Well, if you read my last post about Mahdia Gold you know what I think of Alan Zaakir. Well...today he resigned (canned).
So now we have Andre Duchane at the helm and the old boys group which was headed by Zaakir is no longer safe. I look forward to seeing exactly who they bring in to replace Zaakir as the Executive Chairman.
I can't help but suspect that this was a forced move. Mike Wekerle bailed the company out with $1,000,000 to pay the Guyana Government, the amount which Zaakir had given himself as salary. The project could be sound, but the money behind it likely got tired of the games being played by this man. Overall, a good move for shareholders, Curious to see who they bring in next.
EDIT: ship hasn't turned it course. Some average alluvial gold production but no financing....
Wednesday, May 15, 2013
Monday, May 6, 2013
Received my CXB proxy form
Should I really have been surprised when I read that it has been recommended that shareholders vote yes on a proposed share consolidation.
I get a kick every time I read a recommendation like this, as if it will somehow bennefit the share holders.
Now, granted, CXB has ~190 million shares. In case no one has been through this before let me explain to you what typically happens.
Typically, when a company announces a proposed rollback, sp goes down. Not horrendously, but down none the less. Why? Well, because people who believe that there is a good chance the reverse split will occur realize, or have learned, that the stock price, almost always (especially in the junior exploraco industry), ends up going back down to the same, or near the same price, as it was before the roll back. So, out of fear of just winding up with less shares at the same price, they sell their shares, even if its at a large loss, and buy back the same position after the post-rollback havoc has been wreaked upon the share price (or they just walk away asking why they didn't liquidate sooner).
In a worst case scenario, the rollback actually gets shareholder approval and so ensures what it described above.
Long story short, a reverse rollback essentially leaves you with less amount of the same priced shares. Now, your shares may have more value in the sense that there is less of them around and any large, panic buying inducing, news will likely see the stock go up to higher levels than it would have otherwise...but, of course, you have less shares.
Rollbacks are notorius in this industry because many companies don't seem to do anything other than sell stock, and when their shares drop so low that there is little interest in buying them (because they haven't done anything to create interest) management decides that a higher share price will increase share buying. Now, that doesn't really help the investor who is down on his investment, but certainly does help management. This was a game played for years on the VSX, and has continued on the TSX-V.
All this being said, I don't want to make it sound like Calibre Mining is one of those companies. I really do not believe they are. They have a nice story, that just seems to be getting cheaper like all other junior stories right now. As per a recent news release, B2Gold is to spend 6 million in exploration work on their Primavera property for an additional 19% stake in the property (which, after earn in would be a total of 70%). 6 million in exploration in this market is something to champion. I think CXB themselves are running low on cash (a little over 1 mill in the bank as per last financials) and may be sweating a bit when the idea of management fees, exploration costs for other properties, and listing fees/working capital comes up (yes...in that order of course).
With good news on the horizon, minimal cash, other promising looking projects, and 190 million shares outstanding I could almost think about considering to vote yes....but I won't. Nothing like asking the shareholders to take another one for the team. How about increasing shareholder value before asking us to agree to decrease it.
I get a kick every time I read a recommendation like this, as if it will somehow bennefit the share holders.
Now, granted, CXB has ~190 million shares. In case no one has been through this before let me explain to you what typically happens.
Typically, when a company announces a proposed rollback, sp goes down. Not horrendously, but down none the less. Why? Well, because people who believe that there is a good chance the reverse split will occur realize, or have learned, that the stock price, almost always (especially in the junior exploraco industry), ends up going back down to the same, or near the same price, as it was before the roll back. So, out of fear of just winding up with less shares at the same price, they sell their shares, even if its at a large loss, and buy back the same position after the post-rollback havoc has been wreaked upon the share price (or they just walk away asking why they didn't liquidate sooner).
In a worst case scenario, the rollback actually gets shareholder approval and so ensures what it described above.
Long story short, a reverse rollback essentially leaves you with less amount of the same priced shares. Now, your shares may have more value in the sense that there is less of them around and any large, panic buying inducing, news will likely see the stock go up to higher levels than it would have otherwise...but, of course, you have less shares.
Rollbacks are notorius in this industry because many companies don't seem to do anything other than sell stock, and when their shares drop so low that there is little interest in buying them (because they haven't done anything to create interest) management decides that a higher share price will increase share buying. Now, that doesn't really help the investor who is down on his investment, but certainly does help management. This was a game played for years on the VSX, and has continued on the TSX-V.
All this being said, I don't want to make it sound like Calibre Mining is one of those companies. I really do not believe they are. They have a nice story, that just seems to be getting cheaper like all other junior stories right now. As per a recent news release, B2Gold is to spend 6 million in exploration work on their Primavera property for an additional 19% stake in the property (which, after earn in would be a total of 70%). 6 million in exploration in this market is something to champion. I think CXB themselves are running low on cash (a little over 1 mill in the bank as per last financials) and may be sweating a bit when the idea of management fees, exploration costs for other properties, and listing fees/working capital comes up (yes...in that order of course).
With good news on the horizon, minimal cash, other promising looking projects, and 190 million shares outstanding I could almost think about considering to vote yes....but I won't. Nothing like asking the shareholders to take another one for the team. How about increasing shareholder value before asking us to agree to decrease it.
Friday, May 3, 2013
Victoria Gold
There are a number of plays which I have been looking at entering but I have been waiting for the bottom in this junior down cycle. I was very sure that we were months away from the bottom, and I was gearing up to pull the trigger. The recent fall (attacks) in the price of (paper) gold has sent me crawling back to my perch, far away, as I observe the happenings for a bit longer.
Its in these bottoms, whenever I can best perceive them, that I will go into a play on the fundamentals, going long over a greater period of time than normally characterizes my trading style.
Anyways, one of the companies I have been looking at for a while is Victoria gold and their Eagle Gold project. Victoria Gold, trading on the V under the symbol VIT has been trading in the 17-20 cent range lately with 340 million shares out and a market cap of about 60 million.
