I have been critical in the past of the lack of news, but now that we have the news, I can understand things a little more clearly from management's viewpoint.
I can understand that they can't report every time there is a delay with the plant. We know that they didn't order the lightning and the broken shaft -which may have been caused by poor lubrication, or it may have been a hard rock being jammed in precisely the wrong place. The breakdowns are unexpected to me because the plant is essentially brand new in terms of time in operation. Regardless, they have made it clear ...they expect these issues to be sorted out this month. So what if we are behind by a month ...as I said in answer to a question previously ...I expect around 2,000 Oz per month once we get going properly on HM3 and much higher when HM4 kicks in.
What can they do? They don't know they are about to have a string of breakdowns, ...and when they are happening, the most important issue is to fix them rather than running to shareholders. Anyway, its not possible to pacify short term holders who bleat at the fist sign of bad weather. The temptation for management is to hold back on the negative info, but in the long run this is counter-productive IMHO.
What are my suggestions for the board in future ...spit out the news quickly and reassure investors in the case of unforeseen delays, this stops info leaking out and causing a panic ...which is exactly what happened to us from 12c. It prevents traders taking an advantage at the expense of long term holders with greater belief. In the end ...it is trust that is eroded.
However ...from the viewpoint of a
long term shareholder, they have achieved the most important goals I'm interested in at this point in time;
- They have secured the balance sheet for 12 months
- Despite a rocky start, they have proven the efficacy of HM3, and to me this also proves HM4. In other words, there is no difference between the tiny mills and the full scale mills ...they both work.
- They are getting the rest of the mine processing plant sorted out for our ore and conditions -no doubt inheriting a plant that had design issues.
- They raised capital at a good price, obviously telling investors that they had very promising results and news to be released.
- They provided desperately needed funding for exploration. The initial exploration is focused on expanding existing resources that can scale up and provide near term gold ore.
- In addition to Cascavel ...Cuca, Antenna, and Sertao all have mineralisation, but just need quantifying and this will underline the resource and the case for LOM mine economic viability.
- In the case of Antenna, I think many of us are underestimating the potential scale of the resource -even when compared with the highly profitable mined pit of Sertao (will discuss this on another thread).
I owe an apology to management, because I incorrectly assumed that they were withholding information as a trading tactic, and the evidence shows that this was wrong. My apologies. I also note that Joe Pinto did not sell any shares, but only bought shares (yes he seemed to get a good price ...but its now been below that) -so this shows future confidence in the company.
I just don't see why there should be panic in the streets -the gold is still there and we are closed to being able to extract said gold -move along folks ...nothing to see here -except an improvement in production results and promising exploration results.
Cheers,
SJB
