I thought it might be a nice nostalgic exercise in advance of the Q4 conference call to revisit what I believe to be a lie or two told by management in the Q3 conference call..
Kicking it off, here's who I believe to be Prevaricatorr-in-Chief, and Fact -Twister-in Chief, Mr William Reid. Telling the audience how GORO is misunderstood by the marketplace and that the stock was unfairly treated. After only 2 1/4 years of production from his company here's Bill:
"I believe, however, the market lost sight of the actual advances we have made as a company. We have demonstrated 3 straight years of increased production.":
"...Increasing production year-over-year for 3 years straight is a very positive accomplishment.."
Bill, investors can do the basic Math....2 1/4 does not equal 3.
Another nice try.
Yes, these conference calls are quickly becoming a lawyer's bounty in the form a collection of contradictory statements. They are chockful of fun stuff, when put into the light of the historical events.
In the Q3 2012 conference call, the one I believe to be the Prevaricator-in-Chief, Bill Reid, seemed almost aghast, insulted that investors and shareholders could not understand that water problems in mining are a given.
Here's what he said in the conference call in November after two horrible quarters of production:
"At the moment, we feel we do have a handle on the current water situation, but to be clear, we will always have challenges with water being underground. This is part of the operation of an underground mine."
In other words , "how naive of you to think that there would be no problems with water at La Arista"
Well let's hear what this very same guy was saying to his shareholders and investors about the very same topic at the very same mine, exactly one year prior in the Q3 2011 conference call:
""Uh, yes, we do as we go deeper, we do have, uh, water coming out of the vein structure and, of course it picks up as we go, uh, deeper.
"But it's not, it's not that significant. Yes, we do have pumps, and we pump water all the time. Uh, but it's, uh, it's not a problem."
"This is not a problem mine with regards to water."
Indeed, Mr. Reid! Please disclose that in your deposition to the plaintiff attorneys, if you will.
And what about the moving target statements by the Prevaricator-in-Chief, as he attempts to define what kind of company GORO is? Well, the definition depends. It depends on what has happened most recently in the mine.
Let's see what Bill Reid had to say in the 2011 Q3 Conference Call after an 88% increase in production from the previous quarter:
"The trajectory of our gold production is clear. We have demonstrated that all the building blocks are in place. At this point we are maintaining our 140,000 gold equivalent ounce target for 2012 and our exciting 200,000 gold equivalent ounce target for 2013 is coming into focus.. As we have said before, the sensitivity to achieving our EXCITING PRODUCTION GROWTH PROFILE is the continuing development of our underground La Arista mine."
Now let's take a look at what the same guy, Bill Reid, said in the 2012 Q3 Conference Call, exactly one year later and after the company had two horrible quarters of production:
"The mining industry, in the last decade, was focused on growth, most often, growth simply for growth's sake. If you invested in a company and all you got was the anticipated -- anticipation of the growth curve, then that growth curve is very important. You can criticize for less production, and again, and if that is all you're getting, fair enough. Gold Resource's focus, however, is different. Our focus is on cash back to the owners. If we can pay to the owners $0.72 a share, which we are doing now, whether we produce 85,000 ounces, 95,000 ounces or 105,000 ounces, then the actual production number is less important. "
"...After all, without a cash return to the owners, new investment is just a derivative of the greater pool theory"
Suddenly a little water in a mine that was not supposed to have water problems, turned you investors trying to chase an "exciting production growth profile" into "greater fools".
Does this guy have chutzpah, or what? He demeans his investors for HIS mistakes and he does it based on HI
If the Reids spent less time on the golf course and more time anticipating the effects of H2O, the perception of their competence might be very different. But to host CCs from the 19th hole (aka the Golf Villa, aka headquarters) and wax poetically that the market misunderstands them while net income contracts year over year despite a 40% increase in ounces created and a $100 increase in Au price, these clowns don't get it. Their coin dividend has no traction. Holding metals in their treasury has proven a financial miscalculation. And most importantly, the market has contempt for a business that raids the treasury to pay shareholders. A 60% decrease in share price despite a 100% increase in dividends.....WAKE UP REIDs.
Without a defined drilling plan that shows that management is actually interested in proving to the market that this project is sustainable beyond the 600k remaining ounces of final product, this stock is doomed to dwell in the "so what" pile of "story" stocks.