Hi there everyone.
It seems that all of us have taken a step back to make an assessment what is the current situation with SPE. Some, probably, like Brain decided to decrease their position or even take and sell a whole thing. Those who continue to hold have various reasons to do so. They all must be very interested in discussions and comments presented by both parties: John Menzies and Reality Check. I want to put my opinion out.
I have contacted Reality about a week before his first report. He has since than e-mail me number of times. To be correct we have exchanged our worries and ideas, he provided me with his reporting on Steppe as well as gave me the background of his work and the agenda he is after.
Certainly by description of the ways, I know John Menzies much longer.
I have read all reports by RC and I did same for John's message. To cut to the chase here RC is questioning in my opinion the SPE's "grip" on billion $ worth assets in the light of Mizek being not in production. He questions the SPE ability to complete what they have set to do, since they haven't completed one of them, which was viewed as crucial by many and seemed to be much within the reach of company like SPE.
Mizek reality.
The "Yorkton" recommendation" is much to blame for opinion that we are out of the business since Mizek will not start in 1998. This was my belief as well, after reading it, although it was never concluded this way by John. This has been addressed by John's message just recently. The index page of the SPE's web site has a applet ticker calling for "With planned production in 1998" to this very moment. This applet was
there when Au was about $350 per ounce.
How production of Mizek would affect the company if we put to rest the issue of "Yorkton recommendation"? It would have no effect at all on financial situation. It would be a generally a sacrifice in level of revenue in order to achieve short term impression on the market. It would be nice to have it working, but would not be nice to see the balance sheet. Everyone who is buying producers looks there first.
Obviously this not the main reason why production is not in place. SBL has not put their money out yet and this is very important to all of us as it affects the price of the stock.
Financing reality.
While for last three months we are aware of the SBL presence, we have little to tell what is happening with the process. Is there something unusual in this situation? Personally I don't think so. Why? This is a corporate matter, an insider situation. I would doubt it very much that Reality Check could get a better detail anywhere else before the conclusion. This is a part of deal we play here. Nobody will say anything. Is this a junior thing? I would gladly disagree. I think we can be blessed that John's put some time frame at the end of this detail description of "riding a bike" who no one really cares for.
RC mentioned the need for $500.000 required to complete the dd for the SBL. John is silent about it. How relevant this is if financing is in place or not? Only by application of method to rise the money this is important. We are looking at 39M shares plus 4M to Goldbelt plus another 2M to SBL. Number of PP's Let say 50M shares. 11M shares
are the warrants and options totaling some $20M in capital to be yet raised. When you take this away you have some 41M shares. This is the reality.
Dilution reality.
SPE has no money. RC and others are in the believe that recent announcement was made about pp done by B.Bell. This announcement was received by many as new money. I hold belief that was just an approval by VSE of transaction from the past. Nevertheless SPE badly needs money. Without cash it can't be run. No target will be drilled, no new development will be recorded. The financing is to cover Mizek operations and as such the funds will be placed in escrow till appropriate time. $2M at today's price is like 8M shares and probably similar number of warrants. This is costly,no doubt. There is no other way unfortunately. This is survival act in place. Well how this affect us? Few weeks back I made a calculation of geological resources of
properties which are or are in the process of becoming part of SPE land package. The figures can be seen here.
cal.shaw.wave.ca
This is what can be mined by people wearing uniforms of "Steppe Gold". Certainly this will not happen if company will not have money to stay in business. There is enough value to cover 100M shares and have a $10 Cdn per share. What about the rest of it, places from April 1 release? Would they add value if deposits are found there?
There is a very good reason to rise money here, even at such a costly terms.
K&A reality.
I don't think that that said above someone would have a doubt about existence of the problem with meeting $250,000 payment. Now if someone think that companies are crawling around there in order to get the piece of it, making impossible for Steppe to hold to the option due to tough stand of Kazaks insisting to be paid, think again. I don't
believe that Kazaks will decide it to work on it themselves either. Never mind the investment sentiment being on the other side of the river in this country, the negotiations must be taken as we need this $250K in other area at this time. Still assuming this, insisting on details is taking us over the board here. We will be notified if anything happens. The money can be raised and after all if such a decision made, applied at this area. I believe in open exchange of information but RC is asking too much here.
I did not write about Goldbelt as John put it the best way. Shareholders approval is needed to confirm the transaction. I can draw tables how I want, but for him to do so is much silly, not just little.
This is just my opinion.
Robert |
