-- Posted Thursday, 19 January 2006 | Digg This Article
History and Background
Golden Phoenix (GPXM) is really a page out of the old west in every sensing. It’s difficult not to have a little fun with the story (hence the title) now that the company is finally back on track and in my opinion it is back on track. I’m going to jump right in here at the beginning and then pick up the story line as we progress. I have absolutely no problem recommending the company at this time. I might be a tad early but I’d rather be early than late in this resource market. And my opinion is that GPXM is a buy up to $.50 US, even with over 140 M shares outstanding on a fully diluted basis.
In my opinion, the biggest negative at this point is the share structure because it could possibly impede the ability to raise funds. However, that may also become a moot point in a strong gold market and with Molybdenum (Moly) prices hovering around $23-$25 a pound. When one has a Molybdenum deposit of the magnitude discovered at Ashdown, Nevada, several parts of the equation can be moot. Coincidentally, it feels as though GPXM may be getting ready to “break out”. I don’t know whether this is a function of their work program at Ashdown, the market, technical indicators or a combination of all the above. My suggestion is “don’t miss this train”. Now that we’ve gotten the negatives out of the way right up front, we can concentrate on the positives.
One of those positives is that the Mineral Ridge Story has potential in its own right. Add to that a current management team that is focused on the big picture and in building a world class company, and then add to that the Ashdown story line and there appears to be a bright future in store for GPXM.
I’ll give you the historical perspective in just a minute. It is fascinating. I’ve been following this company very closely for over six years having participated in a private placement way back when. That got me started with the company. So many players have come and gone since then that the company has taken on a life of its own. It has risen from the ashes of deceit, poor management, mismanagement, and misinformation due to the efforts of a few very special people. People just like you and I; ordinary people doing extraordinary things and actually becoming even more extraordinary in the process. Right now these people are weary but steadfast and unwavering in their desire to see GPXM through to its profitable conclusion. This is totally understandable given what they’ve been through—situations as diverse as underground tunnels and boardroom battles.
It reminds me a bit of how the Founding Fathers of these United States believed that the common ordinary folk (citizen-statesman) would take their turn serving in the Congress or the government in some capacity and then return to their trades after their term was completed. It was a good concept at the time—actually it still is if the concept were honored and implemented. Golden Phoenix has ordinary folk taking on extraordinary responsibilities to rebuild a company that had been run into the ground. I believe that most of them have the idea that some day they too might return to their daily lives; turning over the day to operations to another team of their choosing and ratified by the shareholders.
Go to The Website!
Before we go any further, I’m going to direct you to one of the better web sites in the mining industry today—http://www.golden-phoenix.com/. They say a picture is worth a thousand words and if that’s the case, you’ll be looking at many thousands of words. Their web site is filled with pictures that tell a story. Actually, when you put all the pieces of this puzzle together, it’s more than a story. It’s a saga outlined in blood, sweat, and tears. It’s a saga of progress, dedication, and of hard work. It’s about overcoming incredible odds to get where they are today. The photos of the buildings, roads, mills, tunnels, tailing ponds, machinery, and tough men are all real (If you can believe it, the men are not professional models!). You can’t fake that stuff. You really don’t need to read any further—just go to the web site and follow the saga “post shootout”. Read about the projects, the progress, the people, and don’t neglect the financials. That way you’re covering all your bases.
This is a saga in real time and it is now documented in pictures. And Golden Phoenix has indeed lived up to its namesake, having risen from the ashes and having done so on more than one occasion. You know the funny thing? The name “Golden Phoenix” is so appropriate and I don’t believe for a minute that the folks who named the company so many years ago would have ever dreamt how the company would fit into the mold of its namesake to such a degree of perfection.
I’d bring one more element into focus concerning this saga. When the current management team finally took over the reigns of this company, GPXM was breathing its last breath. It was in very poor shape and many thought it wouldn’t make it. Remember that as you witness the rebirth first hand. You’ll find the documentation of their perseverance on the website, in their press releases, and what is going to occur in the not too distant future. They’ve uncovered layers of problems and obstacles and have resolved most of them. The one thing I cannot adequately relate to you was the depth and degree of the problems they uncovered when they eventually came into a position to deal with them. It was simply mind boggling. These people truly have turned lemons into lemonade. A little sugar wouldn’t hurt but its coming folks, its coming.
