Pete,
The move to Canada while explainable from a financing perspective, it does leave me somewhat perplexed. I think that it was widely expected that at some point in time the Brisas and Las Cristinas deposits would be merged into a single operation, thereby reducing the capital expenditures required. The explanation of the move to Canada offered by Gold Reserve management, especially coming so fast and during a holiday period, suggest some urgency that I can't quite explain.
I don't find anything wrong with the move. Only the timing is curious. They failed three times to get a quorum for the annual meeting. And now, there is a rush job to push through something that many shareholders (especially American) might find difficult to fully understand.
I somehow think that there is more to this move than has been revealed to-date.
With respect to your concern about the remuneration paid, I think that it is a fair question. Shareholders are justified to question the overall management expenses for a Brisas project that is barely moving at all. It would appear that management has been more focused on WAITING for a possible PDG overture, than enhancing shareholder value in a more immediate horizon, thereby extending their pay schedules, which include options of course.
The move to Canada may signal that PDG will not absorb GLR, which in turn may suggest that PDG will NOT proceed with Las Cristinas, given that the contract-of-work has not yet been converted into a full concession. Title to Las Cristinas is still firmly registered in the name of Mael. I may be wrong, and find out later that the move to Canada is motivated by a business combination with PDG, but I would be surprised.
If GLR does go ahead on its own, I am not sure that it will be easy to raise the capital without shareholders suffering a lot of dilution. The company will still face potential issues in the area of the environment (Imataca Forest Reserve). The copper prices quoted in the pre-feasibility study are VERY far from current prices. Further revisions for a bankable feasibility are to be expected, with downward economics as compared with what was presented to us so far.
I would be interested in hearing the opinions of GLR followers out there. |
