Potential JV with major and OGX future

I haven't posted anything substantive for a while so time to contribute again.  I have been frantically moving house prior to a Christmas cruise.

It will probably come as no surprise that I read the situation completely differently to many holders.

One reason I didn't want to post frequently is because I have no intention of entering into a debate with others who may have entrenched views that may include the theorem that the entire BOD are idiots or incapable etc (each entitled to our own view).

With that premise, please don't think that our current prediction has not affected me personally.  I will have exhausted every possible known means of finance to be able to take part in the SPP (assuming we don't trade prior to the closing date) -but take part I intend to.

I recently traveled to Sydney on a quest that included investigating a new technology / innovation (that may potentially make a major contribution to the smooth operation of our Cascavel operation -will keep quite about the details at this at this point to give ) -and the $One Grand this cost was not easy to find -believe me.  My better half and I took the opportunity to drive down from Bris and also catch up with friends and have a nice meal at a few places like the famed Fish Market.  In hindsight we wouldn't have booked our cruise to PNG had we been aware of the issues OGX would face (mind you at $150/day PP including all meals -very inexpensive and fantastic opportunity to visit five ports or islands).  

Am I happy with what has happened -and how it has happened?  No, the SP plunge indicated selling by SOME of those with insider knowledge, and should be investigated by authorities as far as I'm concerned.  I recently attended a presentation on insider trading by Queensland University, and it highlighted the complexity of the problem.   In Australia you are guilty of an offence if you discuss price sensitive company info at a BBQ to someone without "quid pro quo" (receiving a benefit or advantage), but in the US this has not always been not be the case (need to prove a benefit -even if it is intangible).  So what is the law in Brazil? -who knows ...but I would like OGX to conduct an investigation (and report to shareholders) in the interests of good governance.

Regardless of this -is it logical that our BOD were responsible?  Did any of them sell shares at an opportune time?  -Not as far as I'm aware (aren't we told to "follow the money?").

So this indicates to me that there was no deliberate attempt by the BOD to orchestrate a capitulation of the SP and take advantage of said capitation.  They didn't sell shares, and this indicates that they didn't have two bob each way or "heads we win tails you lose" (AVQ).  They stood to lose from this like the rest of us.

This draws an important distinction between intent and the outcome or (the cause and effect).  Keep in mind that I have never met or spoken to any of the BOD including Mark P.  Yes I would know him is he "stood up in my porridge" because I saw him present at the Gold Coast.  I'm not pushing anyone's barrow.

So ...what were the causes behind the fiasco / SP capitation / stuff-up?

As I see it:

• Funding was tight and they tried to get the mine operational on a shoe-string budget (had no choice in the matter really) and this led to corners being cut:
  • no on site assay plant
  • insufficient security (possibly)
  • deficiencies in the beneficiation circuit?  Is Gekko have any liability here?
  • inexperience / inferior mine design and operation
• In addition, poor ground conditions in the upper part of the mine resulted in an inefficient operation.
• The assay results turnaround was clearly a major issue and (as I understand it) resulted in us not being aware of poor beneficiation until the gold was being poured.  (Yes someone was aware ...so who started the sell off?)
• Apparent poor performance of (the Co who would appear to be) the external assay service provider Intertek:
  ​
• I also have questions of our Brazil office holders considering their direct and relevant expertise:
  • Dr Marcelo de Carvalho
    VP Brazil & GM Operations
    M.Sc (Metalogeny), PhD (Metalogeny & Geochemistry), CREA
  • Dr Klaus Petersen
    President, Brazil Operations
    M.Sc (Mineralogy & Petrology), PhD (Mineralogy & Petrology), AusIMM,CREAM.Sc (Mineralogy & Petrology), PhD (Mineralogy & Petrology), AusIMM,CREA

We will probably never know all the real causes, but the independent consultants should know, and I hope they are reported publicly to restore confidence.

For those who are suspicious of us losing the gold in the processing plant ...these posts from an Au metallurgy forum may be informative:

​

Enough of the causes -what about the steps taken after the "shisenhouzer" hit the "conflugerator"?

In this area, I think the BOD have done well:

• Suspended trading to halt the panic and the cash drain.
• Taken steps to prevent insolvency.
• Ordered independent expert review
• Commissioned a SPP.

As others have mentioned, shareholders will need more evidence pointing to a positive resumption of operations and that the gold is actually there (well ...somewhere).  This looks to be the case on the face of it from the initial reporting of the experts.

Assuming things get back on track, then the SPP should give holders the ability to recover -for that opportunity I am grateful.  I'm disappointed that option-holders can only rely on a shortfall to take advantage of the cap-raise (is it better than nothing? -we don't know yet).  If all their funds were in the options ...how will they participate?  2 for 1 on the new options with a small fee would have been better -and I hope that is still able to be considered by the BOD.  

Finally, the play from left field is the potential JV/buy-in with a gold major -and this could potentially turn things around overnight. We have had initial discussions ...so it is clearly not pie in the sky.  If something big comes off -we need to be fair and look after the OGXOBers!

Ironically, it may have been the involvement of the expert independents who introduced a major to OGX.

I have no doubt that more info will transpire over the next few weeks.

Finally, have we examined carefully whether professional negligence or liquidated damages may apply to any of our service providers?   

Cheers all,

All the best for the rest of 2017.

SJB