Ashdown and Molybdenum
Currently the focus of GPXM is their Ashdown Property and what many consider to be the richest deposit of Molybdenum in the world. Remember, I said the richest, not the biggest. The Ashdown mine is comprised of 101 unpatented lode mining claims covering four square miles in Humbolt Country near the town of Denio, in the northwestern corner of Nevada. The mine is owned by Win-Eldrich Mines, Ltd. (WEX), a publicly traded Canadian company based in Toronto. Golden Phoenix serves as Ashdown’s manager/operator under a Joint Venture Letter Agreement with Win-Eldrich.“ The Joint Venture split is along the lines of 60/40 with WEX receiving 40% and GPXM receiving 60%.
Trust on all levels has had to be restored. Trust between WEX and GPXM and all the management teams, directors, and especially the shareholders. I think they’re getting there and both WEX and GPXM should be commended for getting this far with the most difficult of situations.
What make this Ashdown Property so impressive are the grades of the Moly that have been discovered. The Sylvia Vein alone has values in the 5%-8% molybdenum per ton range! People get excited with only 1% Moly per ton and with Moly selling for around $23-$25 per pound, the economics of the project become nothing short of spectacular. Some analysts have conservatively suggested that there is $100 million US dollars worth of Moly concentrated in an area about the size of half a football field cubed. The core deposit is something along the lines of 300 feet long, about 100 feet wide and about six feet thick. It could be larger and open in all directions. They won’t know until they get to the face of the deposit and begin processing the ore. However, the core of the mineralization that has been described as the “target deposit” indicates figures as high as 21,500 tons averaging 8% Molybdenum. People, that is real, and it’s spectacular! (Thank you Terri!)
One thing for certain is the quality of this project and the value that is staring us in the face. As of January fourth, 2006 the mining crew was approximately 75 feet from breaking through to the original mine tunnel or decline as it’s called. That was some 14 days ago, and it is January 18, 2006 today. It gives you some idea as to how close they may be from getting to the face of the deposit. Incidentally, this is all part of the saga and is well documented on their web site. Two teams of miners are working underground in ten hour per day shifts. They are getting so close they can taste it. And of course, the closer they get, the more they need to slow down and be careful. Excitement can never be allowed to get in the way of safety. I believe the company will be handling the news releases in a similar fashion the closer they get to the deposit. Excitement won’t be allowed to get in the way of accuracy.
You won’t Have to Wait Long
I mentioned that Golden Phoenix has been a saga; especially before the Shoot-out at Mineral Ridge (we’ll get to that!). As in all sagas the story lines have been mixed, mixed up, and full of surprises. Ashdown has been no different. There were expectations not met, there were production schedules that didn’t come in on time and there were credibility issues that forever had to be addressed and overcome. Credibility with the investors had to be re-established because “pre-shootout”, they were told one thing and then something else occurred. Who to believe? That was always the question.
However, all things considered and with so many obstacles overcome, you won’t have to wait long for the conclusion of this particular story. I believe that we shall know within the next three to four months (if not the next three to four weeks) whether GPXM is going to be mining this Molybdenum deposit and shipping off super sacks (about 3900 pounds of molybdenite concentrates per sack) at current market value of around $24.00 per pound of elemental Moly.
Never forget that mining is a high risk business and anything that can go wrong usually does. However, that being stated, I have to say that after watching this crew headed up by Ken Ripley, Earl Harrison, Rob Martin --- Jeff Tissier, David Caldwell, and the rest of the guys, I am nothing but favorably impressed in how they have attacked these problems. Seldom do you find your Interim CEO wearing a hard hat and helping to build the mill one minute and finessing any number of bureaucracies the next. This entire group has found it necessary to wear many hats and they’ve worn them all quite well. They’ve worked together as a team and they’ve made timely, accurate communication to the shareholders a priority; something I believe we can look forward to in the future.
I fully understand how important it is to know how to do something, even if you don’t personally perform the task. This group has taken it upon themselves to learn how to do things so as not to be at the mercy of incompetents. Ever remodel your kitchen or add on an addition to your home using unknown carpenters or trades people? Ever take your automobile to an unknown mechanic? I have. Need I say anything further? Stories, oy veh! Do I have such stories!!
