Great Basin Gold (GBG)

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silverwood
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Great Basin Gold (GBG)

For those of you who own or are interested in this company I would like to share my observations today. I have closely followed the action of GBG today on the Amex and the close was nothing less than spectacular. This stock has a large short position on both Amex and Toronto. Today it appears the shorts covered at the close with a venegence. Almost 850k shares traded on the last minute and the candle on the stock chart closed @ $1.73 +.03 from yesterday, that candle ranged from $1.69 to $1.73. It also appears that in the immediate after market over 2.2 million shares settled moving the price to $1.78. You think somebody knows something? Anyway this could indicate that this will be the end of the down trend in the PM mining shares. The game of chicken the Fed is playing with the markets will result in the Fed steering away from a collision with deflation.

Edited by admin on 11/08/2014 - 06:20
caramel
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interesting to see how the

interesting to see how the miners play out.  I own some GBG, not much, I like what they have but don't expect anything in the short term with GBG.  The shorts definitely own this one as well, for the time being.  Would like to seem them pay out a dividend if able.

Eric Original
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GBG

If it gets any cheaper, I'll be almost forced to buy some.

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caramel
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same here Original Eric.  I

same here Original Eric.  I recall you had pointed out some time ago GBG's very ugly looking chart pointed to the downside; you were right, went from about 2.75 to where it is now.  

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caramel, you've got a long

caramel, you've got a long memory there buddy.

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caramel
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lol, like most guys,

lol, like most guys, selective hearing & memory :)

btw, trust Brewer fans love Marcum :)  His ERA is awesome.

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GBG=Crazy close on hugh volume, WTF? On 6/17/11

So the more I look into today's trading action the more WTF happened at the close reverberates in my head! Going into the last 15 minutes I believe the volume was about 2.5 million shares, (can anyone help me find out what was the exact volume @3:45 est?) so with a 2.1 million 100 day average volume everything is normal, right? I called my broker and he told me at the 4 o'clock close the volume was  about 8 million shares and then in the after hour almost another 4 million shares traded as I am seeing an official volume of 11,818,000 traded for Friday the 17th of June 2011. I cannot find any press release or any news. Now at 3:59 the spread was bid $1.68 ask $1.69 and I see that 900K shared traded in the last minute moving the price to $1.73. The final quote for the day says GBG closed @ $1.78. So my question to the forum is do you think that this is just pure stock manipulation or can this be considered normal trading activity? Also does anyone think GBG will rally next week?

Disclosesure; I have a sizeable position in GBG. 

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rebalancing?

I did a little checking on some stocks I watch.  I also saw big late spikes up, on volume, in NGD, AUQ, and AG.  But I saw late drops in ANV and BRD.  And not much happening at all in CGR and EXK.

There's discussion on the GDXJ thread about rebalancing of the ETF, effective 6/17.

http://www.tfmetalsreport.com/forum/junior-gold-miners-etf-gdxj/155

But the details don't quite fit as I don't think GBG, NGD, or AG are involved with the rebalancing.  I don't know whether GDX was also rebalancing today or not, but it bears investigation.  Maybe other miner ETF's active today also?  No idea.

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I own a good sized chunk of this stock

I bought it over a year ago for $1.50 and it doubled in six months.   I sold all of what I had last Nov. at $3.  Then in January I started buying back in at around $2.70.  I kept buying anytime it dipped below $2.60 and once I had doubled my original position, I stopped.  The stock started dropping below $2.50 and I realized it was going into a tailspin.   This was after they reported processing some really low grade ore for the first quarter.  I sold 40% of my position at $2.38 because I didn't want to wait for it to retrace.  My plan was to buy the big dip and have it come back up to me and make up for the loss from $2.70 to $2.38.   The stock dropped all the way to $1.95 and so I rebought the 40%  I had sold.  It up ticked to $2.13 on short covering and so I sold it.  Then it crashed all the way down to $1.70 yesterday so I went ahead and rebought my 40%.

I have 20,000 shares of this thing and I hope that yesterday was a washout bottom.  The big spike to $2.13 a couple of weeks ago looked like short covering as well.  I don't know what is going on with this stock and since they aren't really producing much yet, it's hard to figure out what the story will be next quarter.  I believe that the stock has just been dumped by others who bought it down where I did a year ago, they hoped it would do more than it has and decided to get out.  Now maybe there is a new group of buyers.   I hope to see it back over $3 by the end of the year.  I will keep trading the 40% position in and out until it gets back to the $2.70 entry point, then I will let it ride and cash out above $3 assuming we get there.

