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Veris Gold Fiasco
Posted by: Mariusz Skonieczny (IP Logged)
Date: December 5, 2012 01:12PM

I was up last night working and when I got up the market was already open. I had plenty of missed calls and my mailbox was blowing up. I probably received 50 e-mails all about Veris Gold (Formerly Yukon-Nevada). About 49 of them were something like this:

“Oh my god! The sky is falling.”

“They are diluting us again.”

“I am really pissed off.”

I don’t even need to continue with this, you get the point. But there was one e-mail that said this.

“Well this should be the low in Yukon. A total round trip from $0.20 to $0.90 and now back to $0.20.”

Wow – only one guy who is thinking like this.

There reason why I am talking about these e-mails is this. 99.9 percent of investors are either pissed off or are selling. What does this tell you about the price action? This guy might be right that we’ve reached the low because everyone is trying to get out at the same time. I don’t know and only time will show.

Should you be surprised that the company is raising more money?

No, you should not be because they told you that they need more money.

Should you be angry that they are raising more money?

Sure, you should. I am angry but no one cares about how you or I feel. It is irrelevant.

One person asked “How is one supposed to guess when, if ever, the dilution will finally stop?”

It will stop when they don’t need the money anymore. Right now, they are operating at a cash flow positive level, but positive only means more than $0. It is obviously much better than losing money, but it is not good enough. What they need to do is to put Starvation Canyon into production. This mine will give them higher grade ore and allow them to fill the capacity so that the costs can come down. Until you have Starvation Canyon contributing ore to the mill, this operation will never make enough money. So this new financing that they are trying to raise is to put Starvation Canyon into production.

The way I see it is that I want them to put Starvation Canyon into production. Obviously, I would prefer if they had enough money in the bank to do it but they don’t. So what is the next alternative? Well, they need to raise money to do so. Then and only then, can we expect the company to finally generate decent cash flows.

So if you don’t want them to raise this money, you don’t want Starvation Canyon to be put into production, which means you are happy with them operating at pretty much break-even. Yes, I hear you. They promised this and that and because of this you are very angry. Get over yourself. No one cares about how you feel.

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Veris Gold Fiasco
Posted by: [email protected] (IP Logged)
Date: December 8, 2012 12:00PM

Just bought a LOT. Seems to be good news but no market reflection of that in the price because of the new round of fund raising and dilution. With the roaster winterized and with spare capacity, there is opportunity and value there. They are also cash flow positive for the first time in years and production is almost meeting predicted goals.

There reportedly is a lot of good happening at Veris after years of nothing but bad news. May well be the time to buy.

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