Normal-Course Issuer Bid

In reflecting on the process held up by the company so far and exactly what their intentions are, a solution popped up which the company is in a very good position to undertake. Rather than bury the company in a going private transaction, they can have a normal course issuer bid.

In order to get the ball rolling, they may announce that financing is in place, and how much. Two tranches, one asset-based, one revenue-based. In a very simple statement. The lenghty details can be provided in the balance sheet results.

This is by far and away the biggest priority when it comes to this particular gold play. Capital. While they table financing, they can submit geological results and balance sheet results to regulators for approval, which can take weeks or months to verify.

Geological data or feasibility will be argued over till people are blue in the face, and may be a hindrance to company development. You'll want to get the geological argument very public but really a moot point. Because financing is not dependant on geological opinion and bank financing, it might not benefit the company either. Once the geological arguments are exhausted, a discovery can be made.

The 'experts' will be recruited to cast aspersions on any model and make hopeful investors look stupid. (Brent Cook comes to mind) this is why dividends are so important.

To get the ball rolling while people are waiting and lift the stock, a normal-course issuer bid can be made, with an offer to renew.

"The TSX Venture Exchange places the following limits on purchases made under NCIBs:

(a) Such purchases may not exceed 2% of the total issued and outstanding shares outstanding at the time the purchases are made; and

(b) Over a 12-month period beginning on the date specified in the notice of the bid submitted by the company to the TSXV, such purchases may not exceed the greater of:

(i) 10% of the public float (i.e. shares held by persons that are not insiders of the company and are free from resale restrictions); and

(ii) 5% of that class of shares issued and outstanding;

on the first day of the 12-month period."

http://www.snclaw.com/cgblog/74/123/Normal-Course-Issuer-Bid-NCIB-Checklist

Here's an example:

http://business.financialpost.com/investing/investing-pro/potential-short-squeeze-at-mainstreet-equity-as-issuer-bid-meets-large-short-position

A gold mining company recently did the same:

http://www.marketwired.com/press-release/marlin-gold-mining-ltd-announces-intention-to-commence-a-normal-course-issuer-bid-tsx-venture-mln-2099600.htm

But you also have to keep this in mind:

"It’s like I’ve been saying, that there’s a psychological resistance level that gold prices will overrun, the same as in 2005, when gold prices were said to never go above $500. My guess is that most people in the gold space don’t have this resistance level in mind, but outside of the gold space there are people willing to hedge their equity declines with a gold investment. Gold’s volatility is very low, meaning mining shares won’t advance unless the volatility is much higher. That situation might change if gold prices are perceived to reach a certain round number."

http://www.kereport.com/2016/03/09/wednesday-market-wrap-big-al-doc/#comments

We are now only days away from the Q3 fiscal 2016 report, which I don't anticipate a change of course, but do see something for April 1, the five-year anniversary of commercial production, or the end of the fiscal year, which is April 30.

-F6