Great Basin Gold: Stock Looks Ready to Move Up

I own one gold stock---Great Basin Gold (GBG). It's an immaterial holding in my account, but I do have 2K shares @ $1.53 per share.

Here's a chart:

Click to enlarge

This apex is my favorite thing to watch....the stock is fixin' to get ready to move. The news today will determine which way! Do note the volume patterns in this stock.

I'll pull a chart for you later in the week....to see how it pans (!!) out.

Disclosure: Author is long GBG.

Comments

[Marco G.:]

I'm with you Leisa, see my report, also on Seeking Alpha:
seekingalpha.com/artic...

From freely available research on GBG's public disclosure, management seems to be preparing for high grade extraction at Hollister. They are also drilling more prospects at Hollister and are preparing the Esmeralda mill for re-start in the near future. All these initiatives points to future positive news releases.

A good pick Leisa!

Nov 09 08:14 AM

[S. E. Wells:]

Well you could be right. But, when I read thru Great Basin's list of mines all I see is political risk. Nevada operation has good grades but the tax take on Nevada operations is up about 15% this year based on an article in Mineweb today and the permitting process is becoming ever more cumbersome there. Kimberly Reef operations in South Africa seems to me a bit imperiled by huge spikes in electricity costs going forward with spillovers of those increased energy costs to show up in wage demands, higher priced steel, etc. Kuril's Island operation in Russia shout loudly of political risks based on the Fraser Institute survey of mining executives assessment of varying regulatory regimes.

For your sake, I hope you're right about Great Basin's prospects but the more valuable a commodity gets the more politicians in the US, South Africa and Russia will want to control it.

As a general question, why would you choose to invest in Great Basin when there are a lot of companies operating in Canada and Mexico with good grades and less political risk? Is there something to Great Basin I'm not seeing?

Nov 09 08:43 AM

[HardRock:]

Hi Seewell,
Da most important thing for a company is the management, bar none.

GBG have great depth, with technical know how and management connections; Chairman Thiessen is with Hunter Dickenson.

The South African mine has a Black Economic Empowerment group invested (orginally 26%) in Burnstone. This is a brand new mine, the first in 30 years on the Reef. Grades are 25% better than the average and the mine is shallow with a decline. This is a low cost and low risk mine!

The kicker da Rock sees is this; as the author points out, they are relatively unknown now, but when Hollister and Burnstone kicks into production there is 350k Gold oz. output immediately. Hollister is already producing 110k oz this year. Burnstone starts June 2010.

The Eskom power is a risk, but the mine is already very low cost, the power cost increase will be negligible. The South African risk will be mitigated by management and the BEE group.

To each their own, Gold luck ta ya!!!

Just da way I see dat!
HardRock


On Nov 09 08:43 AM sewells wrote:

> Well you could be right. But, when I read thru Great Basin's list
> of mines all I see is political risk. Nevada operation has good grades
> but the tax take on Nevada operations is up about 15% this year based
> on an article in Mineweb today and the permitting process is becoming
> ever more cumbersome there. Kimberly Reef operations in South Africa
> seems to me a bit imperiled by huge spikes in electricity costs going
> forward with spillovers of those increased energy costs to show up
> in wage demands, higher priced steel, etc. Kuril's Island operation
> in Russia shout loudly of political risks based on the Fraser Institute
> survey of mining executives assessment of varying regulatory regimes.
>
>
> For your sake, I hope you're right about Great Basin's prospects
> but the more valuable a commodity gets the more politicians in the
> US, South Africa and Russia will want to control it.
>
> As a general question, why would you choose to invest in Great Basin
> when there are a lot of companies operating in Canada and Mexico
> with good grades and less political risk? Is there something to Great
> Basin I'm not seeing?

Nov 09 09:01 AM

[S. E. Wells:]

hardrock, your points about the shallow reef in South Africa I think are fairly well-taken. They will definitely have a competitive advantage over other mines producing from far, far deeper reefs in South Africa. I guess my point was just this: for their South African ops how they stack up against other South African miners isn't really the question. How they stack up against global miners is the question. The reason I won't buy it is I ask myself how they stack up against a Jaguar Mining as a mid-tier producer or RedBack for instance.

