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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers
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To: AlphaRomero who wrote (65025)5/5/2009 6:28:57 PM
From: hubris33   of 78417
 
er, not sure I see things the way the GSS does, nor particularly like what he's selling. He seems to have fallen in love with MTO.v which is fine in itself, but making that one of your top picks gives me pause as to the background/credibility. In addition some of the comments on the blog suggest a missing depth of DD before posting that Cash Flow summary.

While doing my own DD and following up with MTO, I spoke with the CFO who sounds like he is the only guy in the lot with a college degree. Not that that is particularly bad but the strong attitude did come through that "we don't need engineers or geologists." Which explains the focus on production BEFORE they have a single ounce of Proven & Probably RESERVES or even a single ounce of 43-101 compliant resources! I think it also explains the variable production since it is pretty darn hard to control grade [head grade] and optimize the process if one is mining "blind." In addition, I think it helps explain why reported cash costs are $688 per ounce as reported in the blog comments! (1)

Look the GSS up on Linked-In and one will see that the GSS is new to the gold space with no engineering or scientific background.

Sorry if this comes off as academic snobbery. I've seen my share of projects fail that were "seat of the pants" operations and am baffled by one who puts up a website/blog as an expert [with little mining background] yet ignores the risks involved with a "seat of the pants" operation. From reading the blog it looks like a couple of trips to the mine were the basic education into mining & milling and thus perhaps a fondness for MTO? Perhaps the GSS needs to develop some more sophistication in the mine industry?

Then I find that GSSX Index© to be only "interesting" at best. Anyone here could pick a basket of their favorite junior miners and compare it to the TSX, HUI and XAU and end up beating the averages especially because the juniors were the hardest hit when it came time for massive fund deleveraging in the last quarter of 2008. Juniors lost the most so they have bounced the most. Most viable, producing or cash rich juniors came back toward fair valuation during the first 2 months of the year. Also I can't tell how the GSS weights his picks in the index. It looks like each company is weighted equally regardless of Market Cap, Cash Flow or NAV or any other traditional valuation method. E-mails to the GSS to clarify such have gone unanswered.

I dunno, I'll read the GSS with a careful, jaundiced eye - and run my own numbers and DD.

jmho

H3

Note:
1.  In a rising POG environment even the worst run, poorly conceived projects have the opportunity to make money. 
However, when a price pullback comes or inflation threatens production costs & margins, the marginal producers will 
be the first to suffer.  Most investors don't track the vagrancies of the industry.  Therefore buying into one of 
these operations can be ST profitable as long as one sells and takes profits.  Hang on too long and one ends up riding the
-80% drop we saw in most juniors last year....
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