...mbgld's response to elementwise1's criticism has merit, imo. Elementwise1 used the same selective logic that has permeated this thread since its inception. That is to say, posters here have largely exalted the exciting, yet unproven so far, drilling results and largely ignored indisputable facts that have occurred concerning management's misleading promises concerning production and the resulting revenue that was supposed to fund the drilling program. This has occurred not just for a few quarters, but since the first pour in Aug/06.
I first bought into SGR in the summer/05 at the $0.50 level when the posters at SH (when it was still a viable board) were all excited/impatient about impending promised production, including myself. It took several months longer than thought to achieve the first pour in Aug/06, but as SGR stated to the Canadian Mining Journal in early 2007, they would produce "at least 60,000 ounces in 2007", and we thought we were on our way. On our way to becoming a profitable minie producing enough revenue to fund the drilling program, enough revenue so that further share dilution would largely be unnessary. If a large investment firm wanted a substantial position in the company, which was a reasonable consideration even then before the hinge finds, they would have to pay, for the most part, retail like the rest of us. This would have resulted in a much higher share price with essentially the same available float.
Instead, management obviously decided that they could not or would not produce as promised. Instead, over the next two years they embarked on a massive share dilution to the tune of over 100,000,000 shares and allowed the likes of Goodman & co. to gain controlling interest and continually manipulate the SP ever since. As well, Wynne has funnelled $17m out of $18m in total production revenue to his own private drilling companies. Whether or not this has been a "good deal" for SGR is beside the point--this is 95% of revenue produced so far, suggesting that the company has only bothered to produce enough gold to pay the CEO's ambitions.
It is said by many analysts I have read that management integrity is as important as "goods in the ground". That being the case, SGR's management has decisively failed as far as these indisputable, proven facts are concerned. Yet many posters here have ignored this serious situation (although apparently many who attended the annual meeting did not). Instead they, like elementwise1, have concentrated their thoughts on the stream of NRs describing remarkable drilling results since the first hinge find. I, too, am excited about the distinct possibility of a true elephant being discovered. But like the broken promises concerning production, promises of a 43-101 release, which would independently verify at least some of these findings, have also been broken repeatedly. This has invoked serious caution on the part of this poster as well as others I assume, and perhaps that is just what Goodman would like.
To justify SGR's actions, posters like elementwise1 have used selective logic to either rationalize or dismiss the above. He extolled the apparently superb drilling results as being preferrable to a mine of proven expanding production and therefore expanding revenue. If this were true, then every miner that has the $140,000,000+ infrastructure and superior grades even then that SGR had, should not mine but simply explore. To rationalize this logic, he states:
"Had they simply implemented the plan from 2005 most likely they would have run out of capital and would have been unable to raise enough to continue towards breakeven sometime in early to mid 2007 because numbers 1 through 4 would not have occured. Even if they had been able, without 1 through 4, to go on they today would be operating only 1 mine at between 400 and 600 tons per day with an average grade of abour .20 oz/t with annual production of about 40,000 ounces of gold. They would prehaps be just breaking even."
If all this were in fact true, why on earth did SGR make those production promises in the first place? There's no getting around this--either management was incompetent or deceptive concerning production from the start. As well, Goodman has gained control for far less than he should of paid, the CEO has taken just about all the revenue, and stockholders have seen their shares' value seriously diluted and been left spinning their wheels for three years.
Having said all the above, management has released new projections for production #s that appear to be reasonable--we'll know concerning the 2nd quarter very soon. If that number, along with the 3rd qtr # and the eventual 43-101 #s, are as accurate as we have been led to believe, then SGR will have gone a long way to redeeming themselves. And if that elephant that seems to be shaping up very nicely does show itself, the skyrocketing SP will send this history to the dustbin. Good luck to all, aquisces.
