GBN.V Monthly Chart

In the monthly chart, a possible right shoulder is forming after seeing a low in August.

The previous shoulder formed in 2006 - 2007 took 11 months to complete. The present shoulder is already 8 months in gestation.

• We have seen the low in the stock in August(surprise) and should be advancing on several aspects.
• The mine design for the Roy Lloyd should be reconfigured and underground work completed, as the company has stated that technical problems had been overcome in July.
• Permitting issues should come to a close, which is key to expansion in the La Ronge Gold Belt.
• The April 2011 end of fiscal year report is due Monday, August 29, with some notion of operational costs and developmental costs.
• Another quarterly report is due end of September.
• Komis and EP should come on line.
• The mill should reportedly be operating @ 700tpd as it was upgraded last year to operate in this capacity prior to commissioning.
• Grades should come in steadily as I presume grade controls will have been implemented. Grades from the Alimak bulk sampling should be reported.
• The pay-back period should be completed, at the very least by the end of the year.

GBN.V could very well sign another agreement with Sprott and take on a large gold based financing once more and throw everything and the kitchen sink at development. But they could just as well finance everything out of production.

I assume that buyers will also come into the market. The one salient detail about GBN.V is that it garners no attention amongst news letter writers who have obviously avoided GBN.V like the plague with few exceptions.

One seller from last year which did not continue selling massive quantities of shares into the market has not panicked out of their shares, but continued to hold them.

A monthlyclose above 40¢ (heavily defended by sell-side brokers) is in order.

supersize: http://www.flickr.com/photos/11747277@N07/6088886359/sizes/l/in/photostream/

stockcharts.com

PEA Assumptions/Exploration Mining Cycle

The following charts are the summary of operating costs and assumptions in the PEA. The monthly chart since the low in Dec. 2008 suggests that for the moment, the Exploration/Mining Cycle is being followed closely. We are just coming off the disinterested low.

For example, year 4 in the operating cost summary assumes no development to be added, and that considering all operating costs, the basic amount will be ~$377/oz. U.S. Add about ~$130/oz. U.S. for each mine development. Pre-production and Total capital costs should be very closely in line with those reported.

The grades at the mine should be triple that reported in the 10-year PEA study. Going by the legally-required documentation would give you the false impression(inentionally? unintentionally?) that feasability here is just a joke.

Net Present Value

The calculation of the Net Present Value of any business would use the discount rate, as all business are priced in currency. So when the discount rate goes below 0.5%, the economy does very poorly as all growth falls well behind inflation. The exception is the gold miner. The NPV of the gold mine increases as the discount rate decreases below 0.5%. This is because short term rates can go below negative propping up the gold price, meaning gold miners become genuinely cash flow positive, while other business struggle with very poor growth profiles:

Dow Industrials Compared To Gold, Deflated By CPI

Its interesting to see how Gold deflated by CPI has the same turning points on the charts as the Dow in its bull market. Of course, the numbers have shifted a fair bit. The ability of gold prices to retest its 1980 inflation-adjusted high is pretty much a given, and that gold prices should eventually go well beyond this price.

This is probably a result of negative interest rates in the short term treasuries, as well as positive gold lease rates as gold prices rise.

Other example: http://www.flickr.com/photos/11747277@N07/5603191940/sizes/l/in/photostream/

-F6