 to 37 of the above photo presentation.
In the 5/11/11 call, it was said that Level 5 had been cleaned out enough to start the stope to mine the ore between levels 4 and 5 to determine the average grade at that first stope level.
In the 5/11/11 call, it was said that the "really strong ores" will probably be encountered around levels 7, or 8, or 9.
It was said that they were just starting to crosscut on level 7 when the floor hit. I would assume that once level 7 is operational again, they can crosscut at level 7.
Don't know where they are at present exactly.
Are you sure the company is drilling between 500-1,000 meters right now? I'm not. That drilling costs an awful lot and they only expensed $500k on exploration last quarter.
"As we made the transition from exploration to production, we have been tightly focused on production and development of the underground mine. We have brought in additional drills the past couple of months, primarily focused on drilling the extensions and development of Arista. Please keep in mind that drilling the extensions of Arista is not a quick job, as these deeper holes take time."
Greg doesn't specifically state the depth of the current drilling and it's hard to trust what Bill says the company will do as proof that they'll do it.
Regarding Alta Gracia, Bill stated 2 Quarters ago that there were some very exciting results over there. Have we heard about them? Nope. I have no idea why but if they were so exciting, even if they were rock chip samples, I'd venture to hope that management would think shareholders would want to hear about it. Remember the geomagnetic surveying that the company was going to do 2 quarters ago? What happened with that?
All the things you mention would be welcome, but the company hasn't press released any comprehensive drill results in well over a year and outside of the February PR(one hole) and Baja vein PR on the eve of the shareholder's meeting, the company hasn't PR'd La Arista drill results since September of 2009.
The short count might be rising, but so is the daily volume. It's naive to blame the action on shorts entirely as it's unlikely any retail investor actually knows where all of these shares are coming from, nor who is buying them.
Two drills at La Arista are drilling from 500 meters down to 1000 meters down trying to extend the Baja and Arista veins down twice as deep from 500 to 1000 meters deep. I guess it takes much longer to drill these deep holes, although I have not heard any company timetables to complete the drilling of these 500 to 1000 meters deep holes.
One drill at Gracia has produced preliminary acceptable results, although not yet to be press released according to an answer during Q&A of a recent conference call. Perhaps the grades are so-so so far, or any hint of veins are narrow, and they want to drill deeper at Gracia.
Better average grade measurements for crosscuts and stopes of the Baja vein at levels four and five should become available as production ores from the Baja vein at these levels are extracted to the mill.
Crosscut to the first look of the top of the main body of the Arista vein (at level 7 or 8?) should be due. A previous underground drill samples of the Arista vein at this deep level produced the highest grade, and the widest drill-samples to date. Will the crosscut first look of Arista vein at the deeper level produce confirmation of the exceptional drill results?
Of course, news from the company will be exceedingly welcome, as gold is under pressure in the summer period until fall harvest (when overseas farmers cash in their crops, and they use some of the money to buy some gold.) The stock market as well as the total US economy is under pressure as well, as the Republicans block the raising of the debt limit threatening a collapse of the US financial system, besides the traditional summer doldrums of the stock market in the US as well as in Europe, when Europeans go on extended month long vacations (needing to sell stocks to fund these long vacations, even though they can still trade stocks with cell phones, unlike in the old days when there is little communication facilities in the forests and mountains.)
Shorts are taking advantages of these doldrums to mount their attacks. To counter, good news are needed.
I was at the meeting and it was a pretty impressive piece of rock; although I say that from a complete novice's perspective but if the assays are correct it was indeed an impressive piece of ore! :)
Looking forward to hearing about what you find out at the shareholder meeting. Thanks for having a civilized discussion on the company; it's ironic that the public board is a better place to actually discuss the company's negatives without being attacked! Have a good weekend!
Yes, it was the Baja vein. I remember they brought a piece of rock from the vein to the annual shareholders meeting. Believe me, I will be asking about drill results and other things at the upcoming meeting.
Amadeus, are you referring to the Baja vein grade? I was almost too lazy to go back and look as well but decided it was probably too easy to not do. :)
This is from the PR regarding the intercept of the Baja vein which you refer to:
"We expected a two to three meter wide vein at this level, but were quite pleased to have revealed a solidly mineralized structure six (6) meters wide at the point of interception (see photo). Several samples were rushed to the Company’s lab with the highest returning 14.6 grams per tonne gold and 2,300 grams per tonne silver, plus base metals, over 1.5 meters. Though these are just preliminary samples and not an anticipated average grade, we are extremely pleased with the indication of such high-grade. The vein is now in the process of being sampled systematically and in detail.”"
That is not a bad assay in the least! My concern is that this is likely not a grab sample but a bunch of carefully picked samples, the highest of which is listed here. Why weren't any of the other sampled assays listed? If they were sampling this in detail in November why did they never release these results to the public.
The company has been woeful in the past 18 months at releasing any results(outside of the single-hole PRs we're discussing) and it just seems odd. Look at nearly any other exploring/producing company's press releases and you'll see full tables of assays, even if most of them are comprised of low intercepts.
I fully admit that it could just be that the Reids are particularly bad at following along with the "norm" and don't think shareholders care about drill results, although I'm sure Greg has gotten enough calls/emails to indicate otherwise, but there is something really suspect about the lack of drill results coming out of a company that has more drills than they've ever had on their properties before and is, by their own admission, drilling out Arista. If it remains "open" at width then you'd think the company would have hit "something" by now as they're drilling from the surface and that "something" would be worth a PR. I could have this entirely wrong but my gut feeling is that 2+2 only equals 3 when it comes to GORO and the Reids.
Last year they put out a press release just ahead of the annual shareholders meeting, I believe (don't feel like looking it up) which announced spectacular results from a particular drill hole. Granted, it was only one hole.
I am hoping we will see some news ahead of the upcoming meeting later this month. And I hope it will of a broader nature than just a single hole. Otherwise, I will get very nervous about management's intentions here.
Bill, on the subject of AXU, I have sold a good 15% of my GORO recently and moved it into AXU. I feel AXU is way oversold and has a better chance than GORO in the next 6 months or so to increase. I am not an options guy, so this is my way of hedging to a certain extend the uncertainties surrounding GORO right now. I am not seeing Q2 numbers as hitting anything out the park. I am just hoping they will not be another major disappointment.
I have been in GORO since the Fall of 2007, and have been as aggressive as 50% of my account in margin on GORO. Doody, Toqueville and Hochschild are what are keeping me from trimming down more than currently.
Just have to take it day by day. GLTY!
I meant to say that the 1.5M oz AuEq is backed up by nothing that is public; I doubt the Reids' plucked a number out of thin air but based on their El Aguila estimate their methodology is questionable. I'd imagine an open pit is much easier to calculate the content of than a pinching and swelling underground vein.