pc:
In order for Yamana to have a "sunshine future", one or two of the following things have to happen:
a) The market needs to turn around so that people regain their faith in the best exploration stocks. This involves many factors including gold --and, to a lesser extent, other metal -- prices, as well as the strength of our sector. It's also has to do with someone having a major find. It's got to do with the major producers showing their faith in the market. It's got to do with central banks and international markets. It's even got to do with normal cyclical changes. I'm seeing technical signs in the past week that the market -- specifically, the gold price -- may be turning, but they are far too narrowly focused to be a strong signal. I'm hearing this extremely cautious optimism repeated by many market-watchers in Canada and the US. The European perspective is not so clear, but I'm looking for feedback there too.
b) Yamana needs to find a significant deposit. This is complicated by issues about at what stage in this process will people believe we have a worthwhile deposit. What excited people a year ago is different from what excites them today. It's further complicated by the fact that we have to be able to spend money on exploration, but, with cash so tight right now, we also have to conserve cash. Therefore, the strategy is to (judiciously) focus primarily on the place where we feel we can be most efficient and effective -- Santa Cruz Vanguardia, Argentina -- while conserving cash everywhere else. Incidentally, this doesn't mean that, in terms of potential size, this is necessarily our best prospect. It just means, given all factors, this is our best shot.
c)We need to be finacially able to weather the downturn while we are waiting for a turnaround. That's why we are working on a few ways to come up with a bit more money. (The idea is to get to a place where we can extend our exploration efforts, rather than just conserving cash. Right now we are drilling in Santa Cruz and continuing to gather data from past work in a few other areas. Otherwise, exploration activities are cut to the bone.) Financially, we're in good shape for 1998.
d) One major reflection on all of this is the issue of a JV partner. Getting one or two more -- besides Barrick, which IS STILL WITH US IN INDONESIA, DESPITE THE RUMOURS -- would help us from a cash position,as well as in the market. The trouble is, there is very, very little JV activity out there right now. We are conducting property visits (for people who have cash and who seem serious) and we are talking with a dozen different companies about different projects, but noone is moving very quickly on anything, particularly on things that are not advanced enough.
Q: Does our lack of recent success in gaining a JV partner reflect the quality of our projects?
A: I believe that all we know is that Yamana can not currently demonstrate that we have a proven world-class deposit.
e) In the longer term, it would be nice if the situation in Indonesia cleared up.
Overall, we know the market will come back. We have much reason to believe that metal prices with improve significantly (and fall again). We know that someone will find a major deposit, attracting investors to the sector again. This is a cyclical business, and always has been. The pros have been through this before.
From Yamana's perspective, we know that we have several good properties.
We know we have gold and silver at Santa Cruz Vanguardia.
We know we have gold in PNG.
We know we have gold in Wenatchee.
We have targets begging to be drilled -- based on extensive geochemical, geologic and geophysical data -- in the Northern Porphyry Copper Bet in Chile and in Kalimantan.
We also know that some people think that we are too diversified, while others like the variety -- many shots at the brass/gold/silver/copper/nickel ring. I know that we have a strong board, honest management and a good (although smaller than before) technical team. I know that we have a good chance at success, in several areas.
I also know that nothing is certain and, I still have almost everything I own locked up in this company. We need some luck to supplement our assets, efforts and abilities.
I hope this helps.
Greg |
