Subject: Comments on Naxos from Weekly Hotline Message
This is Jay Taylor speaking for Taylor Hard Money Advisors, Inc., the
publisher of J. Taylor's Gold & Gold Stocks for the week ending February
22nd, 1997. This hot line message is normally updated every Saturday at
6:00 PM Eastern Standard Time and it is intended solely for the paid
subscribers to J. Taylor' Gold & Gold Stocks newsletter.
At the close of last week, our portfolio was up 7.1% so far this year while
gold bullion has lost 4.38% of its value in since January first.
The following represents comments made with regard to Naxos Resources in
this weeks hotline message.
Naxos Resources is still on my list and I am as hopeful as ever that this
company will discover an enormous mineral deposit. But I do not back away
from my view expressed last week that of the three so called desert sands
companies I now follow, Naxos is currently my least favored even though the
company announced some more good news as the week came to an end. Ledoux
labs certified a average recovery of 0.079 oz. gold/ton from surface to a
depth of 250 ft. from a drill hole taken at Franklin Lake using the
company's proprietary hot cyanide leach process. These results, which come
on top of a number of other very strong results during recent weeks provide
still more evidence that there is legitimate reason to believe Franklin Lake
has the potential to contain a very large precious metals deposit. Under
normal circumstances, an announcement of a 250 ft. intersection grading
0.079 oz. gold/ton would blast the share price of Naxos to much higher
levels. But given all the doubts about this company it may not have much of
an impact on the price of the stock for the moment. Naxos is under a cloud
of suspicion that is not, in my opinion deserved. But Naxos investors should
take heart. Another company, namely International Precious Metals was also
under a cloud of undeserved suspicion in 1994. But by putting in place a
Chairman with world class finacial experience and adding other mining and
financial professionals to complement Lee Furlong, who has been instrumental
in putting numerous mines in to production, and by hiring internationally
respected outside consultants, they have definately restored themselves to
credibilty but appear to be on their way toward building an enormously
valuable gold/platinum mine.
On the internet last week, much was made about my feelings being hurt by
Greg John and that I was getting back at Naxos by saying what I said.
Nothing could be further from the truth. How could I let a single remark
steer me away from my hopes and dreams for this company in which I have put
more time and energy than any other stock covered in my newsletter since I
began publishing in 1981? What Mr. John's remark did do was provide me with
a first hand experience of how the company's managerial shortfalls can lead
to uneccessary problems. I honestly believe that at present the management
team at Naxos does not measure up to the management at L.S. Capital and
especially the management team at IPM. Again, that is not meant to be a slap
at the current people at Naxos. Personally I like President Jimmy John very
much. He has his own set of talents and strengths which have served the
company well up to this time. And I stand behind my views that he is an
honest man. But any mining company, even those with conventional
technologies, require a diverse pool of professional talent if they hope to
succeed. In my view, Naxos is a bit short on professional talent at the
moment and it needs to set more definite limits and direction for its
employees so that misunderstandings like that which happened between me and
Greg John at Death Valley Junction (and much more seious ones) do not
continue. In time, I remain hopeful Naxos will straighten this all out.
One of the criticisms I faced last week (by one subscriber who was so angry
about what I said about Naxos last week that he canceled his subscription),
was that I was wrong for asking Greg John for "inside information".
Unfortunately with a company lacking discipline, it is not so easy to know
what is and what is not insider information. This is just another example
of a weak management team which by its modus operandi (or lack thereof) have
created a gray area of uncertainity and confusion. How was I to know what
others had or had not been told since those kinds of questions have been
(and I continue to be) answered by people senior to Greg John on an ongoing
basis going back to 1990. Based on long standing experience in covering this
company, I fully expected an answer to my question because I and others had
been having those questions answered for years. (Just last week, afte the
Greg John incident, I received a call from an investor who, based on a
conversation he had with the company, said he heard the company's hot
cyanide method was recovering 0.70 oz. gold/ton). So I do not believe
(though I can't prove) Greg John was motivated by some "high principle" of
ethical behavior when he told me he could not answer my question. I believe
it was simply his way of saying, "I am the President's son and you are not.
Compared to me you are insignificant so you don't deserve to know". It was
that "put down" message that caused me shock and hurt. The idea that he was
refusing to answer the question on the grounds that to do so was illegal
never entered my mind. If the company did have a policy with regard to
divulging information, then Greg John must be the only one following that
policy. Had Greg John told me that he could not answer that question on the
basis of inside information, I would not have been phased by it. That
happens all the time when I speak to companies carrying out drilling
programs. But there was no explanation as to why he would not tell me. Greg
John simply said, "Yes I know, but I'm not going to tell you". And I did not
push him after that. I simply said to myself, this is a guy who is not
trying to help me undersand the company and of course that did not make me
happy. All I was trying to do was to inform my subscribers as best I could,
but I never aimed to break any laws or regulations in my information
gathering process.
To show my sincerity about this matter, I have instituted a new policy from
this point forward with regard to Naxos of not calling this company.
Because management has not instituted a uniform policy on the disemination
of information, I will simply rely on press releases without follow up
questions at this juncture. To do otherwise may just get me into trouble.
Only after management puts into effect a strict policy with reagard to the
dissemination information will I seek personal contact with members of this
company. If my subscribers are in the stock for the long term (as I am since
1990) we can rely on "official" information and if the company is
successful, it will not make a difference.
With respect to Greg John, I would like to take this opportunity to tell him
I harbor no ill will toward him and wish him the best. But if he can take a
class in "Humility 101" I would strongly suggest he do it - at the company's
expense. It may be as beneficial to his future dealings in the business
world as any math class he has ever taken.
Jay Taylor
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