They may have once had a good reputation but that is a thing of the past now. What mining company is going to hire a firm that: 1) thinks they decide what (and when) the issuer needs to report as material. This is an absolutely ridiculous concept unless you are a law firm advising the issuer and even then it is the issuer's obligation. 2) resigns without telling the issuer or having a proper discussion and prior to completion of the process they were hired to complete 3) after they have resigned continues to make statements against the interests of the issuer and it shareholders (without pointing to any factual support) to protect their own reputation even when they no longer have a stake in the process 4) violates their confidentiality obligations to their former client - I have to assume that they are bound either by an agreement or their professional obligations.
In the Q3 release it is stated that the processing will be from lowest to highest grade. Also see the press release dated Oct 22 (I think) which confirms (by indicating which cross cuts were processed first) that the last 2 to be processed will be the 615xc and the 615el. I cannot find any direct confirmation that the results released to date conform to these comments/plans (previous statements) or to whether the 615 drift or 615 cross cut will be processed first.
Given the remaining amount of tons to be processed (1815) it seems at least some of the 615 cross cut has been processed. If that is the first 1/3 it does not look like Cleo is in there (although it at least ran through the 615 drift based on the diagram so likely at least some of the results to date include Cleo).
His firm actually agreed on the location of the bulk sample and the extreme grade location which was where they found the Cleopatra vein. At this stage, we have a consultant trying to damage the company and its shareholders, it is no longer about his duty and feeling he needed to resign, he wants to damage the company and in the process hope he can fix his damaged reputation.
Legal action should be taken against Strathcona at this point. From the article a week ago where they had another geologist (not the Farq) mention there could be a mine, after Farq initially saying there were no valid gold resources, to this article where they now say they too expected 4,000 ounces from the BS, it is getting pretty obvious that Strathcona is desperate to salvage their reputation at any cost.
The only way they are liable for stock market losses is if the bulk sample results are much lower than the 4,000 ounce estimate. Strathcona does not determine what is material - it is the issuer's obligation. You seem to forget that the first cut was from an area with low and no grade gold predicted or you just want to support your short thesis regardless of the facts disclosed to date.
This sounds a lot like damage control from Strathcona in case the sample comes in as predicted.
Do you just make this stuff up as you go? It is public record that the entire sample result will be disclosed at one time - end of Nov/ early December. Check the last press release and their website for confirmation.
1.) Of course top cut loses ounces where the deposit is as heterogeneous as it is here. That is the point, under a topcut your estimate is note even close mathematically - 94% more gold in the first cut of the sample. I would take Snowden's opinion (a Qualified Person under the instrument) that this is the best approach for this type of deposit and a valid approach to your personal views on industry "best practice". I will also take comfort from the third party peer review of the next resources report they have agreed to do.
2.) I recall the Pretium saying in that presentation that there is no grade predicted by the model for a particular block - it is a bulk mining estimate. Therefore you need to look at the entire sample and compare the grade.
3.) Look at the chart on the Pretium website or their recent presentation, they consistently hit high grade gold. I believe it was ever 500 metres of drilling this year and has improved every year. These hits are within this lower grade 2.0 g/t stockwork so they have an ability to improve on the results and have each year.
This dispute is over methodology - Starthcona's methodology is definitely more conservative, however, so much so that in this type of deposit it will vastly underestimate the actual resources pulled out of the ground. However, I would wait to see the results of the entire bulk sample results before making any conclusions.
I agree an equity financing at $3.23 would be very expensive and seems unlikely but: 1) I would expect the share price to be considerably higher if the bulk sample results confirm the grade and estimate; and 2) they would not be restricted to doing a pure equity deal. One of the ideas they have discussed is doing a much smaller financing to mine the Cleopatra vein to assist with financing the rest of the development.
However, I agree they could decide to sit on the results as you mention and wait for higher prices - its just seems less likely in my opinion.
If the bulk sample turns in 4,000 or more ounces, VOK will get financed and there will be a mine. The financing may be expensive but it will get done.
Strathcona indicated in responding on the conflict that they wanted their estimate of the grade from the tower sample (likely also the comments around the resource report as well which were also released later) reported before the results of the processing of the complete 2000 tonne first cut. PVG chose to release that info together so Strathcona resigned.
I took the no debt to mean that Spinco will have no debt. Therefore if they do debt it will be repaid with the proceeds from the sale of Vz asset. Depending on the terms debt could be cheaper than equity at $5.00/share but its not clear who would be willing to lend them money in these circumstances. I think it will be equity raise (ATM sounds easiest) and they likely are close with a couple potential partners in Gabon to address financing needs (over and above what is left of the $40M) going forward. My rough calculations (excluding any outstanding share comp) for what an investor would get if the deal is done is just under $6 per share cash and the spinco share.
Agreed. If they sell equity at current prices it there will be dilution and less cash per shareholder. The proceeds will be used for corporate expenses and to increase value of those other assets (ex VZ) so some value goes to shareholders (any cash left stays with spinco). If they do debt, the $40 million debt of HNR will be deducted from the proceeds to shareholders as spinco will be debt free. Either way the cash amount per share will not be a 30% premium to the $5.25 after the $40 million financing.
How could they raise equity on spin co shares in advance of creating spinco? This will have to be equity raise in HNR and the proceeds if any remain prior to spin out will be kept in spinco. The new equity raise will be getting the proceeds of the Petrodelta deal the same as existing shareholders.