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Yeah was some big buying

Yeah was some big buying happening near the low, i am  wondering if some of the big trades werent arranged to help the shorts cover down here. That huge short position has been on GBG for a ridiculously long time. I think GBG a huge buying op here, just based on resources in ground and upcoming production projected.

Here is the summary of the days trades  including ATS on the TSX , the real volume with ATS was 4,390,200.

You will note Citigroup was the big seller by far , over 1.1 million $ worth.

House Positions for C:GBG from 20110617 to 20110617
House Bought $Val Ave Sold $Val Ave Net $Net
14 ITG 337,046 552,153 1.638 83,118 143,046 1.721 253,928 -409,107
1 Anonymous 1,663,704 2,829,778 1.701 1,427,786 2,430,521 1.702 235,918 -399,257
79 CIBC 951,105 1,613,075 1.696 786,283 1,337,361 1.701 164,822 -275,714
82 Stifel Nicholas 150,200 261,428 1.741 0   150,200 -261,428
15 UBS 75,408 130,781 1.734 500 825 1.65 74,908 -129,956
53 Morgan Stanley 73,634 122,849 1.668 1,234 2,084 1.689 72,400 -120,765
90 Barclays 99,660 166,397 1.67 29,036 48,491 1.67 70,624 -117,906
7 TD Sec 250,970 415,519 1.656 182,207 301,875 1.657 68,763 -113,644
80 National Bank 106,550 178,990 1.68 68,600 117,299 1.71 37,950 -61,691
39 Merrill Lynch 35,800 58,368 1.63 5,500 9,438 1.716 30,300 -48,930
13 Instinet 26,900 43,847 1.63 0   26,900 -43,847
9 BMO Nesbitt 99,400 166,764 1.678 87,129 146,728 1.684 12,271 -20,036
81 HSBC 10,800 17,983 1.665 0   10,800 -17,983
33 Canaccord 9,900 16,434 1.66 0   9,900 -16,434
99 Jitney 23,900 40,166 1.681 19,000 32,241 1.697 4,900 -7,925
124 Questrade 1,000 1,650 1.65 0   1,000 -1,650
102 Lakeshore 91 153 1.681 0   91 -153
57 Interactive 100 163 1.63 300 507 1.69 -200 344
44 Jones Gable 4,000 6,680 1.67 9,000 15,600 1.733 -5,000 8,920
101 Newedge 3,900 6,523 1.673 12,000 20,436 1.703 -8,100 13,913
94 Hampton 2,692 4,513 1.676 12,157 20,445 1.682 -9,465 15,932
65 Goldman 0   34,310 57,794 1.684 -34,310 57,794
89 Raymond James 0   50,000 85,655 1.713 -50,000 85,655
11 MacQuarie 0   62,100 101,781 1.639 -62,100 101,781
72 Credit Suisse 168,301 275,767 1.639 237,649 399,737 1.682 -69,348 123,970
85 Scotia 32,500 54,014 1.662 108,755 184,234 1.694 -76,255 130,220
2 RBC 252,567 413,898 1.639 328,972 543,441 1.652 -76,405 129,543
19 Desjardins 10,104 16,878 1.67 165,132 287,705 1.742 -155,028 270,827
123 Citigroup 0   679,464 1,107,527 1.63 -679,464 1,107,527
TOTAL 4,390,232 7,394,771 1.684 4,390,232 7,394,771 1.684 0 0
mouser
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I see the US traded GBG had

I see the US traded GBG had over 11,800,000 shares traded during the  regular market hours , so between the two over exchanges , ( TSX and NYSE)  over 16  million shares traded hands Friday.

I think a sign the bottom is in. The fact that GBG has been slowly ramping up production at Burnstone perhaps has given the shortsellers some leeway, along with the summer doldrums happening in the miners .

Gold not far off its alltime nominal  high , yet the goldminers for the most part havent went the same direction as the metal.

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Oustanding Shares

I've looked at Great Basin over and over again and came close to jumping in on several occasions. It's been on my watchlist forever it seems. But every time I go back and refresh myself from their website, the 554 million outstanding just turns me off. Yet, I never see anybody else on any thread anywhere, show concern over the amount of shares outstanding. Am I the only one that sees this as a red flag?

