AXG - Antipodes Gold [formerly GEL - Glass Earth]

[elZorro]

GEL shares have picked up a bit, since the collapse started by Brent Cook's broadsheet recently. They are still resting well below the price set in the latest PP (CD16c, NZ20c), and I thought that would be rock bottom.

Here's Brent Cook talking to the Gold Report in late 2012, and Glass Earth is not mentioned. Although he does say that some shares held by him for longer than a year hadn't performed well, and were pulling down his average returns. CTG, another TSX-V longer-term share he held, is mentioned and in a neutral (to positive) way. Both were dropped in the same week, with explanations.

http://www.resourceinvestor.com/2013...recious-metals

As usual though, great informative background here. Basically he thinks the market should still be tough on juniors in 2013, but that there are still some bargains to be had. The market is not at a peak, may be near a bottom, and maybe some of the poorer juniors are finally being valued fairly. Finance is going to be hard to find, leading to dilution for many.

Let's assume Brent didn't pick GEL 18 months ago so that he'd get a trip to NZ out of it eventually. It had well above average prospects, and I would think that still applies. Dilution and delays at WKP are behind this decision on his part.

Delays on the WKP drill core assays can be explained by the SGS lab in Waihi having one major customer: Newmont. And Newmont will be prepared to pay only a fair price for each assay, most of which will be for urgent grade control data for their mines. SGS will be looking after the 100% Newmont owned jobs first, because that's the breadwinner. They already do 12hour, 4 days on, 4 off shifts, meaning (I think) they are open for 84 hours a week, every day. There is a job going as a sample preparer for that lab, right now. No major qualifications needed (a good sense of humour?) The WKP report showed that the lab in Waihi has a limited number of fire assay pots, and the premises don't look too large or overly staffed. Maybe 10 staff in total. (Footnote, SGS looks like a very profitable company, only 8mill shares and each one costs a fair bit).

The WKP report explained some core samples are being sent to Australia now. What a shame explorers have to do this sort of thing to get a sensible turnaround.

The other aspect is dilution. The Placer report makes interesting reading, and there is clearly potential for much improved profit from the alluvial mining at Drybread. GEL is not using large-scale gear yet, compared to L&M for example. Some overheads and costs look like they could be pruned back, now that the team has decided what gear is needed for the longer-term work. The mobile conveyor looks particularly useful, and I'll be keen to see the details on this in future. The efficiency of something like that wasn't factored into the older data.

It's up to GEL management to prove Brent's decision on the share might have been a bit hasty. Good clear profit cashflow from the placer should increase the MCap of the company by about 5x the profit per annum, so say $6mill profit p.a. would add $30mill to the MCap. A quarterly target to achieve that is just $1.5mill of clear profit from placer returns. On current data, the return before scheduled payments on the equipment is about $2mill p.a.