The Good
Their Eagle Gold project contains quite an amount of gold which includes a reserve of 2.3 million (all falling under the probable category) oz Au at 0.78g/t, 4.8 million indicated at 0.68 g/t, and 1.5 million inferred at 0.60 g/t.
In regards to the reserve, the CAPEX will be roughly $400 mill with life of mine sustaining costs at $133 mill. According to the reports, it would be an open pit mine which would move 29,500 tpd ore and produce roughly 200,000 oz Au per year at $542/oz, with the highest grades/yields coming from the first 3 years of the mine. The mine is proposed to open in 2014/15 with a life of 9 years. Processing costs are projected at around $12/t ore.
All in all not bad. Although the company has some money, somewhere around 40 million last I checked, they will need to raise much more cash to get it rolling. That being said, they are quite far along in their permitting processing with a feasibility study, first nations agreement, and an environmental assessment that has been approved by the Yukon government. They currently need to finish up with their construction permits and then construction of the mine. As well, they are still needing their quartz mining permit.
At .17 cents it has seemed like a undervaluation to me, and apparently to Kinross as well as they own 16% of Victorias shares. Sure the project is a bit low in the grade department, but majors like these kind of plays as take over candidates, where all the dirty work is done. I will be waiting to see if they can turn some of that 6 million inferred ounces into the indicated category as well.
Aside from the general market conditions, Yukon plays seem to receive further devaluation. The area fell out of favor a couple years ago and has never regained its form. That being said, the Yukon is my favored territory in Canada for miners. The first nations groups are more sophisticated in a bussiness sense then say those in Nunavut, as they have been through it before, and there are not the land claim battles going on the same extent as they are in the NWT.
The Concerning
Well...They need to raise a lot of money. It this sector and market condition that large number seems even larger. As well, I would imagine that large dilution will come of this, very high dilution. I recall reading that they were planning on selling gold forward. Not sure if it was just a presentation suggestion/food for thought but it seems that the general market sentiment is fairly bearish on the POG. At this point in time, gold is trading at 1470/oz and their 43-101 report was done based on a 1325/oz price.
Generally, that is fine when gold was trading at 1650/oz, but at nearly $200/oz less on a low grade project a $145 buffer zone just does not give the same comfort as, say, a $325 buffer zone. I actually felt they should have used a lower POG for their technical report. Some of the other projects I have been looking at were using $1250. We all saw how gold can fall in the course of a day.
So...as per full disclosure....What am I going to do? I plan on picking up some shares in the 17-20 cent range, but not a large position. Will add if I see something I like in regards to the POG and VITs ability to finance their project.
Its in these bottoms, whenever I can best perceive them, that I will go into a play on the fundamentals, going long over a greater period of time than normally characterizes my trading style.
Anyways, one of the companies I have been looking at for a while is Victoria gold and their Eagle Gold project. Victoria Gold, trading on the V under the symbol VIT has been trading in the 17-20 cent range lately with 340 million shares out and a market cap of about 60 million.
The Good
Their Eagle Gold project contains quite an amount of gold which includes a reserve of 2.3 million (all falling under the probable category) oz Au at 0.78g/t, 4.8 million indicated at 0.68 g/t, and 1.5 million inferred at 0.60 g/t.
In regards to the reserve, the CAPEX will be roughly $400 mill with life of mine sustaining costs at $133 mill. According to the reports, it would be an open pit mine which would move 29,500 tpd ore and produce roughly 200,000 oz Au per year at $542/oz, with the highest grades/yields coming from the first 3 years of the mine. The mine is proposed to open in 2014/15 with a life of 9 years. Processing costs are projected at around $12/t ore.
All in all not bad. Although the company has some money, somewhere around 40 million last I checked, they will need to raise much more cash to get it rolling. That being said, they are quite far along in their permitting processing with a feasibility study, first nations agreement, and an environmental assessment that has been approved by the Yukon government. They currently need to finish up with their construction permits and then construction of the mine. As well, they are still needing their quartz mining permit.
At .17 cents it has seemed like a undervaluation to me, and apparently to Kinross as well as they own 16% of Victorias shares. Sure the project is a bit low in the grade department, but majors like these kind of plays as take over candidates, where all the dirty work is done. I will be waiting to see if they can turn some of that 6 million inferred ounces into the indicated category as well.
Aside from the general market conditions, Yukon plays seem to receive further devaluation. The area fell out of favor a couple years ago and has never regained its form. That being said, the Yukon is my favored territory in Canada for miners. The first nations groups are more sophisticated in a bussiness sense then say those in Nunavut, as they have been through it before, and there are not the land claim battles going on the same extent as they are in the NWT.
The Concerning
Well...They need to raise a lot of money. It this sector and market condition that large number seems even larger. As well, I would imagine that large dilution will come of this, very high dilution. I recall reading that they were planning on selling gold forward. Not sure if it was just a presentation suggestion/food for thought but it seems that the general market sentiment is fairly bearish on the POG. At this point in time, gold is trading at 1470/oz and their 43-101 report was done based on a 1325/oz price.
Generally, that is fine when gold was trading at 1650/oz, but at nearly $200/oz less on a low grade project a $145 buffer zone just does not give the same comfort as, say, a $325 buffer zone. I actually felt they should have used a lower POG for their technical report. Some of the other projects I have been looking at were using $1250. We all saw how gold can fall in the course of a day.
So...as per full disclosure....What am I going to do? I plan on picking up some shares in the 17-20 cent range, but not a large position. Will add if I see something I like in regards to the POG and VITs ability to finance their project.
Thursday, April 18, 2013
Bad Management, Good projects.
I have written about Mahdia Gold Corp in the past and, anyone who has read the last write up I did, knows my feelings on the company; great project with horrible management.
I realize that talk is very cheap in this industry, sometimes intentionally and sometimes through unforeseen circumstances that cause good management, who really do care about increasing shareholder value, to go back on plans and miss timelines.
