Two good posts Panamax. It's marwal here and I thank you for your private Agoracom message.
Yes, I am as disappointed as you are. My thoughts here will perhaps add to yours, although from a different perspective. First, I blame only myself for my investing decisions. That's not to say, in hind sight, that different decisions made 2+ years ago could have been better ones. No one possessed a crystal ball telling of a 2 year precious metal and mining share price decline. Probably the most significant one in my long life time. It was not predictable nor would any different decision by management have made much of a fifference in PEM's eventual share price. It is my opinion that we were more a victim of circumstances than we were a victim of management decisions at a time when all the so called experts were calling for the POG to rise, and rise, and rise with small corrections along the way. I bought into that paradigm first. Now those very same pundits, and we know their names well, are making a ton of excuses for their repeated errors, month after month, as they would say "gold will take off any day now, or next week, or within a short time." The explorers were all at a disadvantage, having no income. Financing dried up almost everywhere. At best perhaps PEM could have saved a couple million dollars from 2 years ago as a cushion in case of a sudden surprise. But for how long, especially when QE-3 came out and to everyone's surprise the POG just went down, and down further, and down to a depressing level, seemingly endlessly. The value of gold in the ground declined commensurately. Now, almost all those who invested pre-QE-3, and who held on, have suffered massive losses.
Our new CEO, John Ryan, gave a presentation this past April to a group at the CDA. In it he opined that low cutoff grade deposits were being destroyd. That means that the POG in the ground were devastating the explorers. Those with .3 grams per ton would not be profitable to mine until gold hit 3,000 dollars an ounce. He explained that there was a glut of ounces already found in the ground with .3 g/p/t and less. The value of gold in the ground on average fell off a cliff from over $120 an ounce to far less than $20 an ounce, depending on grade. He spoke to this issue as having, all by itself, destroyed explorer's share prices. And, then there are other factors that helped to insure that destruction. Some firms fared worse, far worse. PEM was but one. It was estimated that as many as 70% of the explorers would not survive.
When will the POG bottom? I have believed it would do so by the end of the year or early in the next. That has to happen. If, (I repeat if) there was any significant good news to be had by investors at times like this, perhaps it should first be that the POG has bottomed once and for all. Otherwise usual good news releases would have a short lived beneficial effect.
I remember 1979 and 1980. With the POG rising unbelievably, companies like PEM skyrockted thousands, tens of thousands, even hundreds of thousands of percent. Wern't we all hoping to be a part of such a repeat performance for our sector? Prior to that rise they were going no where in a hurry. Will gold go to 3,000 an ounce? 5,000 an ounce? More? No one knows for sure. But we all sure bet that it would go a whole lot higher. The pundits on average said, and we believed, it would be at 3,000 to 5,000 an ounce within 2 to 3 years. That was said 2 to 3 years ago. It didn't happen. If it had, perhaps PEM's share prce today would be in the dollars per share, with deals in the works that we could only dreamed of.
PEM has the gold. They don't have the money, for now. My last ditch hope is that they will survive a couple to several months, and that the POG bottoms in the interim and then takes off. I suspect we could see gold at 1,100 to 1,200 in the coming weeks, or possible longer.
If PEM could have had a mine by now at the BG, had they started the process 2-3 years ago, then perhaps we'd be producing gold at a loss today because of the gold price. The mine would have delayed opening, with the company severly in debt, and we likely would have been in financial trouble. If the BG is John Ryan's mandate, the time to persue it will be once he can orchestrate and facilitate 10 to 20 million dollars in financing. Regardless, we are all waiting for good news. Announcing any now would be lost on the investing public in short order. We might get a bump up to liqudate some shares, but the hike in SP would likely be short lived. Then again, I am repeating myself.
So, I don't discount other's views of different reasons for our plight. But I offer the above as reasons that can not be discounted either. Thanks for your many good posts Panamax. I always enjoy reading your thoughts. Today's was no exception.
Del may be gone as our CEO but he is still our Chairman and our largest shareholder. I can only believe he has done everything within his power to help PEM. After all, he has had the the most to gain or loose. For now we all are loosing along with almost everyone invested in our sector.
