The Operating Word

GBN.V as a company will disappoint anyone expecting huge resources to be laid on the table, or discoveries to boost the share price. A very detailed technical report on the mill zone veins is probably not forthcoming from the company, though that information is readily obtainable. In the search page, you put in 'Mallard' for location and 'au' for commodity.

"Mineralization in the Rod South Zone contrasts with that of the Rod Main.

Sulphide content is much lower and visible gold is more abundant and coarser

grained in the Rod south. Grade of this vein is 1.03 oz./ton Au (diluted 15%)

and its width average 2.0 m (6.6 ft). Mineralization has not given any

consistent magnetic responses owing to its narrow width and low sulphide

content. It is estimated that the zone contains at least 35,000 tons of ore.

Although presently estimated to be of smaller size than the Rod Main, this zone

is of higher grade and is of more uniform grade and thickness (Burrill, 1985a)"

The discoveries were made by SMDC decades ago, and not a single developer took advantage of the robust grades in the La Ronge gold belt. They took the money and run. It will take a lot of development and growth to exploit the Mallard Lake deposits. Take it on faith that the mill is located where it is for a reason.

The exception on the whole is Claude Resources with their Seabee mine. Its as if they would only implement a mine in La Ronge with a believable grade. The only company to take up SMDC's former development strategy is GBN.V, even though it had been abandoned by so many other companies operating in the district.

Something much better is in the cards I expect, and that will be free cash flow over and above operating and development costs. It was mentioned several times in the MD&A.

Can the open pit sample be taken for the grade of the mine? Sure, why not? You dig a pit and mine a sample of 75m long X 10m deep X 3m wide. There's bound to be some dilution, but we'll go with the numbers. The only other example on the property of former grade dilution is the Komis mine.

You have a mine with a head grade at the mill of ~18g/t.

If your all-in costs are ~$825/oz. U.S. then your free cash flow is probably in the area of ~$9 million for the first quarter of operations. That would mean a share price @10P/E of roughly $3.-

The next step would be to implement multiple processing circuits at the mill, one after another. The bigger the project gets, and the higher the average gold price, the closer the day the mill zone will come to be re-opened. This is the goal, don't let anything else going on in La Ronge Gold Project distract you.

Brent Cook would probably say he doesn't like the La Ronge gold project, because the properties are 'difficult to mine.' To that I reply: WELL DUH!!!

$IRX

The discount rate is within a hair's breadth of going into negative territory. This was one pleasant surprise this week, since that would force the settlement of all of the naked shorting activity in GBN.V shares. If the discount rate goes negative, this will also probably wipe out all speculators.

One group that has largely been absent in the past couple of months are the commercial traders looking to settle their financial risk assets. I suppose they're waiting to catch other naked shorters in the game who continue to lay on risk in the face of massive systemic risk. The larger traders have mostly stood aside, but will have to step in soon to settle their claims. This is what has supported the share price in the past and we'll see this activity again.

This activity should have supported the share price now, if it were not for the absence of net settlements.

supersize: http://www.flickr.com/photos/11747277@N07/5581993527/sizes/l/in/photostream/

stockcharts.com

Weekly Gold Chart

What effect have the recent sell offs in gold had on the outlook of the gold chart? None. Zip. No effect whatsoever. (costing taxpayers billions) A hopelessly futile histrionic and failed attempt at fixing the gold price lower.

supersize: http://www.flickr.com/photos/11747277@N07/5582620040/sizes/l/in/photostream/

stockcharts.com

Aussie Gold Mining Stocks

Australian gold stocks are notorious for immense dilution of the shares. What happens as a matter of course in Australian gold mining shares is now the new norm in Canadian gold mining shares. The charts have the same look as does the GBN.V chart. But don't let anybody tell you that its all well and good to have your share float diluted into the hundreds of millions of shares. Its the way the banking sector is attempting to prevent any investment in gold mining.

http://www.safehaven.com/article/20342/aussie-gold-stocks-surge

-F6