STEELGUY:
"...claims about a problem with Brown and Root were absolutely false. I asked if payments had been made since January and she [Tita] said they most certainly had..."
MY RESPONSE:
Yes, I think that Tita was technically correct in her response to you. Money probably has been paid to Brown & Root by Greenstone for contract mining work, but I think that it may have been for prior months (January 1998 and prior months).
The question remains - was Tita referring to the February, March, April & May invoices, or earlier ones?? (my sources stand by their earlier statements that, as of last week, these four months are in arrears).
STEELGUY:
"...asked if their burn rate is $20million a quarter and she said not even
close..."
MY RESPONSE:
How does Tita reconcile the $40 million @ December 31, 1997 and the $20 million on March 31, 1998? Yes, most of that $20 million probably went into capex for Greenstone's mines - no arguments there. But, how much money did Greenstone go through in the second quarter??
The big question that Tita avoided dealing with was: HOW MUCH MONEY IS LEFT IN THE ACCOUNTS RIGHT NOW? $15 million? $5 million? $1 million? JUST HOW MUCH WORKING CAPITAL DOES GREENSTONE CURRENTLY HAVE, AND HOW LONG WILL IT CARRY THEM??
STEELGUY:
"... at La Libertad she said, it was Brown and Root who called Greenstone to make sure they (Brown and Root) would be considered as the contractor for that project if it continues to progress.... If Greenstone were such a bad client, why would they want more business?"
MY RESPONSE:
I seem to recall that Greenstone decided a long time ago to mine La
Libertad themselves, using relatively small (35 ST ?) trucks. The cost of getting large mining equipment (85 ST & 120 ST trucks, etc.) from Managua to the minesite was thought to be a significant factor in why it was more cost-effective for Greenstone to mine La Libertad themselves, rather than use a contract miner.
It's exciting to hear that new high grade zones have been discovered, and that an expansion of the current operation is under consideration! Kudos to the exploration guys!!
If you have not been to Nicaragua, keep in mind that outside of the major cities, the roads in Nicaragua tend to be narrow and unpaved. Moving big trucks and shovels around the countryside is difficult and expensive, so Tita's comments suggest that Greenstone may FINALLY have found the large, high grade deposit that a lot of other people have suspected (since the early 1990s) was there (est'd 2-3 million ounces). It's why, years ago, all of the major gold mining companies wanted this deposit so badly, and why we shouldn't be surprised if one of the majors steps up to the plate and bid for Greenstone if the stock stays at these levels (or drops lower).
STEELGUY POST:
"Regarding analysts downgrading...I asked if Greenstone will receive
indications from analysts and brokerage houses as to impending
downgrades..."
MY RESPONSE:
It's been my experience that analysts and brokerage firms do not usually give out advance warnings - and if they do, you can bet your bottom dollar that the heads-up is going to be given to that firm's major retail / institutional clients!
I maintain that there is something going on that we are not aware of if a major shareholder unloads 1,000,000 shares in this market (why take a tax loss in July when there's half a year to wait and see if things turn around?). The fact that a buyer was immediately found is comforting, and shows that the company is on the ball. However, the problem remains - what precipitated that large block being sold in the first place?
Tita (or someone higher-up at Greenstone) is still going to have to answer to the analysts about why the stock has under-performed in recent weeks and months (as measured against the TSE and peer companies). If there are logical answers to why the stock has slid so badly, then the buy recommendations will remain in place, and the stock price will recover the
ground it recently lost. And if not, .....
Something else to ponder, Steelguy: Greenstone used to attend all of the gold investment shows, and now we never see them anymore. Any ideas why not???????????????
STEELGUY POST:
"So what does this mean? Well, I would hope that Tita is telling me the truth.... I believe that what IR tells me will be the truth."
RESPONSE:
For everyone's sake, let's pray that Tita is correct!
However, don't forget that not all companies are totally-forthcoming (I still cry when I think of the losses that I took on Bre-X because of IR)
Also (and I'm not saying this is true with Tita - it's just something for you to think about, Steelguy), IR people are not always completely in the know - all they can do is report what senior officers and directors choose to share with them. Problems at a foreign location can take awhile to filter back to HQ and down through the organization.
My earlier post was intended as nothing more than sharing some very
sobering information that I had heard, and seeing if anyone else on the thread could confirm or deny it. This is the whole purpose of SI, for investors to share news, rumor and gossip back and forth, figure out what's true and what's false, and hopefully, make better and more-informed investment decisions.
CLOSING COMMENTS
In closing, my sources in Panama stand by their earlier remarks. Guess that we will all have to wait and see what happens in the days and weeks to come (maybe, some further clarifications from Tita).
Let's all remember to take a close look at the June 30th financial
statements when they are released (early to mid August). I, for one, will be damned interested to review the balance sheet - hope they've got enough cash to hang on until the markets turn around! It'll be interesting to see what Greenstone's cash and total operating costs per ounce are.
Mr Metals
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