To: Jason Kaye
Re: Your query:
Greg heavy volume this morning. Are we going to see more bad news from YRI in the next day or two, or is the gold conference scaring off
investors?
jk
Jason:
I'd not be surprised to hear that anyone out there was not skeptical about some of the activity that has been happening over recent weeks but I can only say that, no, there is no bad news lurking or hidden, that I / we am/are aware of. The reason for the recent hit against our share price has been traced to a newsletter writer, Michael Schaffer who said:"We recently reviewed Yamana Resources and have decided to remove it from our list. The company's huge land position in Indonesia has turned into a liability rather than an asset, and it is all extremely grassroots that will be expensive to explore. Several of their joint-venture partners have turned in projects and the company is spending too much money without results. Last year $2 million was spent on salaries and investor relations and $7 million on exploration with little results. The company does have a lot of cash, but if the burn rate continues it will be depleted rapidly. The company needs a discovery in the next 12 months or it will be re-valued by the market. We suggest it as a tax-loss candidate if you still own it."
The following couple of days have brought very heavy volume which, according to the numbers, has included a lot of 1,000 to 1,500-share lots. That is, several retail investors have been frightened away by Michael Shcaefer's "Global Gold Stock Report" and others, by the share price fall itself, which was started by the report.
Michael Schaefer certainly has the right to his opinion. That's why I post it here: listen to all sides. But what he did NOT do was talk with me. That may be one of the reasons his facts are not entirely correct. As you will see in our annual report, we spent $1.3 million on "salaries and investor relations." Maybe he intended to include the $0.7 in G&A as well. As to the exploration expenditures -- Yes, I know this could make his point still more -- we spent $7.6 mm and our partners spent another $2.6 mm (during fiscal 96-97) plus we spent $1.6 mm on equity in Union Mining NL. And what did we get? What were the 'little results?'"
Today, we have 15% -- raising to 30% by year end -- of a 520,000 ounce gold resource in PNG, in an area which has multi-million ounce potential. We have made a third gold discovery there as well.
Based on drilling (most of it) and/or float samples (in one case), we have discovered gold or silver and gold at four properties in Santa Cruz, in an large and promising area in Santa Cruz, Vanguardia, Argentina. Our partner left because they were no longer interested in gold.
We have intercepted small amounts of ore grade base metals at Tierra del Fuego and our former partner has recommended that we continue drilling on two of the three targets we have already drilled. That partner left "for business reasons, not for geologic ones."
We have identified a drilling target in Paraguay which we will be drilling shortly. This is based on geochemical and geological results which indicate a Cripple Creek analogy.
We have the Northern Porphyry Belt which has Rothschild confident and excited enough to be ready to market to the biggest copper companies in the world and they are getting back to us with strong interest. Again, this is based on the exploration work we have done and the results we've received.
We have a large and very promising target area in Indonesia which we look forward to drilling once the COWs are signed.
We are in discussions with several majors (and a few juniors)as potential partners on at least five projects, all based on the results we have generated so far. This is all happening in a very difficult market in which most companies -- including Yamana -- are tightening their belts. All of this makes deals very difficult. We'll see what happens.
No, none of these "discoveries" are "ore deposits". That takes time and money, along with the help of Mother Nature and Lady Luck. (We are doing a great deal to help these latter two along, as well.) If we sit on our hands and don't spend the money on exploration -- which is our business after all -- the market will punish us for NOT spending.
Yes, we have to find or build a resource, if not a deposit, in the not too distant future. That's what we are here for. Finding a deposit typically takes five to ten years. However, for a three-year-old exploration company, I'm sorry, but Michael Schaefer is wrong. It took Anglo $40 million, 1,072 drill holes, 26 kilometers of trenching and 139,000 samples (drill and surface) to announce they had a 2.3 mm ounce Au and 28 MM oz Ag deposit at Cerro Vanguardia. Our partners and ourselves have spent $8 million, drilled 145 holes, dug 8 kilometers of trenches and collected 34,000 samples but (looking, for example, at spending) I believe we are more than 20% of the way there.
In the meantime, if a newsletter writer wants to express a negative view and if investors want to listen to it, without speaking with us and without getting the facts, that is their right. And who knows? Maybe we will NOT find a huge economic deposit. That's the business.
I believe we will.
I HAVE HEARD ABSOLUTELY NOTHING WHICH SHAKES MY BELIEF IN THIS AND I HAVE HEARD AND SEEN A GREAT DEAL WHICH STRENGTHENS IT.
I can only urge investors to listen to their hearts and their heads, deciding on the merits and facts. Do what's right for your own Manageable Risk Profile. This could be a relatively short-term investment win. It could be a bust. In my view, it is a good, medium-term investment with a strong upside.
Please, keep talking to me, keep asking the questions, and I'll continue to tell you what I see FYI.
Greg |
