I had a call yesterday, from one of GEL's current staff members. This was much appreciated, and I was filled in on how the senior staff felt about the placer operations.

Maybe the price paid for the gear was a bit high, which put the company on the back foot when it came to funds for capital equipment if needed. At that point they still had to pay the monthly capital instalments to Bob Kilgour, the gold price had backed down, the weather had turned wet, and they were still looking for elusive higher grades.

I previously posted some maths on the gold value in a dump truck heading away from the wash area: just $200 if the actual grade is 0.4g/m3. This is a lean operation, not much room for error when you're carting the wash. The caller had been involved in gold panning the wash to demarcate it, and in general they had good staff on the wash digger, although some had to be trained up. Keeping an eye on the feed rate into the GRU was an even more important operation.

Every placer area has unique characteristics which cannot all be found out beforehand, you have to get in there and run the gear apparently. In the end GEL used some older equipment plus some leased gear, and were able to extract 95% of the gold in the wash layer, when other operators had only achieved 30% in the past, and given up. The caller was in general very proud of the teams working in the placer operations.

If Glass Earth had been able to bring more capital to bear, had planned the operation over several years beforehand, and been able to operate a floating GRU as at Earnscleugh, the result would have been quite different. Already Skevington Contracting (SCL) has turned up at Drybread with a brand new Volvo excavator worth over $500,000. SCL has a requirement to resurface all of the Glass Earth workings on the 3-4 farms as the operation proceeds, and this was built into their buy price. So there will be no loose ends for Glass Earth shareholders to worry about.

I'm very pleased about that, as I can see that the operation GEL started will continue to employ staff - maybe fewer - but some. The affected farmers will be able to continue their operations with an extra income and new pastures being established behind the mining strips. I think one farmer at least has already arranged for a massive dam to be constructed (mostly completed by GEL paid staff), which will help in the normal shortage of summer water for the farm. Bob Kilgour will be paid out in full I assume.

I said to the caller that I still think the placer operation was worth a punt, it could have worked out very well with a bit more luck. Anyone tapping data into a spreadsheet will see that it all depends on the grades (and the gold price). It sounds like the grades just stayed a bit on the average side, when the wash had to be carried to the GRUs.

I mentioned the Neavesville permit and the 850oz payment due soon. This is being discussed with Eurasian with a view to it being delayed, so in line with the heavy retrenchment of staff at Glass Earth, there might not be much capital outlay required in the next few months after all.

WKP was discussed too. It is still the jewel in GEL's crown, but on an international scale and with Newmont losing money in NZ and elsewhere, it is proving to be difficult to get extra enthusiasm from Newmont's heavily reduced geologist team at Waihi at the moment. Infill drilling at WKP would of course soon add to the NI 43-101 grading of the resource. GEL are thinking about all of their options here.

These points are all relevant to the current price of GEL shares. Does the MCap of Glass Earth deserve to be flattened to just over C$1.5mill, or is there reasonable expectation that the share will recover like it did after the GFC in late 2008?