That being said, there is little excuse for management to use shareholder money for their personal bank account, which does happen far to often. A good example of this is Mahdia Gold and its management. When they closed a PP for 8 million a year and a bit ago, share holders really believed that it was time for the company to start developing this project which seems to have very high potential. But, one problem.... You can't just give 8 million to a group of guys who have spent the better part of the last 4 years closing PPs and never doing a thing. Go back and read my write up on Mahdia Gold, which begins with a brief history of Aztek mining; a company which Allan Zakir raised money in the millions and never did a single thing on the properties they owned, which they ended up transferring to Mahdia Gold. From the 8 million PP Al Zakir alone took a million and put it into his bank account, add other management salaries, and the fact that so little work was done on the property one begins to ask what happened to the other millions of dollers.
The next fiscal year, after giving himself his paycheck, Al released plans for a PP once again. Essentially, the company was broke again. After a small drill program and the re-evaluating of historical drill core. They were looking to raise money at 25 cents, of course, none of the guys who had become rich off of the shareholder money decided to put up any money themselves. Andre Duchane, the newest and only member of management to have any kind of credibility in the industry, put up some of his money.
So, out of the planned 4 million, they managed to raise a mere $350,000. Nothing more was heard from that PP. Yesterday, they raised $1,020,000 through unsecured subordinated debentures. 1 million will go straight to the Goverment of Guyana Geology and Mines Department, as per their Omai agreement, and that leaves 20k, plus the 350k they raised last month, which we haven't heard anything about.
Now....what, to me, is the most disappointing aspect of this whole Mahdia fiasco? It is that, for a long time, they have had a pile of low grade ore sitting around. Some reports say the grade is 0.85 g/t, but the official cut off grade for Cambior, when they were operating the mine, was 1.6 g/t. A cambior report form 1999 recorded 248,000 oz of gold in the stock pile. The mine continued to produce until 2006, and the stock pile grew over that time. Remember, gold was around $350/oz when this was happening. Now, with a higher gold price (a little less higher than it was last week) 0.85g/t projects are in development.
The trick in this industry is finding large mine-able deposits, then getting the money to explore them, permit them, and process them. These guys, at one point in time, had 8 million dollars and a pile of gold containing ore sitting on their property. I still cannot fathom why they did not go ahead and start processing it. The times where, and still are, tough for financing, and it would seem that processing a large amount of gold ounces, which you didn't invest any time in uncovering, they were more a bonus item to the property, would be one of the first items to take care of.
Lets say that the stockpile never grew, which doesn't make any sense, but lets just use the lowest possible figure we can. Hell, lets use 200,000 oz. At a price of $1100/oz that is $2.2 x 10^8. Now, lets say that half the money one makes off each ounce was used to process it, a very large number, but still that gives $1.1 x 10^8. Alot of money which can be used for further drilling/exploration on the project.
Of course, this team has little experience in actually developing projects, only in using share holder money for their own bank accounts, so I suppose it wasn't that surprising. When Andre Duchane came in as president and CEO, it was one of the first things he announced...go figure.
This post might sound a little bit vindictive, and perhaps it is, but it really is frustrating to see incompetent individuals in charge of very nice projects.When you add up the money raised, the figure is in the excess of $13,000,000, not counting the money made from selling regular shares on the market.
So, we are in for another round of financing, and perhaps any money that they will get from their placer operations, in an area where no geology information has been released, no reports, no nothing. just a couple of sentences outlining the plans.
On a bright note, Michael Wekerle put down the 1.02 million so I suppose that is a bright side. He participated in the 8 million PP, taking down at least half that number iirc, so hes been in this play with some money for a while. Hes made a lot of money, and is a smart man, so I take some solace in the fact that he is still willing to invest.
PS: This post, although focused on Mahdia Gold is really describing the problem with this industry as a whole. This industry had little credibility left and its decline, in my opinion, lies in the hands those who have been profiting the most off it. At no point has the industry sat down and said that it is not ok to set up shop on only old moose pasture, get financing without any belief that the project has any real potential, and start collecting decent to high salaries, only to abondon the project a year and a half later citing lack of funds, then blaming the market. All the while, sitting on the board of 4 other companies playing the exact same game.
Even the majors are guilty. They rarely announce all in costs, then when Q3 comes out and investors are asking "why didn't you meet the targets", and in some cases "why are we loosing money", the CEOs and presidents come up with a load of excuses, but never telling plain simple truth; "we just mislead you into thinking exactly how much it would cost to pull the gold out of the ground and process it".
With so much money slipping through the fingers and disappearing its a wonder why anyone has wondered why the financing has dried up.
Just like raccoons and the distemper virus, the juniors go in cycles. Right now, the juniors are in in a distemper cycle reaching epidemic levels. Soon many will die and financing will once again start flowing back into the sector as only those companies with quality management and projects will survive the break out.
Until then, we ride out junior death and a gold price under attack. I still believe that the day will come. When gold being to stabilize I will begin nibbling, there are many juniors on my watch list....I'm just not sure how low they will go...
Until next time...
I realize that talk is very cheap in this industry, sometimes intentionally and sometimes through unforeseen circumstances that cause good management, who really do care about increasing shareholder value, to go back on plans and miss timelines.
That being said, there is little excuse for management to use shareholder money for their personal bank account, which does happen far to often. A good example of this is Mahdia Gold and its management. When they closed a PP for 8 million a year and a bit ago, share holders really believed that it was time for the company to start developing this project which seems to have very high potential. But, one problem.... You can't just give 8 million to a group of guys who have spent the better part of the last 4 years closing PPs and never doing a thing. Go back and read my write up on Mahdia Gold, which begins with a brief history of Aztek mining; a company which Allan Zakir raised money in the millions and never did a single thing on the properties they owned, which they ended up transferring to Mahdia Gold. From the 8 million PP Al Zakir alone took a million and put it into his bank account, add other management salaries, and the fact that so little work was done on the property one begins to ask what happened to the other millions of dollers.
The next fiscal year, after giving himself his paycheck, Al released plans for a PP once again. Essentially, the company was broke again. After a small drill program and the re-evaluating of historical drill core. They were looking to raise money at 25 cents, of course, none of the guys who had become rich off of the shareholder money decided to put up any money themselves. Andre Duchane, the newest and only member of management to have any kind of credibility in the industry, put up some of his money.
