Dec. 30, John McKnight V.STS Starpoint Goldfields
Hi Guru, Becoming a bit of a joke now, the credibility factor of STS is disappearing by the day, another relinquishment.
I thought Riverstone had been "Handpicked". It's about time Bristman got his act together, instead of prancing around
the world on our money. Why doesn't he get some sense of direction into this company? It appears to being nowhere
right now. Regards
RESPONSE: A sense of direction for STS is exactly what the company is doing. When we first started buying STS,
over a year and a half ago, they were looking at gold properties in South America, mainly Peru, and Africa. We wanted
them to focus on Peru because if they got a promising property, we knew the market would want stock in a company
near Arequipa's Perrina deposit, whether or not it eventually panned out. The property they were looking at didn't look
as good as the company was first told and they passed on it. Any promoter would have told them to go for it, knowing
at least the short term ride would have be exciting.
STS has always intended to get a promising property, gold or diamonds, and move it towards production. Last summer
the Angolan diamond properties became available, which looked very promising. Angola was not sexy nor a promoters
dream deal, but Yetwene had a proven diamond resource based on hundreds of drill holes by a previous operator.
Riverstone was not tested like Yetwene, but also looked promising. We now know STS lost Yetwene because they
could not raise $5 million needed before the due date. This was in the middle of when the Bre-X debacle was unfolding.
In need of a new key project, STS picked up their properties in Uganda and the Democratic Republic of Congo, and
still had Riverstone. They investigated these properties, based mostly on existing historical data, and found that the DRC
properties had significant alluvial past production. This suggests there may be large gold/diamond resources yet to
uncover in these areas and the unexplored areas of their claims. Past production of these properties was done with
crude mining near the surface, when gold was much lower in price. Very little has been done to test the possible
hard-rock source, below the surface. Well known for its mineral potential, several major and junior companies have
moved into the Congo this year. For example, Barrick has committed $US 300 million on a nearby project, Banro
soared this year on drill results from the Congo, First Quantum and many others are there. Up until the coup this year,
most have avoided the country due to political instability. There is still political risk in the Congo, but now only a few
properties are up for grabs.
STS felt they needed a key project and they cast their nets accordingly. The market has taken away the luxury for most
juniors to maintain many idle projects in their pipeline. In effect, low resource stock prices have focused Starpoint and
most juniors on only their key project. Angolan politics is still very risky and was probably the main reason the
Riverstone was not chosen as STS' focus property. Uganda was probably dropped, for now, because it didn't have
enough data to support paying for the property while the company was focusing its efforts on the Congo. Basically the
DRC properties look the most promising and is where STS wants to focus all of its attention and financial resources.
Once the company has established an economical resource, it will probably want to look at diversifying its opportunities
again through new projects.
This is not at all unusual. We did not expect STS to develop their Congo, Uganda and Angolan properties all at once at
this stage of the game. All three needed to be investigated to choose the best one to go forward with. This is what was
done.
We have been encouraging the company to reward shareholders patience by considering a rights or special warrant
offering in the .25 range. This way existing shareholders can average down and protect from their position being diluted
at the same time, while also adding to the company's treasury to more aggressively explore the Congo properties. We
have expressed this to the company and if you like, you should discuss it with them and your advisor. We would like
some feedback on this idea as well. We believe they have found another good property and we want to see it drilled.
What ideas do you have? |
