via Mineweb -

Junior golds: Value of significant discoveries will grow exponentially

Chris Wilson* shares his guidelines for winnowing out the crowded junior mining sector to find the companies worth serious investigation. Gold Report interview.

"Next, you have to look at deposit style. Irrespective of grade, major companies do not buy small vein deposits with often complex and discontinuous ore shoots. Such deposits will always remain the remit of junior explorers who may struggle to stack together resources or commercialize production."

"You can go on to the System of Electronic Disclosure by Insiders (SEDI) to see if management has been selling their shares and have a look at the stock curve. If it is a typical up and down parabolic curve, it probably does that for a reason."

MineWeb

I think these comments are a direct dig at Golden Band Resources. You can see how people evaluate the company and why it has become a totally ignored mining asset.

• From what I understand about the Roy Lloyd mine, is that while it really is a narrow vein ore deposit with complex ore geometry, the ore shoot is not discontinuous. Certainly the cores from recent drilling suggests that the vein and possibly the deposit widens along the ore shoot. They haven't been mining outside of the ore shoot, which very likely grades the same as Seabee, 6 - 7gm/tonne.
• Secondly, the share price parabolic curve up and down since Dec. 2008 are based on the strong inverse correlation with 30-year U.S. treasury bond prices. If treasury prices moved down, the share price moved up, and vice-versa. There is no accident when correlations presistently run much closer to 1 than zero. Looking at that number today on the monthly $USB chart indicates -86. Since early 2006 after banking was further deregulated in Canada, and the no-down-tick rule was abolished in 2011, it makes writing equity swaps against any equity asset like shooting fish in a barrel.

One thing GBN.V has not done is made a firm, compelling case for investment in the company. You notice that MineWeb in particular promotes the idea that you only want to invest in a company that will likely be bought out by a major gold mining producer, and that this is the only investment strategy available to investors.

For my part, almost all of the investment by major gold mining interests in junior mining companies has been a disaster with cost overruns, overpaying for projects, blindly throwing away money in politically unstable South America, or hostile takeouts that do not benefit the share holders.

-F6