Not at all Balance, I would imagine that the Glass Earth CEO, who is also the company's certified geologist person, will be busy while the rest of us are on holiday. Will this mean that data on WKP, which might have been held back via the Newmont connection in the JV, will be made public? Newmont have a lot more depth in their staff, and should already have a resources chart for WKP.
Hi Bucko, I doubt we'll get drill results in early January, but the revised 43-101 standard reports are due by 21st January. They will be much more useful for the market. In any case, there has obviously been ongoing interest in the latest private placement. It's possible it's not closed off yet, or that some funds haven't turned up in their bank account, allowing the paperwork to be completed. It's a positive sign that some well-heeled investors think there is plenty of room for upward movement in GEL's share price in 2013.
Glass Earth Gold is seeking to sell franchises within its Central Otago alluvial gold operations, and to make the venture self-funding for further exploration.
Chief executive Simon Henderson said the listed gold explorer had hit its straps with its alluvial operation before Christmas, producing 70 ounces to 80 ounces of gold a week. However, there was room for improvement.
The operation was cashflow positive for paying staff and meeting other overheads, but it could also pay its own way for further exploration in the area if production was raised to 120 ounces a week, Henderson said.
Glass Earth was operating two alluvial washing plants in the Manuherikia Valley, each employing five to seven people. "If we could get another 50 per cent increase in gold we would probably sustain not just the administrative costs and all the wages and salaries, but we would sustain probably all the exploration [in the area]."
Production could be lifted to the 100-ounces-a-week level by better configuration of machinery and better productivity, he added. "There are two big plants operating. They've been operating at about 65 per cent productivity. If we could get up to 85 per cent, we could get that increase in productivity."
Glass Earth is also looking to add two extra alluvial plant machines either through its own backing or by bringing in partners as franchise operators to process deposits in the Central Otago area.
"We're looking to do that [franchise] in the next two to three months. We have two other mining permits with the resources defined and we have two partners willing to do that work." The other permits were in the Ida Valley and Maniototo regions.
I like this focus on the gold recovery, after 2-3 months of work the company should be well on track for a stable cashflow at last.
The ODT has another article: some more good background on the alluvial work. The good grades are found 5 metres below the surface at Drybread, not too deep, and at least 0.3g/m3 on average. 50% above cutoff.
It looks like Simon has found a firm who will mine under tribute at the Gunclub permit, which is still valid and consented. This is a lower grade site but with some new hotspots delineated, maybe with the GEL RC drilling truck. Note the photo of GRU#3 running.
The tenor of the two articles implies that Glass Earth is looking around to see who will front up with the capital and work teams quickly, to allow more gold recovery, and of course they'll have to strike a deal on the proportion of gold paid over for that work. As I researched a while back, the core cost for a brand spanking new GRU can be under $200,000, and there are a lot of diggers and ancilliary equipment lying around in NZ. GEL has been oversubscribed, so they do have an option to buy, lease or finance into some more equipment. That way, they'd be far more in control, if they are certain of the grades and their expertise.
I wonder what the buy in is for this franchise they have sold was, must be close to getting a release about WKP soon surely?
Hi Bucko, good point, on closer inspection the franchisee setup is probably well in GELs' favour for once:
Glass Earth had borne all costs of exploration, consenting and permitting of the prospects so far, and the franchisee would take an undisclosed minority share in any profits.
An operator will need to be certain that there is a good profit here for both parties, as that's the only way their labour and equipment costs would be covered. I had a quick look at the NZPAM site today: in the last month or so GEL has surrendered parts of permits 53189 (Sparrowhawk) and 53182. The small amount of land around the Gun Club mining permit was also dropped (51477) on 8th Jan. One other permit extension appears to be 'in progress' with NZPAM.
The date for new reports to NI 43-101 standard is 21st January, Monday next week. There would appear to be three major areas, WKP, Muirs and the Placer permits. So next week could be really interesting for GEL holders.
Using the quarterly reports, shareholders can easily see what Simon Henderson and Peter Liddle are earning for their work with GEL. It's not a great deal, and perhaps from shareholders' perspectives, it's fair enough.
Here's a setup that a large company is using to boost their performance:
Senior management have some performance criteria to achieve, in GEL's case it might be to maximise placer returns, thus allowing leftover cash for exploration. It might include minimising dilution of the shares. Another performance criteria: progress benchmarks at the hardrock permits.
The bonus offered could be up to double their normal salary each year, paid half in cash and half in GEL shares.
But those gifted shares will have to be bought on the market by the company, so there is no extra dilution. There would also be a holding time for the shares, as though they were a private placement.
How does that sound? If all this worked out, there would be enough profit left for incremental exploration without selling new shares, senior management would be a bit more interested in the share price holding up, and the rest of us could look at the GEL shares as a non-diluting investment.
I don't know about "up to double their salary", but I very much like the idea of gifted shares that must be bought from the market. Share dilution is never fun. I wish you were on the board of directors.
Here are the main salaries and director fees from the 2011 annual report, below. The company is not paying over $200k to any senior staff, no matter what their qualifications are, the workload, or the risks involved. This confirms that GEL is a very lean operation.
Glass Earth has done well with the latest private placement, and some of the interest will be due to the generous warrant options. As previous investors have found, the options are not much use if the share price keeps diluting after funding shortfalls. But surely the tide is turning, and those who have jumped in now (including one or two big investors and NZ's ACC besides) could do extremely well.
There wouldn't need to be a lot of shares purchased on market for performance bonuses (while we're at it, why not suggest the same for the board members, who appear to be underpaid too) - but it would be the principle behind it. Maybe some should be purchased on both the NZAX and the TSX-V, which would also improve liquidity over here.
As for your nomination for the board, Gonzo, thanks.. but I've checked the qualifications of the existing board members, and we're very well placed there. They are streets ahead of any experience a small shareholder like me can offer.
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Originally Posted by Balance
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