Recent events (2008):
August - LUDI Exploration J.V. (orig. the Weihai Agreement, per July 6/06 Release) is finally approved by Chinese Central Government;
- production finally announced as underway at the Golden Rose shaft (referred to as "expected" in March 12 Release);
September - the acquisition of Daye Gold Mine is terminated.
The Sept.11 Daye announcement Release in its opening paragraph states the "official" reason for this, citing the lag of time involved in making this transaction happen. Given the current state of affairs in the markets (financial & stock), that move comes as no surprise since it's a tall order for any junior to do a financing right now. The same release goes on to say as much, stating that the $5m earmarked for Daye would be freed to go back into the coffers for normal junior activity: exploration and general operating expenditure.
Does this represent a setback for Goldrea? Well, look around at the landscape - setbacks are the order of the day. Question is, does this make a MAJOR setback? IMO, not at all.
I think having the resources right now to continue operations - expand them in fact, given the Ludi announcement - is an accomplishment and should encourage Goldrea investors. Since Daye mine is basically spent, the value obviously lies in the rest of the mineralization around it.
Originally the Daye Mine purchase was characterized as abit of a coup - buying dollars for nickels, that sort of thing. Overblown, I think, since the implication seemed to be that owning the Mine would mean a cash-flow for the company and it has since basically run out of ore. The real Daye Mine value is in its established operations: processing and milling plants. Owning would be nice, but the overriding importance is that it EXISTS. No huge capex required to set that up if/when the surrounding J.V.'s prove up a viable mining resource. How many mining explorations have a plant right next door they can "rent" when the time comes?
BTW, Goldrea still did get some dollars for nickels: the $2m they spent to earn up their share of the RGG JV bought them much much more there in China than it would here in N.A. That paid for a huge amount of drilling, and ore production coming out the Golden Rose shaft is also a product of that expenditure.
If the Rushan Goldrea J.V. has merit (last year's NI 43-101 suggests it does) then the newly-approved Ludi J.V. makes perfect sense, seeing as how it completes the access to all the potential (known or suspected) mineralization surrounding the Daye Gold Mine.
So maybe there's plenty of silver lining to Goldrea's piece of the stock cloud.