So, out of the planned 4 million, they managed to raise a mere $350,000. Nothing more was heard from that PP. Yesterday, they raised $1,020,000 through unsecured subordinated debentures. 1 million will go straight to the Goverment of Guyana Geology and Mines Department, as per their Omai agreement, and that leaves 20k, plus the 350k they raised last month, which we haven't heard anything about.
Now....what, to me, is the most disappointing aspect of this whole Mahdia fiasco? It is that, for a long time, they have had a pile of low grade ore sitting around. Some reports say the grade is 0.85 g/t, but the official cut off grade for Cambior, when they were operating the mine, was 1.6 g/t. A cambior report form 1999 recorded 248,000 oz of gold in the stock pile. The mine continued to produce until 2006, and the stock pile grew over that time. Remember, gold was around $350/oz when this was happening. Now, with a higher gold price (a little less higher than it was last week) 0.85g/t projects are in development.
The trick in this industry is finding large mine-able deposits, then getting the money to explore them, permit them, and process them. These guys, at one point in time, had 8 million dollars and a pile of gold containing ore sitting on their property. I still cannot fathom why they did not go ahead and start processing it. The times where, and still are, tough for financing, and it would seem that processing a large amount of gold ounces, which you didn't invest any time in uncovering, they were more a bonus item to the property, would be one of the first items to take care of.
Lets say that the stockpile never grew, which doesn't make any sense, but lets just use the lowest possible figure we can. Hell, lets use 200,000 oz. At a price of $1100/oz that is $2.2 x 10^8. Now, lets say that half the money one makes off each ounce was used to process it, a very large number, but still that gives $1.1 x 10^8. Alot of money which can be used for further drilling/exploration on the project.
Of course, this team has little experience in actually developing projects, only in using share holder money for their own bank accounts, so I suppose it wasn't that surprising. When Andre Duchane came in as president and CEO, it was one of the first things he announced...go figure.
This post might sound a little bit vindictive, and perhaps it is, but it really is frustrating to see incompetent individuals in charge of very nice projects.When you add up the money raised, the figure is in the excess of $13,000,000, not counting the money made from selling regular shares on the market.
So, we are in for another round of financing, and perhaps any money that they will get from their placer operations, in an area where no geology information has been released, no reports, no nothing. just a couple of sentences outlining the plans.
On a bright note, Michael Wekerle put down the 1.02 million so I suppose that is a bright side. He participated in the 8 million PP, taking down at least half that number iirc, so hes been in this play with some money for a while. Hes made a lot of money, and is a smart man, so I take some solace in the fact that he is still willing to invest.
PS: This post, although focused on Mahdia Gold is really describing the problem with this industry as a whole. This industry had little credibility left and its decline, in my opinion, lies in the hands those who have been profiting the most off it. At no point has the industry sat down and said that it is not ok to set up shop on only old moose pasture, get financing without any belief that the project has any real potential, and start collecting decent to high salaries, only to abondon the project a year and a half later citing lack of funds, then blaming the market. All the while, sitting on the board of 4 other companies playing the exact same game.
Even the majors are guilty. They rarely announce all in costs, then when Q3 comes out and investors are asking "why didn't you meet the targets", and in some cases "why are we loosing money", the CEOs and presidents come up with a load of excuses, but never telling plain simple truth; "we just mislead you into thinking exactly how much it would cost to pull the gold out of the ground and process it".
With so much money slipping through the fingers and disappearing its a wonder why anyone has wondered why the financing has dried up.
Just like raccoons and the distemper virus, the juniors go in cycles. Right now, the juniors are in in a distemper cycle reaching epidemic levels. Soon many will die and financing will once again start flowing back into the sector as only those companies with quality management and projects will survive the break out.
Until then, we ride out junior death and a gold price under attack. I still believe that the day will come. When gold being to stabilize I will begin nibbling, there are many juniors on my watch list....I'm just not sure how low they will go...
Until next time...
Friday, April 12, 2013
CZY...my old penny flipper
I used to flip pennies on Caza gold when it traded back and forth around the 11-14 cent range, and then again when it traded back and forth in the 7-10 cent range.
But eventually it sank lower, volume dried up, and the volatility dissipated. When this happened I left it.
I've noticed a bit of activity this last week and the price has jumped back up into the range where I was last trading it.
I'll see how it goes Monday and Tuesday and I may start trading it again. I initially traded CZY using various Fibonacci techniques but after a while I seemed to gain an intuitive understanding of the stock, and was correct damn near most of the time. It really is a special feeling.
Interesting enough, I wanted to buy into Caza back when it was trading at .35, for a number of reasons. But, I felt I had become attached to the stock, and decided not to buy it on that basis. I'm glad I did. Then, after flipping it for pennies, I grown another fondness for the stock.
Anyways, take a note of the volume.
But eventually it sank lower, volume dried up, and the volatility dissipated. When this happened I left it.
I've noticed a bit of activity this last week and the price has jumped back up into the range where I was last trading it.
I'll see how it goes Monday and Tuesday and I may start trading it again. I initially traded CZY using various Fibonacci techniques but after a while I seemed to gain an intuitive understanding of the stock, and was correct damn near most of the time. It really is a special feeling.
Interesting enough, I wanted to buy into Caza back when it was trading at .35, for a number of reasons. But, I felt I had become attached to the stock, and decided not to buy it on that basis. I'm glad I did. Then, after flipping it for pennies, I grown another fondness for the stock.
Anyways, take a note of the volume.
Happy Birthday
Well....today is my birthday. Nice birthday gift from the markets today as gold plummeted $86. Haven't seen that kind of drop for some time.
This comes only a few days after Goldman Sachs recommended to their "clients" that they should sell their gold. Everyone who has been through this once before, any even many who do not, know whats going on. Goldman says sell, then they buy the gold that their clients are selling.
These prices wont be happening for very long unless two things occur. One, humans stop valuing gold, or two, the all in costs of miners fall dramatically.