While I do expect gold to keep going up for a while, I've been around gold stock investing for a long time (I know a lot about geology and can interpret 43-101 reports competently, etc.) and I try to position myself with companies that can still be profitable if the price of gold drops by 50%. To do that, I've found that the two most important factors are to have high grades and political stability and predictability.

Good luck with Great Basin. You could make a lot with that one. I guess all I'm saying is it doesn't meet my risk profile due to the factors I mentioned.

Nov 09 10:19 AM

[West Coast ...:]

Good point, Sewells: As good as these numbers are, I have waited OVER FIVE YEARS to get my initial investment of $2 per share back, only to get diluted out of the window at lower prices!!! All those exploration stocks SUCK for normal investors, but not for fat cat management, who know exactly when to skim the milk with stock options at basement prices. With all my cudos to Ferdi Dippenaar (excellent mining CEO - looking forward to get a hold of him at the San Francisco Hard Assets Conference this month), the advice to newbie investors is the same, especially in the current gold upswing: THINK TWICE BEFORE BUYING EXPLORATION COMPANY STOCK! YOU PAY DEARLY!

Nov 09 07:38 PM

[S. E. Wells:]

west coast, I feel your pain. However, there's really nothing wrong with investing in exploration companies, in my opinion, if you time your investments with the natural progression of such stocks. Yes, it is possible to get diluted like crazy and you do have to be on your toes about that. But, there are companies like Seabridge (SA) that have gone the route without diluting their shareholders excessively and their are other companies with so much gold in their deposits that even with the dilution they make you money.

I find that the critical junctures for investing in exploration companies is when they are in a phase transition from raw beginning exploration to advanced exploration (i.e.) one knows they have a viable deposit but doesn't know exactly how viable and when they are making the phase transition from advanced explorer to near term producer. Those, in my opinion, are the sweet spots for investing in explorers. Yes, you'll get diluted even then but with good grades and good political jurisdiction, you'll probably still make good money.

Good luck,

Nov 10 08:39 AM

[Leisa:]

Thanks for your comment MarcoG...They are definitely under the radar, and the Hollister project seems to be the 'gold ring'--I like that it is fully financed. Barron's had a terrific article on them, and that is what put them on my list. (online.barrons.com/art...).


On Nov 09 08:14 AM Marco G. wrote:

> I'm with you Leisa, see my report, also on Seeking Alpha:
> seekingalpha.com/artic...
>
>
> From freely available research on GBG's public disclosure, management
> seems to be preparing for high grade extraction at Hollister. They
> are also drilling more prospects at Hollister and are preparing the
> Esmeralda mill for re-start in the near future. All these initiatives
> points to future positive news releases.
>
> A good pick Leisa!

Nov 10 06:25 PM

[Leisa:]

Sewells: Thanks for your comment. I like the prospects of the company's Hollister project. I also believe it to be a beneath the radar holding. I have just the tiniest position, and I consider it speculative. To be sure, there are many other names that have outperformed it both in technicals and fundamentals.


On Nov 09 08:43 AM sewells wrote:

> Well you could be right. But, when I read thru Great Basin's list
> of mines all I see is political risk. Nevada operation has good
> grades but the tax take on Nevada operations is up about 15% this
> year based on an article in Mineweb today and the permitting process
> is becoming ever more cumbersome there. Kimberly Reef operations
> in South Africa seems to me a bit imperiled by huge spikes in electricity
> costs going forward with spillovers of those increased energy costs
> to show up in wage demands, higher priced steel, etc. Kuril's Island
> operation in Russia shout loudly of political risks based on the
> Fraser Institute survey of mining executives assessment of varying
> regulatory regimes.
>
> For your sake, I hope you're right about Great Basin's prospects
> but the more valuable a commodity gets the more politicians in the
> US, South Africa and Russia will want to control it.
>
> As a general question, why would you choose to invest in Great Basin
> when there are a lot of companies operating in Canada and Mexico
> with good grades and less political risk? Is there something to
> Great Basin I'm not seeing?

Nov 10 06:29 PM