GBN.V Weekly

Silly, stupid me for assuming the company would see a profit without realizing you could entirely amortize loans signed in Q2, fiscal 2013 into the previous fiscal year. Not only that, but capital that was raised in Q4 fiscal 2011, and partially used to pay down the entirety of the Sprott loan was also amortized in the 2012 fiscal year. That means the company had an EBITDA of roughly ~8-10¢ a share.

There is no depreciation recorded in the financial reports, since drilling has presumably been underway to replace reserves. Depreciation is reported in the news release merely as a means to make numbers fit, but in the final report, depreciation is not noted as a part of financial results.

A company that strives to contrive a loss may attempt to use this temporary strategy to dissuade investment in the stock, but it might actually have the reverse effect. The worm has turned, and any large investor questioning why the stock is so undervalued will have recourse to look at the finances first, discovering any discrepancy. As a prospective buyer of the stock, they will also ask questions that a retail investor simply will not have the capacity to ask, simply because of their ignorance.

They will not be looking at something so arcane as blue sky potential out of drill core values.

For my part, it will be the decline in the long-dated U.S. treasury bond price that will lead to an advance in the GBN.V stock price, which should be coming in for the end of Q3. If moves in the GDXJ and the S&PTSXGD indeces are to be repeated, that means the 89-week EMA will be tested, and that means a breakout from the downward channel.

supersize:

http://www.flickr.com/photos/11747277@N07/8009834122/sizes/l/in/photostream/

http://scharts.co/QIthsH

$S&PTGD Weekly

As I have said, if the breakout of gold stocks is any indicator of movement in the smaller cap stocks like GBN.V, then likely the 89-week EMA will be tested. And if GBN.V were to once again index along with the Global Gold Index, as it has in the past 12 years, then that means a share price of perhaps 45¢ - 60¢, depending on which chart you believe.

In aggregate, you might assume that shareholder dilution and capex losses in the majors will equal out with gross errors in judgement at GBN.V. Remember that permitting was at issue in 2009 - 2010, and CAPEX expenditures were at issue in 2011 - 2012. Another leading topic of discussion should be the 'no-down-tick' rule which was also abolished, allowing commercial traders to sell short without marking a short sale, as long as it was part of a hedging strategy.

supersize:

http://www.flickr.com/photos/11747277@N07/8009943111/sizes/l/in/photostream/

http://scharts.co/TewzK4

via Kitco - Don Coxe Interview

One thing Don Coxe happened to say during his interview with Daniela Cambone, is that for the first time gold stocks presented an excellent investment value. He also mentions the length of time it took for gold mining companies to get their act together. I believe he is referring to production companies rather than explorationists. Its a lengthy interview which should not be missed.

http://www.kitco.com/reports/KitcoNews20120920DC.html

BCA Research

BCA Research agrees with Don Coxe, though not in so many words. This is also the first occasion where I see in BCA research that gold stocks are the potential investment avenue.

"Bottom line: ECB and Fed monetary reflation are not yet fully priced: gold, silver and related mining stocks offer excellent intermediate-term upside and will continue to outperform growth-sensitive commodity plays."

http://blog.bcaresearch.com/precious-metals-have-more-upside

Edison Investment Research

A long time ago, I was banned from stockhouse.com for posting a link to information that showed that Brett Resources was being bought out at far below its fair value. This same research paper is still valid as it was back then, recommending that banks will eventually want to lend to gold mining companies, lacking other sources of returns. It would be meet with the expectations of this research report that GBN.V conduct a bankable feasibility study, to be completed for the end of the term of the Waterton deal.

The gold price was $1000/oz. back then, and the average price of a gold ounce in the ground was ~$195/oz. CDN., roughly 20% of the price. Today that would mean a rough estimate of ~$350/oz. in the ground. If GBN.V says 75k oz. per year or better, that means they have access to nearly a million ounces, thus a dollar a sharish. (remember they used to evaluate companies this way?) They started out with a million ounces, which have not yet melted away, I should think. Sure puts the test to any fool notion about depreciation, which is obviously being used to advantage, or disadvantage.

I would like to see how Edison approaches the same material now, since there 've been so many disastrous outcomes in the gold mining sector.

One notable detail about Canadian markets is that they are wholly dependent on a 'blue sky' outlook for any advance in the share price.

via Resource Investor - Edison Research Report

via JSMineset

Cluff Gold has a deal with Samsung similar to Waterton's with GBN.V:

http://www.jsmineset.com/2012/09/18/a-game-changer-for-gold/

-F6