I am always compelled to make disclaimers such as perform your own due diligence; visit the web site; talk to the management, and learn as much as you can about any company before investing a penny. However, once you’ve done all that, I believe you’ll agree that this is a story where you’ll learn if you’ve made the correct decision within a matter of months if not weeks. Look at those photos, read the story line, and follow along. You’ll realize that barring any unforeseen circumstances, they are a cat’s whisker away from success at Ashdown, success being defined as the production of the first super sack of Molybdenum.
There is Additional Value in the Company!
Besides the Ashdown Project, GPXM owns Mineral Ridge, a quality project in its own right. It is a property focused on gold and silver. “The Mineral Ridge gold deposits are located on the northeast flank of the Silver Peak Mountain Range in Esmeralda County, Nevada. This range lies in the southern reaches of the Great Basin within the Walker Lane structural corridor, a 60-mile wide region of wrench-faulting which separates the Sierra Nevada to the west and the Great Basin to the east.” There are several other properties such as the Lone Mountain Mill and the Contact Mine. I’m going to let you review the website for updates on these projects. For now, the focus is really on Ashdown and all that it has to offer. That is where we’ll maintain our focus but I want you to understand that this company is not a one trick pony. Furthermore, current management has demonstrated that they want to build this company into a real, viable, and profitable mining entity.
The Shootout at Mineral Ridge-Virtual Bullets and Blazing Ballots Buzzing Everywhere
There really was a shoot-out at Golden Phoenix, sort of—and maybe not exactly at Mineral Ridge, but there was a shootout. It was of the business variety vis a vis the board room, shareholders, investors, speculators, old management, new management, and analysts all “mixing it up” at one point or another. I didn’t know who was going to end up on top. I’m happy to report to you that I believe the good guys, the ones wearing the white hats, came out ahead and the other ones? Well, for the sake of professionalism, proper decorum, and diplomacy, I’ll simply say that saying nothing sometimes speaks volumes. I believe that is the appropriate course of action to implement here and now. The silence is deafening!
As I mentioned previously, I’ve been following this story for six or seven years. Back in 2000 or thereabouts Jay Taylor named this company as his mining project of the year and that recommendation generated a good deal of shareholder interest. Jay’s word carries substantial weight because he has always demonstrated integrity and he has a sizeable audience. His recommendation got my wheels turning and so I began reading up on the project and talking with the folks in charge back then when the focus was on Mineral Ridge. Ashdown hadn’t even come into the picture at that point if I remember correctly. I’m not going into a lot of detail here other than to say mistakes were made back when. We all made them.
For whatever reason, the information that investors were receiving was not accurate. Was the misinformation due to a lack of technical expertise? Was it a deliberate attempt to lead people astray? Was it an attempt to create a private “piggy bank” or was it a case of just being piggy? Was there too much ego and not enough commonsense.com? Was it simply incompetence? What was it that allowed a company to basically run through $20,000,000 US + and really have very little to show for it?
I will say in their defense that six or seven years ago, the resource market had not turned around and it was a struggle to get funded. And yet millions of dollars were raised and spent and tens of millions of shares were created. I think that people bought into that scenario believing that if that much money could be raised, something good must be happening somewhere within the confines of this company. However, the company and its projects went no where. I recall several very large shareholders that were repeatedly contacted with the request for more money. “We’re almost there but we need a bit more dough.” Some of these people came through again and again and again. It eventually became apparent that trusts had been betrayed.
An analyst is only as good as the information he receives. There were layers of people and information circling this story. It felt like things were upside down. Finally, there was a shareholder revolt—that is the “Shootout” to which I refer. I can’t put it any other way. Shareholders became disgruntled and fed up. They had heard one too many promises and had seen a small fortune disappear with very little to show for it. Their investments were in dire straights and there was the possibility of a total collapse, a complete implosion of the company. Normally, the story would have ended there—but the really interesting part of this saga is that it did not. People chose to get into the fray in order to save the company and their investments. People recognized the value of Ashdown and realized it could be the salvation of the company if there was a drastic change in the corporate culture.
