Private Placement

I have to say I'm very disappointed by the private placement, though it comes as no surprise. I think this expresses Netolitzky's own personal misgivings and pessimism as regards the gold price bull market. He doesn't personally believe that the gold price will continue to appreciate.

He is afraid that the gold price will fall below $825/oz. U.S., so he resorts to the capital markets to fund more development. Either their mill is not producing gold on a steady basis, and there are far more serious problems than they are letting on, or the money is steady enough and adequate to fund development and then some.

This has to be one of the more egregious errors that Netolitzky has made, that he is unwilling to bet on growth, and resorts to the corrupt banking/brokerage sector for support. Now we are seeing a private placement priced way below market, at a time when the company is accumulating cash. Surely some of the larger shareholders would have cause to have the SEC look into the unfair pricing. (It would tighten the noose very nicely around Netolitzky's neck if the financing did not close for some reason.)

If the grade going through the mill is is correct @~14g/t, then they will ostensibly have approx. ~$20mln CAD. minus costs at the end of the quarter. Why resort to the capital markets at all at this point? By the end of the second quarter, they can fund any amount of development they like. Why this rush to dilute at a time when they should be releasing news on the mill operation? (The progress on the mill is material information being withheld.)

Netolitzky is absolutley panicking here as he always does, not able to withstand the idea that for once, he is actually very well situated in a bull market for precious metals sitting on several intermediate size gold mines.

Conclusion: There is more risk in the dilution here than there is depending on production.

Weekly Gold

The weekly gold chart saw a bounce off the 34-week EMA. The resumption of the gold bull market is next in line.

But the management of GBN.V concluded a deal in the very throes of the correction, believing the gold price would crash. The latest dilution is superfluous and unnecessary and the result of a panicked management.

If the monthly log scale chart depicts whats in store, is the management going to panic in each correction, running to the broker dealers in the event the sky falls?

supersize: http://www.flickr.com/photos/11747277@N07/5458541661/sizes/l/in/photostream/

stockcharts.com

The La Ronge Gold Belt

The reasons as to exactly why there was no established production in Saskatchewan in the 1930's are not difficult to sort out. While you had a huge boom in gold production during the depression era in just about every other gold belt in Canada, Saskatchewan was not entirely overlooked.

It was still very under-explored, and the Federal Government passed a ban on speculators as coverage in the press was heating up. Later, the war years saw an almost complete shut down of mines due to legislation. Gold was taxed, mines shut and unable to hire workers. Only the biggest mines were the survivors, and the La Ronge Gold Belt remained under explored.

Regina Leader-Post

Regina Leader-Post

In the intervening years, the 1950's saw the atomic age with the uranium rush in Saskatchewan. While Komis and Seabee were discovered during this era, Seabee only entered into production in the late 1980's, while Komis mined briefly in the late 1990's.

Its no small irony that during the Uranium rush in 2003 - 2007, that gold mining prospects attracted very little attention in Saskatchewan.

Full-page coverage in 1984:

Regina Leader-Post

Full-page coverage 1985:

Saskatoon Star Phoenix

The gold miners during the 1980's and 1990's were struggling uphill against central bank selling. The 1970's and 1980's saw numerous small high grade mines in production at various times. The only mine to ride out the gold bear market in this region was the Seabee mine.

The Toronto Star

Canada's gold reserves are dusty and dwindling And getting peek at what's left is just impossible

OTTAWA - I wish to see Canada's gold reserves, I tell the woman from the finance department.

"How do you mean 'see' the gold reserves?" she asks.

You know, go into the vault at the Bank of Canada on Wellington St. and "look," I say. The Canadian government is selling off our gold and I want a peek before it is gone.

"It's the first time I have had a question like that," she says.

The Bank of Canada calls: "I don't think we've ever had a request for somebody just to say they've been in the vault," says a puzzled woman. "I don't hold out much hope."

I am told that even if a miracle happens and I am let into the vaults, I shall be disappointed.