Although there are a few large high grade deposits around where costs would could be around 500-800/oz all in, this would be very rare. In this case, for gold to continue to go down, the demand of gold would have to be less than the amount of gold which could be mined from deposits which require very low all in costs.
Anyways....gives a good buying opportunity for a lot of the gold majors.
This comes only a few days after Goldman Sachs recommended to their "clients" that they should sell their gold. Everyone who has been through this once before, any even many who do not, know whats going on. Goldman says sell, then they buy the gold that their clients are selling.
These prices wont be happening for very long unless two things occur. One, humans stop valuing gold, or two, the all in costs of miners fall dramatically.
Although there are a few large high grade deposits around where costs would could be around 500-800/oz all in, this would be very rare. In this case, for gold to continue to go down, the demand of gold would have to be less than the amount of gold which could be mined from deposits which require very low all in costs.
Anyways....gives a good buying opportunity for a lot of the gold majors.
Tuesday, March 5, 2013
The Greatest Story to Never (yet) Unfold - Mahdia Gold
Mahdia Gold....where to begin.
1.64 oz of gold over 1.7 ft
17.70 oz of gold over 1.0 ft
9.30 oz of gold over 1.2 ft
9.25 oz of gold over 1.4 ft
-May 19, 2010 - Mahdia to explore Tiger River property. (No exploration work done to date).
For those of you who are not aware the Mahdia Gold mine, it is a ghost mine which was once held by IAMGold and Cambior Inc. Over the 13 years in operation 3.7 million oz were produced from two open pits; The Fennel and the Wenot.
The story which has caught the attention of a few (so far) unfortunate investors is the fact that there is still reported to be gold in the two pits which was not economically mine able at the $350/oz price tag at the time. Now with gold somewhere around $1600/oz (we are still all waiting for the breakout?) it is believed that the mine can still produce gold for a profit.
So...a Little background about the company, which really starts in 2004 when Mr. Alan Zaakir and his company Aztek Resources acquired the Tiger River gold property close to the old Omai mine. In July of the same year WGM conducted sampleing on saporlitic/lateritic aluvial material. 5 of the 6 samples returned showing gold values, the highest being 3.74 g/t Au. A year later Aztek resources became listed on the CNQ with Zaakir at the helm, backed by ex-mining commissioner of Guayana Ed Hopkins and Don Gordon serving as investor relations. They touted the potential of their tiger river property given its proximity to a producing mine...not the first junior, and certainly not the last, to have done such a thing.
Just to give a quick briefing of Aztek....
-Fed 25, 2005 - Aztek closes a pp of 1 720 000 shares at .35 for gross proceeds of $602,000
-Sept 6, 2005 - Aztek signs option agreement for for 80% of the mineral rights to the Mowasi property, Guyana, located near the Tiger River property.
-Nov 14, 2005 - Aztek is halted due to the late filing of audited financial statements. A mapping program is being conducted on the Tiger River property and will be followed up by a sampling program as per the suggestion of Newmong Mining, who made a trip to the site a few months prior.
-Apr 20, 2006 -Alpha One Corporation to aquire Aztek Resources. As qualifying transaction.
-Dec 11, 2007- Aztek terminated agreement with Alpha One Corp. Aztek is "trying hard" to get listed on an internationally recognized stock exchange.
-Mar 26, 2008- Aztek and Wintercrest resources enter into an agreement to undertake an amalgamation of the two companies. Aztek still does not trade on an exchange.
-Mar 28, 2008- The two companies suspend the agreement.
Mar 07, 2008- Securities commission issue a CTO for failing to issue shares from a past bridge financing.
There was a PP or two in between, a bunch of promises and plans, but nothing worth knowing about. The company has not traded since 2005 or 2006 although it is still technically a company. Those who bought shares in the company never saw any piece of meaningful exploration work.
Outside of the way that Aztek resources was managed, the only real importance piece of this story is Wintercrest Resources. This was another company by Zaakir, but press releases were often signed under a different first name. On Dec 2 of 2009 Wintercrest resources changed its name to Mahdia Gold and did a 1:2 share consolidation.The statements ends with "(the) board is aggressively trying to improve shareholder value". Mahdia Gold then acquires the Tiger River Property from Aztek Resources
-May 14, 2010- Mahdia announces pp of 162,000 dollars at .15. Mahdia said it would use that money to "run a comprehensive drill program". The release includes information from a survey done by the Guyanese government on the Tiger River property in 1947. Values listed below. Note that it says oz not g.
0.65 oz of gold over 1.3 ft
1.02 oz of gold over 2.0 ft1.64 oz of gold over 1.7 ft
17.70 oz of gold over 1.0 ft
9.30 oz of gold over 1.2 ft
9.25 oz of gold over 1.4 ft
-May 19, 2010 - Mahdia to explore Tiger River property. (No exploration work done to date).
-July 22, 2010 - Mahdia Gold announced a PP of $2,000,000 at 0.20 for the purpose property acquiring and capital operating purposes, the release outlines the intention to acquire the White Creek Gold property previously owned by StrataGold, the release mentiones plans for a exploration program http://www.infomine.com/index/pr/Pa942231.PDF
-Oct 20, 2010 - Mahdia announces a $500,000 PP at .10 (warrents at .15)
-Jan 5, 2011 - Mahdia signs option agreement for the White Creek Gold property. Press release ends by saying that Mahdia plans to explore the White Creek Property before the end of 2011 to "identify its value". No exploration work on the white creek property has been done.
-Mar 21, 2011- Mahdia announces pp of 1,200,000 at .25 cents (warrents at .45). PP closes on May 3. News release explains that it was oversubscribed and that the gross proceeds of the PP are $3,500,000.
-May 9, 2011- Mahdia acquires the White Creek gold property for $700,000. The property had some preliminary exploration done on it through a joint venture program by StratGold and Newmont. Press release concludes that Mahdia is studying said data and will make it available to the public shortly.
