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Gold Resource Corp Message Board

engynear 5 posts  |  Last Activity: Aug 16, 2014 7:12 PM Member since: Aug 29, 2002
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  • Reply to

    A lot of gold

    by mars_in_scorpio Aug 11, 2014 1:56 AM
    engynear engynear Aug 16, 2014 7:12 PM Flag

    "If they can accomplish what they want, using less money ... that would be a good thing."

    Assuming that what management wants is beneficial to shareholders, then I would agree that accomplishing what they want is a good thing for you, "mars_in_scorpio"..

    Now let's take a look over the same time frame I gave you regarding their under-exploring of those properties that they told the shareholders were so rich in resources (and coincidentally what the independent consulting firm they hired concluded otherwise in June 2012).

    Let's analyze your premise over that time frame and see if management accomplished what they wanted.

    The following is their projection for production of gold equivalent ounces before the start of the year versus the actual ounces produced in the respective year:

    ………..........What Management Projected…...........….What Management Got
    2010…..............…………35,000 oz…………..…........…………10,493 oz
    3011…......…........……....90,000 oz……………........………..…66,159 oz
    2012…..............……… 140,000 oz……………........…………..90,432 oz
    2013……..............……..200,000 oz……………........…………..84,835 oz

    I agree that management accomplishing what they want, if it's in the shareholder interest is a good thing. But GORO management clearly and consistently does not accomplish what they want.

  • Reply to

    A lot of gold

    by mars_in_scorpio Aug 11, 2014 1:56 AM
    engynear engynear Aug 13, 2014 6:40 PM Flag

    "After looking over the geological reports on the GORO website ... there appears to be a lot of gold and other minerals in the area where the company's 6 gold mines are located."

    Hi "mars-in-scorpio".
    Did you happen to read the resource report from Pincock, Allen and Holt dated 7/10/2012? This will give you an idea of what is in the ground down there.
    Charlie Munger (Berkshire Hathaway) often says it can be instructive to pay attention to what a management does with your shareholder money rather than what it says it will do.
    He also defines "good management" as a management that "does what it says it is going to do",
    Regarding the "lot of gold and other minerals in the area" that you posit, let's go back and see how management orchestrated this "big resource" narrative at the beginning of each year.
    Below are the exploration budget numbers reported in the company's SEC filings alongside the actual exploration expenditures for those respective years. All numbers are as quoted from the respective filings (with the exception of the 2012 budget which was detailed in the Pincock ,Allen and Holt report that I mentioned)
    But let's look at what management wants you to believe and then what they actually allocated.
    ..........................................Budget.............................Actual
    2010......................................?..................................4.7M
    2011...................................6M..................................4.9M
    2012..................................10.4M..............................8.0M
    2013..................................11.8M..............................9.5M
    2014...................................8.1M.......................first 6 mos. 2.9M

    My question regarding the above numbers is: Why would past management and present management be so consistent about under-delivering on exploration activity on a property that is supposedly so rich in resource?

  • engynear by engynear Jun 10, 2014 9:23 PM Flag

    Sometimes you can get a feel for management's real assessment of their current operations (not the BS hype served up in each conference call) by reading the wording and the re-wording of risk factors.
    Risk factors can be found in every annual report and in every registration statement like the one filed for Hochschild's 4.1M shs recently.
    Here's a good one from that recent S-3 registration statement for you dividend hounds:
    "Our existing reserves are limited and our future success depends on our ability to identify and develop additional reserves to replace the reserves that will be depleted by mining at our El Aguila project. The report of our proven and probable reserves that we recently released estimates the existence of 381,400 ounces of precious metal gold equivalent at the La Arista underground mine at the El Aguila project, leading to what we estimate will be a mine life of three to four years. As we mine the ore, the reserves are depleted and will eventually be extinguished unless we can successfully identify additional reserves. Gold and silver properties are wasting assets. They eventually become depleted or uneconomical to continue mining. The acquisition of gold and silver properties and their exploration, mine construction and mining activities are subject to intense competition. Companies with greater financial resources, larger staff, more experience and more equipment for these types of activities may be in a better position than us to compete for such mineral properties. The identification of additional reserves requires continuing exploration efforts, which in turn requires a substantial investment of additional capital. This investment may deplete the funds that might otherwise be available for payment of dividends to our shareholders. If we are unable to find, advance, and economically mine new properties, we most likely will not be profitable on a long term basis and the price of our common stock may suffer.

  • engynear engynear Jun 2, 2014 8:08 PM Flag

    I look forward to your response, SSA.

  • engynear engynear Jun 1, 2014 5:33 PM Flag

    "As a result of Mine closures (Closures of the Brunswick Mine & Century Mine alone will account for a 6% drop in the world's supply), 12% of the world's supply will be affected in 2015."

    1) Are you saying that this information is not known by metals traders and therefore NOT reflected in price? Or are you saying it IS known by the metals market, and the market is incorrectly pricing the metal?
    2) You make no mention of the expected zinc coming online to replace the fading supply at the mines you mentioned.
    3) You make no mention of what specific price range you expect for zinc pricing.. Where do you see zinc prices in the future and how do you quantify that expectation versus your expectation of increased earnings and stock price for GORO?

    .

GORO
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