Whats The Deal With Sprott

Why would Sprott come up with such a strange formulation to arrive at a financing arrangement with GBN.V, especially since they manage PHYS, which is an alternative to GLD? I presume its partly a way of inviting people to start looking at the numbers, and partly a way of keeping a constant weight of gold to be paid out by GBN.V to Sprott.

That amount would be roughly equivalent to one doré bar (~25kg) or a little more per month depending on the ability of the refiner to recuperate refined bullion out of these bars. So essentially what GBN.V is paying to Sprott will be roughly one kilogram of gold per day.

A kilogram of gold is essentially the size of your iPhone, but 7 times heavier. The mine, without any dilution achieving 15g/t grade at the mill, will produce almost 7 kilograms per day, or conceivably two doré bars per week.

The challenge will obviously be that the grade controls are second to none here and not some rough estimate or that it is greatly overstated or that people are gainsaying their arguments. Or that the production rate remains constant.

GBN.V news release

Almost 20 years ago, the Bingo deposit was discovered. It has taken this long to realize its potential.

One thing that stands out in this deal is the GBN.V management's opinion of the gold price. They are assuming that the gold price is over-inflated and have used $900.- U.S. as a basis for their outlook. This was arrived at when the gold price corrected during summer, however it has since risen to new highs. They are skeptical, as are many people, that the gold price is in a bubble and bound to pop.

Even Resolute Funds, the Spiderman of investors, panicked during the summer and reduced their exposure to risk. The gold chart looked almost exactly as it had in summer of 2008. (we are at some sort of top in the markets, most certainly) This mine project must look like small beer to these guys. They have to keep in mind that the rate of return of this project is an order of magnitude greater than the majority of mining projects out there.

I would argue that gold prices are still adjusting for inflation because they had been in a depressed state for many years, but that the point where it will become over-inflated has not been reached, and that gold prices will continue in their bull market until a point is reached where this market becomes over-exhausted.

Bull markets are long lived and hopelessly irrational, and since all we see are speculative bubbles in the commodities, so it must be the same with gold. I would differ on that point, but there is a cogent forecast available to arrive at some sort of conclusion.

Inflation?Deflation?Fiat Currency Collapse?Interest Rates Manipulated?Gold Not A Commodity? Its' all rotten nonsense and merely gainsaying the argument in favour of the rise in the gold price.

The following chart is the best example with which to settle that squabble.

Simply The Best Forecast Available On The Web

I came across the following chart forecasting the price of gold in Euros in comparison with the DAX. Their conclusions are that the gold price will exceed €3000/oz. and the DAX will fall to 1500. Now, if you want to make the same chart for the TSX, you would use the TSX vs. $CAD gold price, and similarly, the Dow vs. the $U.S. gold price. In fact, numerous comparisons with various markets using the same strict method coming up with the same conclusions would greatly solidify the argument.

The videos accompanying the charts explain the method, and the log scale chart is used for comparison. (all in German)

One point to be made is that when the blue line crosses the red line, then gold prices can be presumed to be inflationary,(and also stock prices on average falling behind inflation) rather than just adjusting for inflation as they are now, and entering into an expansion. The conclusion is seen in 2015, the aftermath will be higher average gold prices. I can tell you right now that $900/oz U.S. will be a distant memory.

This would be at the same time as a grinding bear market in equities, doubling the challenge to miners providing a return to investors. It should rightly be in dividends tied to the gold price, rather than any scheme to game the stock market which is likely to fall behind inflation. ROI many occur, but the eventuality is that stock prices on average will fall behind inflation.

So, what's the plan going to be, Bub?

source: http://www.realterm.de/DAXinGold.php

Considering the following bear-market forecasts based on charts adjusted for inflation, the above forecast is very much in line with the onset of deflation(which would coincide with inflationary gold prices):

dshort.com inflation-adjusted comparison of the S&P with the Nikkei

nowandfutures.com bear market comparisons

How To Utterly Destroy Your Gold Company And Alienate Shareholders In Ten Easy Lessons

Look at the size of the float in this news release. At one time, investors abandoned this gold miner because they were utterly tone deaf to criticism against expansion of the float. They even criticized shareholders' concerns as laughable. Now, they have to go to a bank to raise capital for aggressive expansion in the hopes of gaming the stock market, right at the onset of deflation in an historical bear market. A gold company borrowing from a bank! This management should be led out in front of a wall and shot without the benefit of a blindfold and a cigarette.

http://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aNGX-1753135&symbol=NGX&region=C

And GBN.V management, do they laugh at shareholder concerns like Northgate? This is what JK Galbraith would call an 'innocent fraud.' You can see why I'm totally in favour of a reverse split.

Comparable - Pickle Crow Mine

The Pickle Crow Mine makes a great comparison with the Bingo Mine, since the grade is so similar. Even the size is the same. It also has similar en echelon structural duplication and proximate minralization. What's more, @225tpd, their project would produce the same amount of gold at roughly the same grade as the original forecast production for Bingo, around 45k oz. per year. Their costs were roughly 5k oz. per year and paid out the rest in dividends. Amazing.

In a time of a gold standard @$35U.S. per oz., and low taxes this is the kind of thing that GBN.V could aspire to. Especially if the gold price averages better than €3000/oz. This should be the goal GBN.V management should aspire to, rather than as a shepherd ass-burgling the sheep. And yet, they probably think of themselves as John The Baptist.(book of Mathew)

Now, Bingo compares with neighbouring Seabee Mine as having about twice the gold content. Its more or less a given. Bingo also compares closely with the Pickle Crow Mine. The following depth comparisons are graciously provided in their presentation:

source: http://www.pcgold.ca/en/Presentations_45.html

The magazine, Exploration And Processing, which has a great affinity for historical projects, has the following to say:

“It was a very well-known gold mine; some people would say it was the best-known long life underground gold mine in Canada,” Keough notes. The mine went into production during the worst years of the Great Depression, he explains, and the fact that it was so profitable at a time when people had no money gave it a particular mystique. “It became the proverbial gold mine,” he says.

Pickle Crow generated $1.5 million in dividends in its first year, and was profitable for each of the next 28 consecutive years, notwithstanding the fact that it operated throughout its life in a fixed gold price environment of just $35 an ounce. In 1964 it began to lose money, as the deeper exploration was required and costs outstripped revenues, Keough says.

exploration-processing.com

The Bingo Mine is only just one of GBN.V's assets. With the inclusion of Corner Lake, there are now six possible areas for production in the La Ronge Gold Project with similar attributes and grades 10g/t or better.

World's Oldest Share

http://www.worldsoldestshare.com/video-1?navId=9

The Fate Of Prosperity

Something to watch for this week will be the outcome of the Prosperity project, said to be decided by Tuesday.

http://www.digitaljournal.com/article/297235

Adrian Ash discusses the latest takeover deals in the gold sector:

http://www.safehaven.com/article/18103/how-much-is-too-much-for-gold-in-the-ground

A Discussion On Sovereign Debt Recommending That You Buy Sovereign Debt

As long as it all remains 'over there,' no problemo.

Part 1.

http://watch.bnn.ca/clip345386#clip345386

Part 2.

http://watch.bnn.ca/clip345389#clip345389

-F6