The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Morning Sparky. Good question. You may have missed that we held "Meet the Director" with Chairman Marcus Edwards-Jones, which has been posted on the YouTube site. That's worth a watch, and the highlights have been put out on Twitter. I have heard of plans (not yet confirmed) that the company are indeed planning to produce interviews to follow RNS's, to explain the details. I personally feel that would be useful, as I find the RNS's sometimes too technical, although it has been explained to me that this is the legal format. I am pushing to hold a Webinar in September, but for obvious reasons the company are keen to wait till the big news is in from the results. So, the news will continue, but we're going in the right direction, I feel.
Another reason I'm glad to be in Idaho....
https://www.mining.com/web/copper-royalty-bill-clears-another-hurdle-in-chile/?utm_source=Copper_Digest&utm_medium=email&utm_campaign=MNG-DIGESTS&utm_content=copper-royalty-bill-clears-another-hurdle-in-chile
JeffLewis, I am planning on attending. However you should note that the website notice for the AGM on the company website differs from the RNS, with a more negative tone. In any case, I offer a warning, that if you are with HL or any similar platform, you need to make sure that the company can see your holding, for otherwise you are grouped together as "HL". If they look for your share ownership, they may not find you, so you need to get in touch with your platform. Plus if you don't intent attending, you should vote in advance. The motions are in the notice on the website again.
I presume that everyone has seen the notice of the AGM (dated 26th August). I thought I would point out the website version is slightly expanded, and includes the motions, including the ability to issue 50% more shares. https://www.goldstoneresources.com/documents/GoldStone%20AGM%20Circular%202021.pdf
Hi Trek. The question was asked during the AGM, and specifically "What is the attitude of the board to raising finance for our projects through equity"? The answer given was as follows:
"the company intends financing the construction through debt. One way we are considering is to offer redeemable shares as indicated in the motions. This is not considered as an equity raise, as the issue is considered akin to a loan, with interest being offered, and are redeemable but not convertible"
Subsequent to this, I have myself spoken with directors, and each time they say that the shares would be issued as debt, carrying an interest rate, and would not be convertible into equity. So, this is in no way dilution.
Look back to the motions (carried) in the AGM, and you will see it written there.
Good luck to you too!!
Good evening Trek. I need to offer a couple of clarifications. First, the Oxides in the Empire Open Pit mine lie near the surface, and so are best accessed via an open pit. Second, the sulphides in Red Star (rich but relatively narrow silver/lead vein) are best accessed via an underground mine. It's horses for courses. So additional money will not help progress or give greater optionality. Second, the company is talking of the best option may be through the issue of non dilutive preference shares, and which can be repaid very fast. Their impact on the long term should be negligible.
I think that the board have examined all these issues pretty well, and are delivering an excellent solution, managing to deliver long term shareholder benefits, whilst maintaining control on the projects. They see no need to have any further equity raise for the foreseeable future, and I for one believe they are doing a pretty good job.
Good morning Sparky, and I accept that you are not knocking PXC, but your conclusions are very different to those from the Board. Any statements which suggest there is a need for further equity raise have the potential impact of undermining the good intentions of the Board, and thereby deramping, albeit that I understand you are not doing this on purpose.
I agree that if the results from the present and future surveys at Red Star and its extensions (please note these last 3 words), led to a vastly improved resource, we would most likely not be able to afford that today from present capital and ability to finance. Now let me explain where we differ, and I believe this is crucial.
“Red Star” is a relatively small canyon, which sits on patented land (as does most of the Empire Mine). This is a historic right, which gives certain privileges, including most importantly the right to ownership of the subsoil. The rich silver/lead vein(s) identified in Red Star could therefore be fast tracked into production through a low cost underground mine, and which do not require the sometimes lengthy processes involving federal government. This project would be eminently financeable and without the need to raise any further equity.
Meanwhile the territory ranging from the top of Red Star canyon, “the extensions” going all the way up to Horseshow and possibly Whiteknob, is not patented, and so would be subject to additional scrutiny. There is little doubt that this would be converted to a mine in the course of time, but it would take much more investment in determining the size of the resource before that happened, and would require substantially more capital for exploitation (we are in agreement on that point as well).
So we are in agreement on most points Sparky, but not on the scope of the Red Star project, which would remain a relatively small-scale starter project. But having got that up and running, like the Empire Open Pit mine, that could finance the development work for the larger projects downstream. With the above conclusions in mind, and which have been stated by the Board (but which I guess you missed), you can see that the starter projects remain small, and eminently financeable. And this is just how the BoD are designing the growth of this company. And Richard Wilkins can not exclude never to raise equity, as we can never totally predict the future. Who expected the pandemic for example? But he did say that he would not be raising additional equity barring unforeseen circumstances which I think covers this pretty well.
I repeat once again, these projects are being developed in a manner where the company remains in control, and where we do not raise any more equity, for the foreseeable future. Statements which contradict this, are in my opinion, at best missing the point, and in some cases deramping, by introducing the suspicion of more equity raise, which is no where on the horizon.
Mr Sparky, I'm disappointed with you. You weren't paying attention in class. Empire and Red Star are relatively low cost mines which are within touching distance (Empire Open Pit already has it's resource, and Red Star will not need much effort) and can be easily financed, whilst Navarre Creek will need a lot more exploration and assessment before it could be considered for any commercialisation. Conclusion: Empire and Red Star will be developed without additional equity, as is being planned. Navarre Creek will be placed to be commercialised when the early mines are throwing off cash, and still then equity raise is unlikely, but it's far too early to say.
I agree Trek. Both of the recent RNS's came out of nothing, and were unexpected. When the real news does arrive, it again risks arriving suddenly, and may catch people out. The next one may be the sulphide analyses, or the EMS results. But the company are delivering the summer of news as they promised.
