Nay sayers? Any thought that Hotcopper opinions affect the...

Nay sayers? Any thought that Hotcopper opinions affect the market to a significant degree is wishful at best. Well the day traders thread might - but not the forums.

Personally I prefer people pointing out risks rather than the relentless optimism from the cheer squad.

I would much rather someone had told me that xyz stock - in my case it was old Tamaya resources - was having problems and was heading for liquidation than the endless "she will come good, just a matter of time" rants from the cheer squad. If you haven't been through a "Go into a trading halt never to emerge" situation then you don't know how hot the pot handle can get. Particularly when you cant let go of it.

So with that said.

Concerns

With this one - yes it should reach much higher levels. But caution on the time frame.

It has been 4 months since they drilled virgin earth.
They are currently not drilling - the rig has no access and they haven't announced that access has been cleared. This means the forward news stream is looking a bit spartan.

The drilling at Hann will probably take 10 weeks after it starts to complete before they move back to Central Bore.

At the same time they have known discoveries a few hundred meters from Central Bore that they aren't drilling.

Obviously planning on drilling these dead certainties later in the year. My guess based on last year is they are doing the risky ones early and the no risk home runs when they need to do the next capital raising.


We need that second rig. Promises of two and at times three exist - so far it hasn't happened. In fact with 4000 sq km to drill they really should buy a rig - they will probably wear out a rig or two before they finish and it would be cheaper than paying contractors or leasing as well as not leaving them exposed to the risk of drilling contractors being available.

Whats a new rig worth - a few hundred thousand? - a million? How much cash have they got? Remember they burn about 3m a quarter for one rig working continuously - so allowing for lab costs and labour lets call it $2m for the rig. How many quarters of drilling have they got to cover 4000 sq km. Does it make business sense to keep hiring contractors.


The JORC should firm up the price and have an increase in institutional buyers - but caution on expecting multimillion ounces - the market expects in the order of 200kOz and from my modeling that is reasonable. The spikey nature of the high grades make this one hard to model.


There are 48m options waiting in the wings of which some percentage will come into the market around June - it needs more support around then to absorb them and the news stream is looking dry. A few million shares a day is a lot for GOR.


Fair price for this thing based only on existing resources and Central Bore is about 0.33c using an assumption of 250kOz. Anything over that is pricing in Justinian and Hann and other prospectivity as well as certainty of going into production. If the JORC comes out less than that it will probably go down.


That all said This is a good buy - or I wouldn't be here - but it is not all cheers and roses and it would be unwise to think that it is.

Have a nice day.