Conclusions

It's very possible that while you are primarily drilling waste rock, that you mistakenly drill through above cut-off grade mineable ore. Unavoidable.

If Sprott is raising a short position in the most liquid part of the gold mining industry, then he would be laying it on through equity swaps rather than accumulating shares during a time when the company is presumably on care and maintenance.

This would be a capital raise to buy out the escrowed production, which Sprott has the right of first refusal. I assume that the amount in question would be some 240,000 oz. with a 7% discount. The market will have to move, where we are seeing small beginnings now.

I also assume that the company would be engaged in an expansion phase involving construction, though the claim is to be on care and MTCE.

So far, assumptions are correct that gold would remain steady in a commodities rout. The larger gold miners are heavily exposed to copper, as they moved into the sector anticipating the 'commodities supercycle' without realizing that moving away from gold sealed their fate. We have yet to see a commodities capitulation, which will separate gold from commodities in the minds of investors.

One area where I was clearly wrong was how the $CAD would fare, assuming the $US would continue its decline. But this has actually favoured gold mining projects in Canada, wiping out discounting and developmental taxes concerns.

Netolitzky closed his short position in Dec. 2013 because Sprott built up their short position over the 2014 calendar year.

Eventually central banks and bullion banks will probably see the efficacy of low volatility gold prices, that attempting to introduce volatility into gold prices will simply go out of fashion.

Right now investment capital is stampeding into low volatility assets, even AAA rated assets that involve negative interest rates. My guess would be to bet on negative rates in the U.S.

http://uk.reuters.com/article/2015/02/11/swiss-bonds-negative-yield-pfndbnk-schwe-idUKL5N0VL2JZ20150211

- F6