Sorry, this may come up as double posted, as LSE is playing up a little for me
To add a little more detail, I had a quick call to one of the directors to understand what this means for the company, and he said:
"the company is quite honoured to have BNY Mellon offering to sponsor an ADR program for us. They are the market leaders and operate over 700 DR programs for some of the world’s biggest non-US companies. This is big company stuff and presumably shows that they believe that they can make decent money from this, which in turn means the program ought to be successful. It perhaps would not be unreasonable to assume that within 12 months 30% of our shares might trade as ADRs on OTCQX. If that is the case, then 30% of the company is going to be bought up from shares trading on AIM. Impact on share price? Who knows? Positive I would think."
That sounds fantastic news for us holders, doesn’t it. And with more news to come on the EM surveys, with the drilling at Red Star, Navarre Creek and the Empire deep sulphides this share is looking very good to continue to ride high.
Hi Stan, you are absolutely correct with your conclusion. Look on the copper deposits like an upturned tree. The leaves are the oxides we see near the surface. The branches represent the sulphides lying below, whilst the porphyry is the tree trunk, and potentially much more wealth, but also deeper. Our drilling programme was suggested by the geologists to go deeper than ever before, and look for the sulphides. If other drilling confirms the first results, sulphides are indeed present, that will be confirmation that the geologists analysis was correct. This will build confidence that the giant tungsten/molybdenum porphyry lies beneath as the geologists predict.
What I like about the way management are developing this project is that they are planning a stepwise approach, keeping everything tightly under their control. That means that when the time is right, and only then, would they invite in third parties, most likely, I would guess, in a JV arrangement. Until then, and past that point, just think of the enormous value this territory and the company will bring us!!
In conclusion, invest today for the massive cash flow off the Empire Open Pit mine, and put away your share certificates for tomorrow, for your pension, for the rewards from going after the deep sulphides, the gold in Navarre Creek, the rich silver vein in Red Star, and the Cobalt, which will remain completely under company control, and without the issue of additional shares. Plus remember that we have explored lass than 1% of the resource to date!! There's so much more to come.
Hi Stan, you are absolutely correct with your conclusion. Look on the copper deposits like an upturned tree. The leaves are the oxides we see near the surface. The branches represent the sulphides lying below, whilst the porphyry is the tree trunk, and potentially much more wealth, but also deeper. Our drilling programme was suggested by the geologists to go deeper than ever before, and look for the sulphides. If other drilling confirms the first results, sulphides are indeed present, that will be confirmation that the geologists analysis was correct. This will build confidence that the giant tungsten/molybdenum porphyry lies beneath as the geologists predict.
What I like about the way management are developing this project is that they are planning a stepwise approach, keeping everything tightly under their control. That means that when the time is right, and only then, would they invite in third parties, most likely, I would guess, in a JV arrangement. Until then, and past that point, just think of the enormous value this territory and the company will bring us!!
In conclusion, invest today for the massive cash flow off the Empire Open Pit mine, and put away your share certificates for tomorrow, for your pension, for the rewards from going after the deep sulphides, the gold in Navarre Creek, the rich silver vein in Red Star, and the Cobalt, which will remain completely under company control, and without the issue of additional shares. Plus remember that we have explored lass than 1% of the resource to date!! There's so much more to come.
I have talked with management a lot over this specific issue. We are perfectly poised to keep the growth in our company under OUR control. As the business develops they will continue to work on internal growth, in manageable steps, resisting the potential of outsiders forcing their way in. Hopefully the shareholder base wil remain loyal. Ultimately someone big will take an interest, but that will only happen when our resources are well defined. But as we develop we will continue to explore and hopefully expand our resources. This is dreaming but I think we will have developed the company under our control till it has a value over £10. Then we we might entertain jv’s, and see the price climb still more. That’s my hope as well as managements.
The broker reports are excellent describing the geological situation. These are accessible from the PXC website. Look for instance at the Hardman report from March 2020, and look at page 17 onwards
Here are several extracts from this and subsequent pages:
# It might seem hard to believe, but the US government highlighted the mineral potential of Empire and the surrounding area more than 75 years ago.
# Despite the large number of exploration programmes undertaken prior to PXC, not one of the companies undertook a systematic exploration of the underlying secondary and primary sulphide zones.
# We believe that Empire is located close to the epicentre of mineralisation in the western US.
# In some respects, the Empire porphyry – endoskarn system bears some clear geologic similarities to the World Class 1 category Antamina Mine, Ancash Province, Peru, which is the largest porphyry – endoskarn polymetallic deposit in the world.
Just to remind newcomers, management (chairman and CFO) held a webinar on 1st June and the following are a few of the extracts (and this is the reason why the share price is so undervalued):
• “there is the possibility that Red Star is very large”
• “it may be perfectly feasible to raise the capital and build them (ie Empire open pit and Red Star – the high grade silver mine) both at the same time”
• “We are confident we will expand our US shareholding… and I believe the US market will buy into our company in a big way due course”
• “What will really move the share price is when the market sees that we are actually funded into production without having to add any more shares”
• “we are in a prolific geological district, we know that we are sitting on the epicentre of 3 faults which cross or converge at Empire”
• “We have Bingham Canyon 4 hours down the road, the US’s largest mine”
• “We are absolutely in the right area, and we know there is a substantial ore body down there”
• “We are getting towards being a world class copper deposit, and this is the reason we’re in this”
• “…..… as I’ve said before, this could be a billion dollar company”
• “We know that the open pit will throw back cash very quickly”
• “At the end of 2023 we could potentially be declaring our first dividend”