Brent Cook - Takeovers In The Market

Takeovers in the market in the junior resource sector is mostly due to the naked shorts in the banking sector getting burned, and will look for a producer to take over a stock, regardless of whether the deal makes much sense. This always happens after a substantial rise in the stock, and the subsequent correction.

Brent has pointed out in the past how PEAs are sloppily conceived, but consideration must also be given to the times, since nobody could conceive of a higher gold price at the time, and were writing them to the benefit of lower gold prices. (that's they way the 2009 PEA makes any sense.)

Certainly the PEA for GBN.V is far off the mark, since grades are substantially underestimated. But perhaps the grade is correct, since they are calling for 8g/t on Roy Lloyd, and 5g/t on Komis. Roy Lloyd was tested to grade ~6g/t outside of the ore shoot, and Komis is reportedly the correct stance as an open pittable resource. Grades for EP and Riddle till are said to be 7g/t. Was the PEA underestimated overall? (a further rise in the gold price will allow for both open pittable resources and underground mining of more modest grades - or what are presently considered modest grades. They are not - they are robust.)

The video demostrates how important margins are on gold ounces. If my estimate of ~$671/oz. in costs is correct, or that there is a ~$1000/oz. margin, then there's a huge margin on production which is not reflected in the financial reports. These quarterly reports are not audited, so basically you're out of luck until they have to report the yearly results, which comes in August. (the end of fiscal 2012 was April 30 - venture exchange listed companies must report within 120 days.)

I arrived at those numbers based on adding cash from operations for Q1, Q2, Q3, assuming $8m for Q4. IFRS accounting for some reason obliviates a GAAP 'cash cost per ounce.'

http://youtu.be/hfjfVkUPjRY?hd=1

-F6