-May 30, 2011- Mahdia acquires Omai gold mine. As well, they acquire historical drill results which seem to outline 1.4 million oz. The press release concludes with a comment on a 5 million dollar PP at .60 with a 1/2 warrant at 1.05. SP shot up to a dollar shortly after the release. This news release also details that the agreement with the Guyanese government does not include any stock transaction. Instead, the company is required the pay $11,500 to the government over 2 years.
-Aug 18, 2011- Mahdia hires AMEC to assist in completion of a N43-101 report. They also report some litigation issues at their Tiger River property (all 9 blocks), which the company says it considers a "minor nuisance"; a base camp will be built on the tiger river property.(another pp proposal is announces days after which states a 3-8 million will be raised at .40/share and .60/warrent.)
-Nov 18,2011- Mahdia releases non 43-101 compliant historical drill results. First set of drill results seen up until now. Table can be viewed at http://www.cnsx.ca/Storage/1405/128315_Mahida_Gold_Press_Release_November_17,_2011.pdf
-Dec 12, 2011- Mahdia Gold extends the closing on the previously announced PP to January 2, 2012. Release states that they are trying to create relationship with prospective participants who can be benneficial to the companies long term growth. They also announce the mobilization of TRADO drills and equipment to the White Creek property, data from the previous operators has been received and will be used to define new targets.
-Jan 3, 2011- PP set to close for Jan 2 is extended to close on Jan 31. Zaakir is granted 2 mill stock options at an exercise price of .10. SP at this time was 0.18. Release ends by stating that drills are being mobilized to White Creek and the Omai property.
-Feb 16, 2012- John Reynolds joins the board as co-chairman. As well the PP closing date is extended until March 19th, the price of .40/share is dropped to .30/share, warrant price of .60/share stays the same. The Omai project is "officially opened".
-Mar 30, 2012- At the request of the CNSX, Mahdia releases more fulsome disclosure on the details of the White Creek acquisition. The release states some late filings, money was borrowed for the White Creek payment, and that the transaction is at an arms length.
-Mar 30, 2012- PP closes, fully subscribed, at 8 million.
-Apr, 26 2012- Press release states that 2 diamond drills are drilling at the Omai site. One focused on hydrology and the other focused on drilling into the ore body in the Fennel Pit.
-Jun 26,2012- Mahdia announces two more drills are being mobilized for confirmatory and twin drilling along the Wenot Trend. The campaign is said the be 6500m over 12-15 holes. In a second release, historical drill results are released, which can be viewed here. http://www.cnsx.ca/Storage/1463/134038_June_26_News_Release_%281_of_2%29.pdf
-June 29, 2012- Mahdia releases more historical drill results, including some monster grades. Of importance, the barren diabase dike is mentioned. The press release states that historical drilling, from 1997, concludes that the dike goes on for a depth of 180m, and that mineralization is intrusive below. (In my conversations with people who were either close to the project in the Cambior days, or actually worked there, their main concern was the Diabase dike. more on this later.)
-Jul 24, 2012 - Mahdia releases NI43-101 geological report, report mentions a number of issues, including the firing of the drill crew due to poor performance. The report is later deemed to be non NI43-101 compliant and is now known simply as the AMEC report. The report can be found on Sedar,
-Sep 14, 2012- Mahdia applies for listing on the TSX-V exchange.
-Sep 19, 2012- Mahdia appoints Michael Galloro as chief financial officer.
-Oct 22, 2012- Mahdia announces expansion of its land package in the Omai/Essequibo district. The agreement with South American Mining inc., the vender, will receive an initial $50,000. In total, the agreement for 100% mineral rights over the 21,000 acres will require the payment of 1,000,000 USD and 2,000,000 Shares of Mahdia. This release contains some interesting points, mainly that Omai explansion was closed off the the previous operators.
-Nov 1, 2012- Mahdia arranges a 3,500,000 pp at .25 cents.
-Nov 22, 2012- Mahdia announces the appointment of Gordon Glenn as CEO.
-Dec 13, 2012- Mahdia hires Andre Duchane as mining consultant.
-Jan 3, 2012- Mahdia announces mended terms of the the PP propsed on Nov 1. Each share will now have a .40 warrant exercisable for a period of 24 months after closing.
-Jan 7 2013 - Mahdia announces Gordan Glenn leaves his position as CEO and appoints Donald Gordan as the intern CEO. This comes less than three months after Glenn was appointed as CEO.
-Jan 24, 2013- Mahdia releases 587 acres (the "Shallow Flats Area") to Roraima Investing and Consulting services. It is assumed that they will work the area alluvialy as Mahdia trys to get some cash flow coming in. No resource estimate has been done on this area.
-Feb 8, 2013 - Mahdia releases a corporate update. Can be read here http://www.cnsx.ca/Storage/1516/139433_Mahdia_Gold_Press_Release_2012_update_8213__2_.pdf
-Feb 12, 2013 - Mahdia confirms gold grade of 4.41 g/t over 16.9 m. These are the first results from phase 1 drilling at the Wenot pit. Total grades can be seen here. http://www.cnsx.ca/Storage/1517/139511_Mahdia_Gold_Press_Release_Wenot_Drilling_results_13213__3_.pdf The results, being mediocre at best, is not the real story here. Its that they were able to discover additional mineralization zones below previously tested targets.
-Feb 15, 2013 - Mahdia confirms gold grades from previously drilled core from the Fennel pit (2006) with confirmatory and supplemental assays. The grades were impressive, including 1.83 g/t au over 78 m; release states that all results are NI43-101 compliant. Full release: http://www.cnsx.ca/Storage/1517/139528_Mahdia_Gold_Press_Release_Fenell_Drilling_results_15213__2_.pdf
-Feb 25, 2013 - Mahida appoints Andre Duchane as COO.
