In the post dated April 29th “Gold Mountain (GMTN.to) and the Gotcha“, this humble corner of cyberspace laid out the mess Gold Mountain (GMTN.to) had made of its own share price but at the time, were prone to cutting the team a break and giving the company the benefit of the doubt. After going through the scenario, your humble scribe rounded off the note thusly:
“GMTN management may have had the best interests of stakeholders at heart when agreeing to that bought deal, even when they agreed on the upsizing, but ignorance is not a defence in Capital Markets, this was a dumb move that has ruined the trust they were building. The good news is that while the loss of trust is serious, it’s not an irretrievable situation. GMTN now has extra work to do, but the fans will return if they 1) don’t repeat the error 2) deliver on plans and get shorts to think twice about remaining active and 3) make real profits going forward. Good operating results and the simple lure of money being made can win back the fan club and get the share price moving again, but in the meantime woe betide GMTN if they whack retail between the legs with another Gotcha.”
Awww shucks, call me a sentimental old fool. As it turns out, GMTNs’s decision to run a $12m bot deal on April 13th priced at $1.25 that was upsized to $18.5m before the end of the day and closed just eight days later, on April 21st, was a cynical shakedown. GMTN ran a move straight out of the shady end of the junior mining playbook on a bunch of over-enthusiastic social media bobbleheads, herded into this trainwreck by the paid pump parasites who think nothing of ruining the sector’s reputation even further, as long as they get theirs.
We found this out yesterday, with the filing of GMTN’s 1q22 financials for the period ended April 30th. At first glance, the modest mine gate profit and the modest overall loss incurred by the company on greatly reduced sales compared to the model struck your author as not quite as bad as it might have been, especially considering the stock price has been literally cut in half since that bot deal was announced.
However, the devil is in the details:
- Average grade, as 4.24 g/t, was a mile below the projected average grade of 10.4 g/t in year one of operations
- The company has hired new talent with specialist knowledge of thin vein deposits
- They’ve made it clear the current issues have continued into the present quarter
- They now need to fund 20,000m of drilling in phase 4 of exploration
- They plan an updated PEA in 3q22 (i.e. they can deliver in October)
The original plan was to fund the next round of drilling from cash flow. Sadly that’s not going to happen, because…
…without the net proceeds of $17.4m banked in late April they’d be running on fumes by now (lead brokerage Eight Capital made out like bandits on the commish, and while something of a sidebar, GMTN says the updated PEA will be predicated on phase three drilling but it’s tough to believe the new team of narrow vein experts won’t want at least some of the phase four metres put into a few emergency discovery holes on the current mine zone…but that’s another story). However, what’s impossible to believe is that the company didn’t know about its grade issues on April 13th. It knew it was in trouble, knew would need to cover its revenue hole, but wanted to press on with its sharp exploration program and stick to the schedule that gets it to production expansion in the fourth year of ops. So, instead of coming clean about its grade issue they made a deliberate decision to hoodwink the market and took advantage of the misplaced optimism they’d fueled by sponsoring paid pump program on social media, running a financing before the rest of the world found out what they knew already. The tricks played by the self-serving scumbag junior, writ large.
We’re left with a company that is arguably on an even keel financially and, as they’re ploughing on with the permitting program for its growth program, they’re bound to puff out their chests at some point in the near future and claim they’re “on schedule” for something or other. But why should we on the outside trust a single word these backsliding scoundrels ever say or promise again? GMTN is now strictly for the type of investor who needs to be fooled twice before they learn, the rest of us should avoid these liars and thieves. And while we’re at it, do yourself a favour and stop listening to the Twitter and YouTube whores who promote these sure things. Remove your money supply from the “crop that never fails”.