Don't jump on me for posting this excerpt from Global Watch – The Gold Forecaster. I'm just the messenger! If you want to counsel them directly, go to www.goldforecaster.com. I have forwarded a copy to Rob Martin with the suggestion that he contact them himself.
"It is difficult to talk about a company and property which has finally gone into initial production and yet is trading at such depressed levels. The problem remains a dispute between JV partners on a late payment WEX disputes and a dilution clause which GPXM is trying to use to take 9.5% of the project from its JV “partner.” The dispute has dragged on for some two months now and no resolution at hand, the companies continue to bicker but have made their third sale of molybdenum with expectations of additional sales in the coming months. Production still remains at very low levels and only generates enough cash to pay off expenses as expectations given to me have not been met once again.
Over the next months, production should finally increase and once the 2+ shipments a month threshold is met, profits will begin to flow for Win-Eldrich. GPXM does not look as healthy with its debt and obligations at this time. The way to play Ashdown remains through WEX until higher levels of production takes the financial risk away from GPXM.
This said, I am not thrilled one bit with this dispute, the companies should have resolved this by now and they have not. I fear the lawyers will win big during the clash, who knows what other risks remain until some resolution occurs. I must therefore give the opinion that other investments are more appealing at thistime and once we know how this all plays out in regards to the JV disagreement. Once both sides come to their senses to resolve this amicably, there will be money to be made off of WEX and eventually from GPXM too – if both sides can come to agreeable terms.
Remember (9.5% remains in dispute):
GPXM holds 60% interest with several million in debt and nearly 160 million shares. Market Cap: ~ $55M
WEX holds 40% interest with no debt, nearly 13 million shares and a very tight float. Market Cap: ~ $17M
There is very strong support around C$1.15-1.20 on WEX and I would pick up some more shares at these levels but good resistance around C1.50-1.75, with this kind of market cap and even in the worst scenario, GPXM takes 9.5% away, which I would view as an unconstructive move – WEX still remains quite attractive.
There is much more than meets the eye and I hope to find out more in the coming weeks to better understand this most unfortunate situation.
WEX – Buy on dips, strong buy once this dispute is resolved.
GPXM – Avoid until production ramps up, steady cash-flow and this dispute is resolved." |