I’m going to save everyone from the dreary details because at this point its all counter productive; it’s water under the bridge. All we need to understand is that some large shareholders didn’t want to watch their hard earned money go swirling down the drain of incompetence. It was getting very close to that point when “they” stepped in. It was a battle royale and the battle lines were drawn. There were some very committed individuals who stepped up and saved the day—I know from talking with them that they thought that they should have been committed! The only reason I’m not going to name them is because if you do your homework you can figure it out. Most importantly the battle was won with brains and not brawn. If it had been the other way around, I would not be talking with you today. There’s a lesson here for all of us. When the going gets tough, the tough get smart.
These guys, wearing the white hats, went to bat for the investors and for themselves. Of course, they had motive—they personally had large positions but some of them didn’t. A few of the directors who helped to win the day had a lot to lose and not that much to gain. But they did the right thing and in today’s world, that is something special. Yes, I was witness to almost all of it on a daily basis when events were churning at a very intense level. It was a daily grind that continued for months. It was brain to brain combat. You can’t imagine as to how the adrenalin gets flowing in these kinds of situations.
When things did turn around, and the company acquired the quality of Ken Ripley as Interim CEO, Earl Harrison as Director of Mining, Rob Martin as Communications Director, David Caldwell and Jeff Tissier as Directors, it was truly a slow and steady change for the better. One of the first tasks was to create shareholder trust; even before shareholder value—good move guys.
I have to say that I’ve talked with Earl on many occasions and I have every confidence in his abilities based upon past successes. I know he has a passion for this particular project because he believes it is historic; historic because he personally believes it is the richest deposit of Moly he has ever heard about and he wants to be a part of mining it. Incidentally, Earl is excellent at what he does. I also have to say that everyone one of these guys has worked tirelessly to resurrect this company and have been excellent at what they’ve done.
Around this same time there were buzzards circling overhead—aren’t there always? They were ready to pounce—aren’t they always? They were unable to unleash their diabolical plans thanks to the foresight of some intelligent people who knew the value of every dollar coming and going. (There is a book in here somewhere because for my money this battle was the antithesis of Enron.) Are they home free? Heck no, they ain’t home free—not yet. They’re moving in the right direction sufficiently enough that I feel very comfortable suggesting that you take a very close look at the story. Do your own due diligence and nibble away, but not with the rent money.
The good news is that they’re all hoping that most of the nasty surprises left behind by the old management have been addressed and they’re getting very close to having the mill ready, the permits in place, and the i’s dotted and the t’s crossed just when that first supersack of Moly comes hurling down the conveyor belt or wherever the heck it comes hurling from—and right into the hands of a prearranged buyer. Just make sure you’re out of the way when 3900 pounds comes hurling down the chute!
Chin up people. You could be a party to something pretty spectacular. At the very least, you’re going to be examining a story that comes straight out of the old Wild West.
Lean and Mean
Ladies and Gentlemen, that is where we stand today: Golden Phoenix has risen from the ashes a meaner leaner bird and the future looks very promising.
Currently, the team is closing in on the original mine shaft on the Silvia vein at Ashdown. Last I heard on January 4, 2006 they were about 75 feet away from breaking into the old existing tunnel (see the PR on the web site) and working their way through some pretty solid ground. Solid ground is good in the mining business. That was some fourteen days ago. So even if they only make about five feet per day, you can extrapolate the information and get some idea as to how close they really are to the main deposit. Once they get there, it should be a relatively short amount of time before the mining begins barring any unforeseen circumstances!
This article may sound a bit promotional but everything that I’ve told you is the gospel truth. In this case, truth is stranger than fiction and I haven’t even scratched the surface in telling you what really went on. You wouldn’t believe me. What I want you to know is that win, lose, or draw, I believe that this new group has put every iota of strength and integrity into this company and I believe they just might have pulled it off. We’ll know soon enough.
Here we go—referring to the here and now:
Ability to Fund: Fair but may become a moot point once mining begins and cash flow follows
Ability to Promote: Good to Excellent (By promote, I mean get the story out there just as I’m doing now!)
Stock Float: Poor—but again, this may be a moot point with $100,000,000 US of Moly in such a condensed area.
I think there are many positives in the future of Golden Phoenix Minerals. Take a close look at it. Rob Martin has done an exceptional job with the web site and he makes it easy to navigate the site and learn the entire story. This is one company I have every confidence that you should review.
Until Next time,
D. Stewart Armstrong
Consultant to the Junior Mining Sector
-- Posted Thursday, 19 January 2006 | Digg This Article