So, there we are.... I left out a few proposed PP that never closed, and other releases I didn't feel were very important. When I first entered this play at .19 I had my doubts, of all the other companies is this beaten down sector with measured ounces and money in the bank, it didn't seem like a wise choice. Zaakirs management history left much to be desired; after receiving so much money and showing nothing for it, one has to wonder, (imagine my concern when upon receiving financials in the mail I see that Zaakir earned $775,000 for the year when a 350,000 pp just closed). As I dug into things a bit, I was faced with a number of geological concerns about the Omai property, specifically a large, barren, diabase dike which runs straight through the area of mineralization in the Fennel pit. The Cambior reports include talk of underground mining below the base. Underground mining tends to me more difficult/expensive than open pit mining. These type of sills tend to be difficult obstacles given the hydrological conditions which often surround them as well as the nature of the rock. Here is an illustration of what I'm talking about
As you can see, lots of potential. I felt that given the price of gold relative to the price of gold then would make the project extremely more economically feasible. The Cambior report also came with a number of old drill holes. Grades were decent, they can be viewed here
So...what does Mahdia have?
Well, there are a number of things which still made the project appealing to me. First off...infrastructure. This was one of the largest mines in South America at the time and, in my experience, infrastructure is time consuming and expensive to create. Environmental impact studies, baseline testing, hiring of consulting firms, and the list goes on. I liked that so much was already in place.
Secondly, they had a stockpile of low grade ore. To be honest, I have been somewhat disappointed that they have failed to do anything with this yet. The ore is low grade, but I'm willing to bet that it can be processed very economically (when Cambior declared their cut off grades, gold was 350/oz). I'm not aware if they have investigated its economic viability yet, but as it was on their list of things to do for 2013 in their corporate update, I will assume they have not. A 1999 report from Cambior stares that ther were 240,000 oz of gold in the stockpile, with an average grade of 0.85 g/t Au (note that Cambiors cut off grade was 1.65 g/t Au). The mine was in operation until 2006, so it no doubt grew from the inital 240,000 oz estimate.
Third...As little as I have been impressed with Zaakirs use of money, the man evidently has some connections. I remember hearing that multiple companies were bidding for the old Omai mine, although I never heard who. To give it to a guy like Zaakir the Omai property with his previous exploration track record in Guyana must mean that somebody is friends with somebody.
Lastly, I was in a unique position to invest in a project where I already knew what kind of results were going to be released to the market. I knew that the releasing historical results would not be NI compliant and that they would have to twin the holes out to prove the grades.
Overall, even given a few concerns, I liked the story. The price has risen and settled back down a number of times since I originally bought in, allowing me to de-risk my position. That being said, I must admit I have been disapointed at how the whole thing has played out so far. Blame it on Market conditions, Management, the retail investors current fear of risk...we all have our favorite mantras...(my favorite is management)
As things seem to be taking a turn for the better over the last little while, and the stock price as such a low level, I may be picking up some more shares fairly soon.
A story to give a look at.....
-Oct 20, 2010 - Mahdia announces a $500,000 PP at .10 (warrents at .15)
-Jan 5, 2011 - Mahdia signs option agreement for the White Creek Gold property. Press release ends by saying that Mahdia plans to explore the White Creek Property before the end of 2011 to "identify its value". No exploration work on the white creek property has been done.
-Mar 21, 2011- Mahdia announces pp of 1,200,000 at .25 cents (warrents at .45). PP closes on May 3. News release explains that it was oversubscribed and that the gross proceeds of the PP are $3,500,000.
-May 9, 2011- Mahdia acquires the White Creek gold property for $700,000. The property had some preliminary exploration done on it through a joint venture program by StratGold and Newmont. Press release concludes that Mahdia is studying said data and will make it available to the public shortly.
-May 30, 2011- Mahdia acquires Omai gold mine. As well, they acquire historical drill results which seem to outline 1.4 million oz. The press release concludes with a comment on a 5 million dollar PP at .60 with a 1/2 warrant at 1.05. SP shot up to a dollar shortly after the release. This news release also details that the agreement with the Guyanese government does not include any stock transaction. Instead, the company is required the pay $11,500 to the government over 2 years.
-Aug 18, 2011- Mahdia hires AMEC to assist in completion of a N43-101 report. They also report some litigation issues at their Tiger River property (all 9 blocks), which the company says it considers a "minor nuisance"; a base camp will be built on the tiger river property.(another pp proposal is announces days after which states a 3-8 million will be raised at .40/share and .60/warrent.)
-Nov 18,2011- Mahdia releases non 43-101 compliant historical drill results. First set of drill results seen up until now. Table can be viewed at http://www.cnsx.ca/Storage/1405/128315_Mahida_Gold_Press_Release_November_17,_2011.pdf
-Dec 12, 2011- Mahdia Gold extends the closing on the previously announced PP to January 2, 2012. Release states that they are trying to create relationship with prospective participants who can be benneficial to the companies long term growth. They also announce the mobilization of TRADO drills and equipment to the White Creek property, data from the previous operators has been received and will be used to define new targets.
-Jan 3, 2011- PP set to close for Jan 2 is extended to close on Jan 31. Zaakir is granted 2 mill stock options at an exercise price of .10. SP at this time was 0.18. Release ends by stating that drills are being mobilized to White Creek and the Omai property.
-Feb 16, 2012- John Reynolds joins the board as co-chairman. As well the PP closing date is extended until March 19th, the price of .40/share is dropped to .30/share, warrant price of .60/share stays the same. The Omai project is "officially opened".
-Mar 30, 2012- At the request of the CNSX, Mahdia releases more fulsome disclosure on the details of the White Creek acquisition. The release states some late filings, money was borrowed for the White Creek payment, and that the transaction is at an arms length.
-Mar 30, 2012- PP closes, fully subscribed, at 8 million.
-Apr, 26 2012- Press release states that 2 diamond drills are drilling at the Omai site. One focused on hydrology and the other focused on drilling into the ore body in the Fennel Pit.
-Jun 26,2012- Mahdia announces two more drills are being mobilized for confirmatory and twin drilling along the Wenot Trend. The campaign is said the be 6500m over 12-15 holes. In a second release, historical drill results are released, which can be viewed here. http://www.cnsx.ca/Storage/1463/134038_June_26_News_Release_%281_of_2%29.pdf
-June 29, 2012- Mahdia releases more historical drill results, including some monster grades. Of importance, the barren diabase dike is mentioned. The press release states that historical drilling, from 1997, concludes that the dike goes on for a depth of 180m, and that mineralization is intrusive below. (In my conversations with people who were either close to the project in the Cambior days, or actually worked there, their main concern was the Diabase dike. more on this later.)
