I've been following the "progress" made in redevelopment of the Relief Canyon gold project for around the last five years, from back when the project was still a higher risk and "marginal" project, with gold still trading down around $700 an ounce.
My first take on it was to pan the effort, not because of any issues with the dirt, but because of some very obvious problems that were clearly apparent in the management of the effort. So, I watched for the last few years as the former management of First Gold (FGOCQ) made one obvious mis-step after another, first spending recklessly, missing project milestones, and running out of money, screwing the project into the ground, and eventually losing control of the project... largely because management were unable to avoid mis-steps that had them positioned to be easily abused by their financiers... an issue about which they appear to have a flat learning curve.
First, Platinum took them for a ride by financing the development effort "just" to the point of starting operations, then refusing to continue funding them, in an obvious bid to take the assets. Back then, their CFO was telling me "no problem"... because they could trust their bankers... so that new financing would come through... and I just shook my head in wonder, not believing a word of it.
Then, after Platinum shut them down, they found a group of Chinese investors to replace Platinum... but, given the sensitivity of the mine location, the Treasury Department (properly) refused to allow their participation as majority owners.
The former CEO then tried to buy the assets and reconstitute the project out of bankruptcy...
Here's how that ended up:
viewer.zoho.com 
In my book, whatever the merits of the argument, that's three strikes...
There's still a reason that I've been following the property all this time... only a part of which is that I've seen a whole lot of the ground around that area up close... from the air... driving around it... walking a lot of it, kicking the rocks, and climbing the peaks in the area. The property is interesting enough as a low grade bulk tonnage operation, and it was a successful former producer for major Pegasus Gold before the bottom fell out of gold prices a decade plus back and drove them to shut it down. So, its a proven producer... and IMO the property is still significantly under-explored.
So, now, here we are, five years later, with many of the PM mining stocks at long term lows, even with the price of gold still holding its own at twice the price that it was five years ago, making Relief Canyon viable, now...
chicagofinancialtimes.com
PGLC has what they need that the former managers didn't have... with the financial backing to make it work without allowing the project to be held hostage by the financiers... and with the technical expertise and experience on the operations side to avoid the sorts of problems and the serial mistakes we saw paired with the former management.
The legal challenges clearly shouldn't be dismissed out of hand... and I'm sympathetic to the complaint, but, my take on them is that while they're very likely to result in some meaningful "noise"... it will probably not end up meaning much more than that...
With a bit of luck, the "noise" that gets made will generate buying opportunities over the next few months... and still not result in having the same guys who've screwed this thing around every which way for the last half a decade... being enabled in continuing their efforts in screwing it around.
PGLC, unlike the prior owners, has the resources and the tools to obviate the past mistakes...
Given a choice between PGLC or FGOC as managers... I don't think there's really a question there. |