"It doesn't glow in the way it usually does in a Scrooge McDuck comic book, you know."

I deal with three more Bank of Canada staff. I explain this interest is not entirely prurient, but a wish to explain an issue of public policy. Canadian currency hasn't been backed by gold since 1931. Governments, through the central bank, have been gradually unloading gold since at least the mid-1960s.

Sales picked up steam in 1986 and have escalated to a torrid pace since the Liberals came to power.

Last year, Canada sold 3.9 million ounces of gold - more than any other single central bank. Based on a current price of about $530 an ounce, that works out to some $2 billion. A further 2.1 million ounces was sold as of November this year, reinvested in interest- bearing securities.

All that's left in the kitty is another 3.9 million ounces, fewer than 10,000 bars by my count. This is a far cry from the 20 million ounces the bank kept in 1980, but still worth a look.

The bank begs to differ. No way am I getting anywhere near Canada's gold, they say, politely but firmly.

As a consolation, they offer a photograph taken in the vault of a woman checking a wall of gold bars. I note that there is dust on the top of our reserves and it isn't gold dust. They lend me a video, The Bank of Canada: Not Your Average Bank. "It would take a mini- series to describe all the activities of the Bank of Canada," the video threatens.

I learn that sheets of currency, printed elsewhere, are trucked to "high security" vaults, also under the bank towers on Wellington St. Billions of dollars are cut there and counted and packaged for later distribution. The video says that recycled denim is a preferred ingredient of paper currency. The things you learn.

As for gold, all the video says is that "the stuff dreams are made of" rests in a separate vault, and that gold reserves of other countries are stored under the bank, too.

Finally, the bank offers a person whose duties take him into the vault. He must remain nameless, but you will be pleased to know he looks like an honest chap.

The gold vault was built under the original stone bank building, which opened in 1938. The currency vaults are under the new east and west towers on either side. The bank buildings themselves have multiple layers of protection, so put aside impure thoughts. Security is progressively tighter the closer one gets to the gold and cash.

Of course, there are alarms and cameras and motion detectors, not to mention a 20-tonne steel door with multiple combinations on the gold vault. Inside, the gold is further locked inside steel cages.

Much of the foreign gold here - no one will say how much there is - was shipped by European countries at the start of World War II. This may explain the dust.

Each bar weighs 400 troy ounces and is now worth about $212,000. Staff need steel-toed boots, and one hell of a good reason, before moving any.

Finance department officials say there is no plan to eliminate gold, merely to reduce its proportion in our national reserves.

They field some irate calls from people who claim that selling Canada's gold is akin to liquidating the family jewels.

Officials are less sentimental. Gold doesn't pay interest, and it is cumbersome to sell when reserves are needed to defend the dollar's value. More than $3 billion in interest has been earned by proceeds from gold sold since 1980.

Furthermore, selling gold gives an impression of cutting the deficit. Gold is held on the books at a value of about $70 an ounce.

When it is sold, currently at $530 an ounce, the government nets a paper profit of almost $460 an ounce. It's an accounting illusion, really, but finance ministers need all the help they can get.

Fool's gold is better than no gold at all.

Now, what we are seeing in the La Ronge Gold Belt after the wave of small mines, is the development of intermediate size mines.

Komis Mine

With regards to the Komis mine, GBN.V is laying the cards on the table with respect to their method of total information lockdown, and the attempting to prop the share price with 'discoveries' that they will have known for many years.

A robust drill core is never found at the extremity of a deposit so odds are that the technical report was very limited in scope. Since Roy Lloyd had an en echelon structural duplication, and Golden Heart has something similar in RKN, then Komis will likely have a 'surprise' nearby deposit, as it seems to be the style in the La Ronge Gold Belt.

This puts all of the mines under production and development in the intermediate scale, where nobody thinks there's any gold, and nobody believes there's been steady gold production for years.

What Are Gold Miners For?

http://www.thestreet.com/story/11013407/1/gold-miners-keep-dividends-coming.html

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