-Jul 24, 2012 - Mahdia releases NI43-101 geological report, report mentions a number of issues, including the firing of the drill crew due to poor performance. The report is later deemed to be non NI43-101 compliant and is now known simply as the AMEC report. The report can be found on Sedar,
-Sep 14, 2012- Mahdia applies for listing on the TSX-V exchange.
-Sep 19, 2012- Mahdia appoints Michael Galloro as chief financial officer.
-Oct 22, 2012- Mahdia announces expansion of its land package in the Omai/Essequibo district. The agreement with South American Mining inc., the vender, will receive an initial $50,000. In total, the agreement for 100% mineral rights over the 21,000 acres will require the payment of 1,000,000 USD and 2,000,000 Shares of Mahdia. This release contains some interesting points, mainly that Omai explansion was closed off the the previous operators.
-Nov 1, 2012- Mahdia arranges a 3,500,000 pp at .25 cents.
-Nov 22, 2012- Mahdia announces the appointment of Gordon Glenn as CEO.
-Dec 13, 2012- Mahdia hires Andre Duchane as mining consultant.
-Jan 3, 2012- Mahdia announces mended terms of the the PP propsed on Nov 1. Each share will now have a .40 warrant exercisable for a period of 24 months after closing.
-Jan 7 2013 - Mahdia announces Gordan Glenn leaves his position as CEO and appoints Donald Gordan as the intern CEO. This comes less than three months after Glenn was appointed as CEO.
-Jan 24, 2013- Mahdia releases 587 acres (the "Shallow Flats Area") to Roraima Investing and Consulting services. It is assumed that they will work the area alluvialy as Mahdia trys to get some cash flow coming in. No resource estimate has been done on this area.
-Feb 8, 2013 - Mahdia releases a corporate update. Can be read here http://www.cnsx.ca/Storage/1516/139433_Mahdia_Gold_Press_Release_2012_update_8213__2_.pdf
-Feb 12, 2013 - Mahdia confirms gold grade of 4.41 g/t over 16.9 m. These are the first results from phase 1 drilling at the Wenot pit. Total grades can be seen here. http://www.cnsx.ca/Storage/1517/139511_Mahdia_Gold_Press_Release_Wenot_Drilling_results_13213__3_.pdf The results, being mediocre at best, is not the real story here. Its that they were able to discover additional mineralization zones below previously tested targets.
-Feb 15, 2013 - Mahdia confirms gold grades from previously drilled core from the Fennel pit (2006) with confirmatory and supplemental assays. The grades were impressive, including 1.83 g/t au over 78 m; release states that all results are NI43-101 compliant. Full release: http://www.cnsx.ca/Storage/1517/139528_Mahdia_Gold_Press_Release_Fenell_Drilling_results_15213__2_.pdf
-Feb 25, 2013 - Mahida appoints Andre Duchane as COO.
So, there we are.... I left out a few proposed PP that never closed, and other releases I didn't feel were very important. When I first entered this play at .19 I had my doubts, of all the other companies is this beaten down sector with measured ounces and money in the bank, it didn't seem like a wise choice. Zaakirs management history left much to be desired; after receiving so much money and showing nothing for it, one has to wonder, (imagine my concern when upon receiving financials in the mail I see that Zaakir earned $775,000 for the year when a 350,000 pp just closed). As I dug into things a bit, I was faced with a number of geological concerns about the Omai property, specifically a large, barren, diabase dike which runs straight through the area of mineralization in the Fennel pit. The Cambior reports include talk of underground mining below the base. Underground mining tends to me more difficult/expensive than open pit mining. These type of sills tend to be difficult obstacles given the hydrological conditions which often surround them as well as the nature of the rock. Here is an illustration of what I'm talking about
As you can see, lots of potential. I felt that given the price of gold relative to the price of gold then would make the project extremely more economically feasible. The Cambior report also came with a number of old drill holes. Grades were decent, they can be viewed here
So...what does Mahdia have?
Well, there are a number of things which still made the project appealing to me. First off...infrastructure. This was one of the largest mines in South America at the time and, in my experience, infrastructure is time consuming and expensive to create. Environmental impact studies, baseline testing, hiring of consulting firms, and the list goes on. I liked that so much was already in place.
Secondly, they had a stockpile of low grade ore. To be honest, I have been somewhat disappointed that they have failed to do anything with this yet. The ore is low grade, but I'm willing to bet that it can be processed very economically (when Cambior declared their cut off grades, gold was 350/oz). I'm not aware if they have investigated its economic viability yet, but as it was on their list of things to do for 2013 in their corporate update, I will assume they have not. A 1999 report from Cambior stares that ther were 240,000 oz of gold in the stockpile, with an average grade of 0.85 g/t Au (note that Cambiors cut off grade was 1.65 g/t Au). The mine was in operation until 2006, so it no doubt grew from the inital 240,000 oz estimate.
Third...As little as I have been impressed with Zaakirs use of money, the man evidently has some connections. I remember hearing that multiple companies were bidding for the old Omai mine, although I never heard who. To give it to a guy like Zaakir the Omai property with his previous exploration track record in Guyana must mean that somebody is friends with somebody.
Lastly, I was in a unique position to invest in a project where I already knew what kind of results were going to be released to the market. I knew that the releasing historical results would not be NI compliant and that they would have to twin the holes out to prove the grades.
Overall, even given a few concerns, I liked the story. The price has risen and settled back down a number of times since I originally bought in, allowing me to de-risk my position. That being said, I must admit I have been disapointed at how the whole thing has played out so far. Blame it on Market conditions, Management, the retail investors current fear of risk...we all have our favorite mantras...(my favorite is management)
As things seem to be taking a turn for the better over the last little while, and the stock price as such a low level, I may be picking up some more shares fairly soon.
A story to give a look at.....
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