Tony, Bearcat, Bob et al:
I would love to be able to tell you that everything is all right and that we'll see the turn-around within days or weeks. As far as the market side is concerned, I can't. I won't even try. The market has made a decision that "it" is not impressed with what we have done. Many of you agree. (Or maybe some of you are just following.) For those of you who got out in the spring, congratulations. You probably made some money, perhaps even a lot. Perhaps we all should have given up back then... or with the subsequent two or three or ten downturns that followed. But let's not forget that we are talking about two connected but distinct issues: Yamana's share price in this market and Yamana's corporate operations.
Yes, I'm aware that Wood Gundy has done serious volume selling our shares. You'll also note that the volume is primarily retail. Gundy has been a strong supporter of this company all along. The fundamentals have not changed and they are still supporters. But they sold YRI and YRI.WT to their clients at higher prices -- which is why there are so many Gundy-related shares to be traded in the first place -- and now many of their clients are stepping back. This is the bad news about being primarily a retail stock. The fundamentals don't matter nearly as much as does sentiment: the market's sentiment is against most juniors. Based on rumours and fear and starnge theories.
For example, there are rumours that Barrick has backed out of Indonesia. There's some truth to them. They've stepped away from OTHER partners, not Yamana. BARRICK REMAINS 100 PERCENT BEHIND YAMANA AND IS VERY HAPPY WITH THE RESULTS OF WHAT WE HAVE FOUND SO FAR IN INDONESIA. We represent their primary interest in Kalimantan because: a)we have excellent properties; b) we have a strong field team which is doing a highly professional job and which has found very good indications of gold and silver on a least one large area; c) our COWs are EXPECTED to be signed soon; and d) Barrick's management knows that they have a strong and credible partner in us. We've also hired WGM to audit our operations their so that, when extensive results are reported, they'll have Yamana's name, WGM's name and, where appropriate, Barrick's name behind them.
There are other rumours and theories that our partners left Santa Cruz, Vanguardia and Tierra del Fuego in Argentina because they were disappointed in the results. Not true. (I know you've heard this all before but the facts are still not straight.)
Rio Algom decided to look for gold a couple of years ago and one of the best prospects they saw was ours. Their technical report stated that they should contiunue after the first year. Their technical team, all the way to management, supported the view. But the new corporate regime changed its collective mind and decided that they were no longer interested in gold. So they pulled the plug, leaving us with US$4 million worth of (generally very positive) results.
As for Westmin, their technical support for the TDF project was the same as Rio Algom's above. But their "challenge" was the fact that they had spent millions on Lomas Bayas, Chile, a huge project with an average grade of 0.31%. By any standards, this is a monster and their shareholders got very, very upset. (And this doesn't even consider the challenges faced at Wolverine, a bigger, more advanced exploration project than TDF.) So they made the (obvious) corporate decision to focus on wrestling with, Lomas Bayas, their biggest problem -- one which could, with bad luck, be the biggest problem they've faced since their bitter strike a few years ago -- rather than spending scarce money, time, manpower and effort on an early stage project at the end of the world.
The market, including some of the most sophisticated (and over-extended) analysts have a problem with the Yamana story. Beyond the "highlights" related to the projects, it's complicated. Is it a good one. Yes. Without question. But it takes more work than most of these guys are ready, willing or able to put in. (Ironically, I think we're going to start to see some coverage again over the next six or eight months.)
The problem for me -- even at 8 o'clock on another Saturday morning back at the office -- is that we're running a business here, doing our job looking for mineral deposits. If you know this business, you'll know that the average exploration cost of finding and defining a deposit is about $100,000,000 and ten years of effort. This is a costly, risky and long-term business and we've been at it for three-and-a-half years, having spent less than a third of that $100,000,000.
Having said that, I also know that we are all looking for something faster, better, sooner. We've had sniffs. We've had many, many sniffs. And we are doing what we are supposed to do in those cases: we're following the trails. Because I do my damnedest to be honest and open, I've repeatedly pointed to our progress in this area, mitigated by the reality of what it takes to take a sniff and turn it into a meal. Almost every statement I make in this area has got an "I BELIEVE" in it, literally or by inference. Many of you know what I have invested in this company -- financially and personally. If you want to know whether Yamana Resources Inc. is going to prove to be a world-class winner, my answer is, I believe it will. With my heart and my head and my eyes. The greater problem is the timeframe. Companies this good, with this sort of property asset base, technical and management teams and board of directors, do not come along very often. And when they do, some of them fail. Mother Nature and Lady Luck are not kind enough. But our chances are far, far better than average.
And then there is Bre-X. Without the Bre-X scandal, I believe -- there he goes again -- YRI would be north of $10. Yes, it would be up there partially because players in Indonesia are given credit for being in Indonesia in the first place. But it would also be up there because the results we have gained and reported, are positive by any standard. If you took Bre-X off the map in the first place, if there never had been the Bre-X run-up, the results we've had would still be very good. The frenzy and heat would not have been there, but it would just be starting now, based on the results that several companies positioned in Indonesia would now be building. People would see positive exploration results, and credit them.
Sigh. Perhaps my passion is boring. Besides, what matters is the reality. To this I say, I've got good news, and I've got bad news.
The bad news?: The share price.
The good news?: The share price.
I'll conclude with one (long) thought. I am sorry that we have disappointed many of you. For some, you put your money in, got out and lost much of it. For others, you've made some. For some others, who have come in, made some money, gotten out, and come back in at these historic levels, I say congratulations.
In any event, I reiterate what you are all hearing from (the majority, I think, of) market commentators: If you are in this market, stay in. If you are nervous, stay out or get out. If you believe in a company and if you believe that, after all, the market will pay for success, look for a chance to be in the right stocks. Higher risk-reward ratio stocks like Yamana... or the "Blue Chips". In the end, look for the right fundamentals and do what's right for you.
Cheers
Greg |
