Hi Guys, This announcement at least provided a silver lining to...

Hi Guys,

This announcement at least provided a silver lining to a pretty crap day for me given CDV's announcement! I am now wishing my GOR and CDV holdings were reversed !!

I think that this is an excellent announcement for GOR and shows that they are very focused on their core competencies and don't have an undue hubris which invariably costs investors (e.g. CDV).

I have no sympathies for the shorters. Firstly I disagree with the principle of being able to sell something you don't own outright, but secondly the fact that GOR had multiple options for funding was evident to even someone like me.

The valuation of Gruyere, I think is fair, and GFI will certainly have left material upside for themselves in this deal and thus for GOR too as they still retain 50% plus a very valuable 1.5% NSR. For every 1m oz produced over and above 2m oz from Gruyere is worth c. A$25m to GOR at today's prices.

I am confident that at LEAST 3m oz will be produced from Gruyere over time.

The obvious valuations can be done on GOR and it points to plenty of upside. There are also more nuanced elements which will also assist the project's success and eventual profit returned to GOR's shareholders:

(1) Having GFI involved in the Gruyere mine will likely lower the cost of capital if they chose to develop the mine using debt funding. The NPV assumes a cost of capital of 8%. This could possibly be lowered if GFI provide some form of backing for this.

(2) GFI's involvement and oversight will provide significant technical skills and processes that should assist in the smooth construction, commissioning and ramp up of the mine to steady state production.

(3) Much like NST did when they secured multiple mines, the Gruyere mine will be able to tap into GFI's Australia wide supplier network and secure better deals on consumables and supplies than may not otherwise be the case, although GOR will be a large operation.

(4) You'd also anticipate that GFI will include many of their processes, systems, and IP within the operations of the mine that have been refined across their global operations. Basically it reduces the risk of stuff-ups from a new team building and operating their first mine.

GOR may present much less upside than a small minnow explorer, but as CDV showed yesterday, these investments have an inherently much greater downside risk for investors.

If you believe that the gold bull has many years to run then this is an excellent risk-reward way to gain some leverage to that process whilst still being able to sleep at night safe in the knowledge that you won't wake up one morning to see your investment down c. 50%

Personally I will be adding to my position over the coming days as gold sells off under a [probable] Clinton election win and FED December rate hike ... before markets realise that nothing is solved and the bull POG trend [likely] resumes.

Cheers
John