Barsolid: “In fact the output has been so consistent that it could be mistaken as faked if one thought that way. I for one believe the numbers since the only other explanation would be massive fraud and jail time, but it does lead me to believe that the output itself is being massaged and that there is at least a little excess capacity that is not being used until other pieces fall into place.”
Trust me, they are not holding anything back for sales into a future quarter (at least not as of 9/30/2013). But what you are introducing is a “straw dog” argument (a regular tool used by President Obama).
Who said anything about these numbers being fraudulent? The numbers reported are so poor that it would be a further embarrassment to management to call them fraudulent; ie, that they’d need to juice numbers in order to get to this poor production level.
“Check the numbers.”
Yes the numbers are flat.
After all of the money they have spent on vehicles and new hires over the past few years, and their past incessant cheerleading for future production and the accomplishment out of the mine is FLAT production???
And this from a company that has billed itself as on a “growth trajectory”???
By the way, where did that $2M budgeted for Turkey go? I see some reports of precious metals fraud going on over in that country in the latter part of 2013.
Also, by the way, whatever happened to the following statement that was ever-present in previous press releases:
“Gold Resource Corporation is a low-cost gold producer”.
Now that they need to rely on the excuse of the poor gold-equivalent ratio and that their costs are out of control, they must acknowledge that gold is not much more than 1/3 of their output.
In this case, a DEFENSIVE weapon.
Barsolid: "Goro is measuring output in gold ozeq which means as the gold/silver ratio increases the gold ozeq drops"
Interesting point, Barsolid. And how do we know this point? Because management put that excuse in the press release. Jason Reid was quoted:
"“We achieved this in spite of a weakening gold to silver ratio working against our precious metal gold equivalent production for the year."
Here is what they said in the press release of one year ago:
"The Company’s 2012 production totals increased approximately 37% over its 2011 production totals."
Was there any mention of the improvement of the ratio by 15%-20% during that year as a big part of the reason for the increase? Of course not.
PS: Gotta love Jason's word "achieve", in describing the disaster that was 2013.
Myth #2: Attractive non-GAAP metric = Attractive company fundamentals.
GAAP (generally accepted accounting principles) exist for a reason...to put all companies and all analysis on a level playing field.
When companies introduce a non-GAAP metric (like click views for Internet stocks of the 90's) watch out! Often these data can be manipulated like GORO's non-GAAP "cash costs". About 18 months ago, I posted the calculation of GORO's "cash costs" if they ever decided to use silver as their primary metal and used gold as one of the by-products. The "cash cost" was significantly negative.
Cash cost was meaningless to this company's valuation.
Yet, Bill Reid and Jason Reid preached the cash cost sermon and perfected it as a mantra in each presentation to potential investors. They said that this meaningless "cash cost" datapoint was going to "zero".
And posters to this message board jumped in with both feet aping the mantra. Here's."Pearhedz" on January 30th 2012:
"I think your cash costs are way off and the numbers provided by the company are much more accurate and are still near best-in-industry.
But of course you don't care about a company's cost to produce its product, only how it relates to management credibility."
And that is exactly what GORO management wanted...to have the investor look at their own concocted non-GAAP number. Because had the investor analyzed the actual GAAP numbers, it was clear that their cost structure was imploding.
Moral: Rely on GAAP numbers. Use non-GAAP numbers as background music at best. And possibly (as was the case with GORO) use management's non-GAAP numbers as a test of their own integrity and reliability.
And here's a bonus for the Amadeus worshippers.
This from his post on March 13, 2012:
"The good news is that we still have almost 3.9 million shorts yet to cover. I expect the pace of covering will increase once the 43-101 gets published and GORO gets listed on the TSX. New money will begin to flow into the stock from Canadian and other institutions."
Need I say more?
Over the past 2+ years I have shaken my head in amazement regarding statements made on this board to support stock purchase.
Myth #1: High Short Interest = Huge future gains...because shorts have to "cover", don't they?
Biggest proponent of this myth was our very own Amadeus. He actually volunteered to put out short interest updates, which he accompanied with personal commentary attempting to validate this myth.
In his post on 8/11/2011, when the stock was at 27 and short interest was at 5.1M shs, Amadeus made the following comment:
"The shorts have hit the wall. Their attack has not worked."
We can see that Amadeus attributes an ulterior motive to this increase in short interest; ie, stock manipulation by shortsellers, with an intention to create fear in the minds of long shareholders. But he had no facts to back up his premise. In fact, the stock had at that time, recently RISEN while the short interest INCREASED.
He did not even bother to consider that the short interest was the result of shortsellers determining that there was a serious fundamental flaw to this company and that its stock was grossly over valued.
Here we are 2.5 years later and the stock ha dropped by 83%. In he meantime, the short interest has also dropped by 25% to 3.8M shs.
Moral: High short interest is NOT an indicator of future gains in price. As a matter of fact, contemporaneous short interest levels and short interest changes can very well be inversely correlated to future stock price performance..
PS: For those of you Amadeus-logic, investment short-cutter types, the above does not purport to translate to a new rule that the drop in short interest to date, implies that the stock will rise in the future.
The conclusion is that incremental increases or decreases in short interest are not valid investing premises..
Unfortunately Barsolid meets the profile of a respondent to emails from Nigeria asking for bank wiring data in order for him to claim the windfall from an Oil discovery. Keepshorting was correct. A book could be written about the typical GORO sucker.
Good post, IP.
Here's a guy, after having wave upon wave of confirming data splashed in his face about the incompetence and disingenuous behavior of the management/stewards of capital that he has given over to invest in GORO. Yet, rather than sell his position! and take what appears to be an overall 50% loss and get immediate tax write off assistance of about 3/4 of a point, he would rather go another route.
And that route is to continue funneling more of his money at the incompetence and the fraud. Because he has a 10 year horizon and believes he can get his money back over that period if only he can get his overall cost basis down to 10-12.
At 11, this stock would generate a 136% gain from here or 9% per year over his 10 year time frame....just in order for him to break even!
But numbers, computers, desks, present values are all unimportant as he has "other things to do".
He states (falsely, by the way): "Yes, in the long run the machines, people, and dirt are what determine value."
We'll, management is so desperate for cash that they have borrowed against those machines. The "people" in management regularly show their incompetence and lack of candor with each passing news release. And the "dirt" was clearly proven inadequate with the 43-101 resource report by a respected independent third party.
From Barsolid on July 5 2011:
"Having said that this is a new mine just going into production and you really have no idea of the number of details that need to be taken care of, if only for safety reasons. Pushing too much in the beginning can get someone killed, so while I am a little disappointed in the mine output at this moment as long as there is steady progress that is fine. What people who sit at computers and desks don't understand is that reality doesn't care who you are. Doing real things, in the real world takes what it takes and as long as the process moves along it is okay. Remember "La tortuga es el guanador." "
Bar, you knew your mining. But you didn't know "investing".. Your mining understanding told you of the dangers and risks of the endeavor. And, of course, GORO management found out the hard way with the tragic death last year.
But you made a critical error by dismissing people at desks with computers. Consider that all the time swinging a pick-axe interferes with your time to fully get the big financial picture. And that is what happened to you as the stock dropped from 22.50 at the time of your post to 4.50 today. Mining snobbery got you nowhere. Respect the expertise of those at desks with computers who can see the big picture, financially.