AXG - Antipodes Gold [formerly GEL - Glass Earth]

[elZorro]

I have had some time to reflect on my previous holdings in Glass Earth. It certainly looks like even the name change to Antipodes Gold (AXG) has not revived the prospects for the company so far. And nor should it - there is much to be learned and remembered from this company's past history.

The last quarterly report gives a half-year comparison between Jan-June 2014 and the same period in 2013.

http://www.antipodesgold.com/uploads...9_aug_2014.pdf

GEL lost over C$6mill in a 6 month period of the first half of 2013, as a result of the alluvial mining operation, and an almost complete backing away from their permits in the South Island. Their accumulated losses are over C$38mill since the company was floated in 2006. In the last report, the directors had each stumped up $10,000 as loans, but since then Chris Castle has loaned $40,000, presumably to repay the directors. The offered shares for this transaction (in case the repayment didn't occur), are valued at C2c each.

In the next three month report, we may see some of the permits being written down. The company is owed $129,000 from some debtors, but who these people are, is not spelt out. The company owes a lot more to others, of course. AXG is meant to spend $700,000 odd on exploration at WKP in 2015 to make up for the cash they haven't paid Newmont under the JV terms. They still owe people who supplied alluvial equipment on lease, and other loose ends.

As one of the smaller investors who supplied these people with the cash they needed to operate for a few years, I have to wonder if I could have expected these poor results. My point of view for several years, was that since they had so many permits and were covering such a lot of ground, they would surely find an El Dorado or similar. I did some due diligence, and thought they were fairly clever greenfield explorers, and genuine.

However, when it came to being alluvial miners, they were far out of their comfort zone. I can see the point of trying alluvial mining - the gold price was high, the exploration results hadn't been spectacular, maybe just bad luck on that score. Around this time Brent Cook had started touting the GEL shares. His interests probably did a lot better than anyone else involved with GEL, as the share cranked itself up, based on frequent reports to his client list from the field data at WKP. But most shareholders didn't make the most of this phenomenon, to exit.

When Brent Cook backed out of supporting GEL, and gold started dropping in price, shareholders were on a hiding to nothing. The alluvial work almost never turned a profit, and now we know it was a fairly badly run operation towards the end.

Without the confidence of investors, GEL or AXG cannot do anything in the near future. There don't seem to be any compelling reasons to expect this to change. One or two things are in their favour: there are a lot of tax losses sitting in the company, which can be valuable to some investors. Also, one or two of the permits are possibly of interest to Newmont. The permit under the rest of Waihi township (immediately East and South of the giant Martha pit), and of course WKP. Both have too few drillholes to be known assets. They will need a lot of cash spent on them, just to see if they are of any use.

With all this in mind, I wonder if AXG will simply be taken over by a bigger company at some stage, or will it be left as a backdoor company for some other aspirants for new shareholder cashflow?

I read the other day that a large proportion of backdoor listings fail or do worse than standard listed companies. GEL was an IPO, however.

I'm interested to hear what others think.

[digger]

elZorro, your not only flogging a dead horse,but your flogging an old pile of bones that only archaeologists could put back together to know that it was once a horse. And the tax lose can only apply if enough of the founding people that substained the lose in the first place. See an accountant on that one.



Now somewhere i see you are very careful on NTL prospects to put it mildly. I would like to hear your thoughts on that company.

[elZorro]

elZorro, your not only flogging a dead horse,but your flogging an old pile of bones that only archaeologists could put back together to know that it was once a horse. And the tax lose can only apply if enough of the founding people that substained the lose in the first place. See an accountant on that one.

Now somewhere i see you are very careful on NTL prospects to put it mildly. I would like to hear your thoughts on that company.

Digger, I wasn't sure of the tax rules for a public company, what you say is true for a private company, certainly.

I am being careful about what I say on NTL, because I haven't researched it well, and want to stay neutral about it at this stage. I did have some shares in it, but sold them a few months ago. Someone else who seemed to know a fair bit about the area, reckoned that all up, the amount of gold left in New Talisman is not a great deal compared to Martha mine and surrounds. Not the amount they are going for, anyway. I was hoping there were not too many parallels with GEL: moving from talking about mining, to actually doing it, and losing a heap of money in the process. But if they take it steady, there shouldn't be too much risk. They'll know if the ore coming out of the hillside is grading 1/2 oz/tonne or more, there should be plenty of cashflow.

[elZorro]

The third quarter report for AXG is out on SEDAR, dated 25th November. As for the last few reports, it's sad reading. None of the three part-time staff have been paid since the end of 2013. There have been some bills to be paid, including $30,000 odd under geological modelling etc. All up C$88,000 has come in from directors (NZ $40,000) and Chris Castle $40,000, $13,000 from someone else. C$70,000 has been spent approx, leaving $13,000 in the bank as at 30 September.

There are two permit areas mentioned only, Waihi West and Hauraki (WKP). WKP is still valued in the books at over C$2mill. By 31st December 2014, AXG is meant to repay C$595,000 to sundry creditors, under a deal that was struck in 2013. Chris Castle is likely to be paid in shares for his cash inflow, at C2c each.

