Tuesday, November 27, 2012
Another case of the Slaughter of the Innocents that is junior mining: Geologix
So here's an interview with the CEO of Geologix.
Warning, it's on Grandich.com.
In it he says they have 1.8Moz Au and 813Mlbs Cu M&I, with exploration upside. They also have $5M cash as of end Q3.
They have a PFS that's late, but he says it's because they're looking at a different processing method to up the profitability.
They also have a chart that suggests the market's throwing up so hard it'll be lucky if it has any bones left by the time it stops:
That's a 3-year low, a year of support broken, and next stop is the 2009 low of 11.5 cents.
They're now down to a $26M market cap, which means wow awesome! you get .012oz Au and 5.46lbs Cu for every 17 cent share that you buy.
Alternately, the gold is trading at $14.48/oz.
But if it goes to 10 cents, it's even cheaper. And if it goes to 0.5 cents, it's even cheaper. And if it's relegated to 0.01 cent on the Pinks, it's even cheaper.
At some point it becomes utterly impossible for them to fund any more development of their property without diluting themselves into the 9th dimension. It might be there now. Then you're left with a 1.8Moz deposit that's sitting on the shelf trading for 0. It might be a marginal deposit, I don't know, haven't looked, but serious people with real smarts have supposedly liked this company in the past.
Two takeaways from this:
1) Is this what Cookie means by saying 70% of the juniors are going to just go away?
2) Then what happens when gold hits $3000/oz and these plays aren't marginal anymore? I mean, is this stock falling to zero because someone is out there finding much less marginal gold deposits that can be brought to production? Where is the gold elsewhere that means nobody needs GIX's gold?