In the MD&A, mention is made of the tough conditions for refinancing.

Antipodes Gold Limited - Management’s Discussion and Analysis
For the nine months ended September 30, 2014
AGL MD&A Report for Q3 2014 Page 13
SUBSEQUENT EVENTS
The Company, in common with many junior gold explorers, needs to refinance and/or restructure.
Management and the Board are now actively pursuing a restructuring. Funding is also required for its
continuing hard-rock activities and to cover General and Administration expenses.

Sounds like restructuring can mean a lot of things, particularly change.

http://en.wikipedia.org/wiki/Restructuring

[Balance]

Holy Shxt - this dog has had a 5:1 and a 10:1 consolidation in the last 4 years and it is trading 2.5c?

The directors and management of this company has turned $10m in 2006 to $264k today - a loss of 97.36%!

How much of that has gone to them in salaries, fees and benefits?

What a freaking waste of time!

[elZorro]

Holy Shxt - this dog has had a 5:1 and a 10:1 consolidation in the last 4 years and it is trading 2.5c?

The directors and management of this company has turned $10m in 2006 to $264k today - a loss of 97.36%!

How much of that has gone to them in salaries, fees and benefits?

What a freaking waste of time!

Balance: I think what is interesting, is that perception is everything. AXG doesn't seem to be compelling at the moment, yet they have taken in something like around C$32mill of shareholder funds since 2006. There are not too many who will supply cash funds now, yet in early 2013 there was quite a bit coming in from investors, including me. The difference is that instead of spending most of the cash on exploration that didn't quite make it, from 2013 they scuttled about $4mill on (what turned out to be) a doomed alluvial project. It seems that might be their last chance in the current format.

It's not unusual for greenfield explorers to raise $2-$4mill, and spend it on exploration over a two year period, often to no avail. GEL/AXG managed that several times over, still to no effect. Bad luck? It's true that Simon Henderson and Peter Liddle earned reasonable salaries over the duration, plus travel and the use of some toys. Most of the capital was spent on external contractors, the govt for permits, company staff including geologists and students etc. And in buying gear and permits from Otago people, who were smarter than Mr Henderson and Mr Liddle.

It has been an interesting journey.

On the TSX yesterday, AXG announced that they have given up on the raising of more capital via shares. Instead, they are in negotiations with an unnamed third party. Considering Newmont are owed the most from AXG contract commitments, and that the AXG permits that remain are on their Waihi doorstep, it doesn't take too much of a sleuth to guess who the party is.

http://web.tmxmoney.com/article.php?...&qm_symbol=AXG

There was apparently no need to post the same info on the NZX today, two days later.

[Balance]

So how much have the directors and management stripped in fees, salaries and benefits from this company?

You must know, elZorro, since you follow it so closely?

Genuine question.

[elZorro]

So how much have the directors and management stripped in fees, salaries and benefits from this company?

You must know, elZorro, since you follow it so closely?

Genuine question.

I would estimate say up to $50k in travel, $450k in salaries and directors fees (they paid very little to directors), per year. More recently, the directors have had to pay cash back in, and no pay for part-time staff. Not a big proportion of the funds that came in, were spent on directors and management. They usually had about $3mill a year to work with, on average.

About C$32mill came into the company as shareholder funds.

http://www.sharetrader.co.nz/showthr...l=1#post427314

[Balance]

I would estimate say up to $50k in travel, $450k in salaries and directors fees (they paid very little to directors), per year. More recently, the directors have had to pay cash back in, and no pay for part-time staff. Not a big proportion of the funds that came in, were spent on directors and management. They usually had about $3mill a year to work with, on average.

About C$32mill came into the company as shareholder funds.

http://www.sharetrader.co.nz/showthr...l=1#post427314

So if you add up the number of years they have been listed, a big chunk of funds have gone in salaries, fees, travel, cars, health & life insurance etc.

Also, considerable amounts have gone to investors' relations - $392,000 eg in 2011.

As for the C$32m, most of it was a write up of minerals prospects.

Anyway, good luck.

[elZorro]

So if you add up the number of years they have been listed, a big chunk of funds have gone in salaries, fees, travel, cars, health & life insurance etc.

Also, considerable amounts have gone to investors' relations - $392,000 eg in 2011.

As for the C$32m, most of it was a write up of minerals prospects.

Anyway, good luck.

What do you mean, good luck? My reason for continuing to post about AXG is to inform anyone else who might be thinking about investing in the company, to take a careful look first. I am not a shareholder anymore. There might be a lesson in how to get a reasonably large (for NZ) exploration company off the ground, even if they didn't make it. While I know they left out, or hid away, a few pertinent facts sometimes, I didn't catch the directors or managers outright lying. I also think their salaries were sensible in the scale of the company.

A large proportion of the funds raised was spent on exploration activities, with drilling crews, aerial surveys etc. More ended up in the economy as wages and lease fees.

The big lesson is that before starting out on a mining operation, make sure there is a good margin. No solid margin, don't start.

ACC sold a few shares and is now holding slightly less than 5% of AXG.

https://www.nzx.com/companies/AXG/announcements/258017