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The OS share count is

The OS share count is important , but only in the math part that you use to calculate the earnings and worth of the company.

A stock with 55 million  shares trading at 18$ is not a better buy with the same type of resources and production planned.

What it will boil down to eventually is production, profits and value for assets, reserves in ground, equipment processing plants etc etc  minus the debt .

GBG's  guidance says they will be doing 360,ooo ozs of gold + within a year , 110,00 gold equiv ozs at Hollister  in Nevada( silver /gold) and  another 254,000 GOLD ozs a year at Burnstone in South Africa. Cash costs look to be under 500$ US per oz ,and allin costs should be around 800$ an oz. That should leave some healthy profits at 1500$ US gold.

Lets be conservative here and say they make 500$ an oz, after the dust settles,  that should  equate to about 180 million annually net. OR about .32 a share. Giving a reasonable 20x earnings would give you over 6$ a share , EVEN with 554 million shares out......

Disclosure , i  own no shares of GBG at present , but it is on my wish list.

Please tell me why OSK is a 5.5 billion $ company just based on hopeful earnings and reserves in ground...

It is because gold in ground has value. GBG actually has more of it .

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OS share count

I just took it for granted that the numbers you posted were accurate. In fact they were not.

This is from GBG sedar filing:

At March 31, 2011, the Company had 453 million common shares issued and outstanding.  A further 21 
million share purchase warrants and 22 million share options were outstanding.

There are debentures that are convertible , but those i believe will be much further down the road.

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Outstanding

mouser wrote:

I just took it for granted that the numbers you posted were accurate. In fact they were not.

This is from GBG sedar filing:

At March 31, 2011, the Company had 453 million common shares issued and outstanding.  A further 21 
million share purchase warrants and 22 million share options were outstanding.

There are debentures that are convertible , but those i believe will be much further down the road.

There are 453 million common shares out, but fully diluted it is 554,473,010 - no matter how you look at it, it is a pile of shares. Cut those shares in half, and I doubt the share price now would be sitting at $1.63, in fact it would be considerably higher I'm sure. Maybe it's just me, but companies with so many shares out scare me.

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If  500 million shares out

If  500 million shares out scares you then you likely arent interested in any big miners.

They are the odd ones like AEM who have only 180 million shares out but they trade at 60$. I  dont see as much upside in that one. They are producing a million ozs a year , but the market cap is 10 billion......

OSK is at 5.5 billion with  416 million shares fully diluted, they will  produce 625,ooo a year , but we are not sure how profitably just yet.

GBG with a market cap of 740 million is not overvalued  imo , considering the gold in ground and the projected production.

I focus on market cap,  value in ground and earnings per share. 

TSX venture explorers with 700 million $ market caps and 5 to 20 years to production ( if they can get financing and permitting) scares me.

It is all about what makes you comfortable.

I  know some are very hesitant to buy a South African miner.

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Big Miners

Correct, not interested in the big miners. The point I'm trying to make here is that large amounts of shares outstanding affect share price in companies such as Great Basin. Look at Avino - they have nothing compared to Great Basin, yet they are trading at $2.10. Why? Because they have 26 million shares out, not 500 million.

Mouser, I'm not trying to diss Great Basin, they are a good company, I agree, thus the reason they are on my watch list. Heck, I might even grab some while they are down so low, can't see it being a bad thing. My point is, dilution hurts... simple as that.

Good luck!

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I prefer small share counts

I prefer small share counts as well, RVM is my biggest holding , only 33 million shares out, and at around 4$. But metal in ground per share makes them a buy ahead of almost every other play i look at. Their  production is decent as well, as i believe they are over 4200 tpd as we speak.

But i like those whose projected metal sales for the year are near equal  or exceed their market cap, regardless of the OS , those are usually worth a look.

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GBG bouncing nicely today

It's coming off that low from Thursday really well.  I think that may prove to be a washout low.  If I am right and we are getting a post OEX bounce from short covering, then the miners can do recover a good bit of lost ground.  I think they will trend higher  through the end of the year once it becomes clear that a bottom was put in.  The volume hasn't been terrific so I am not as convinced about the short covering scenario, it could be just a head fake to suck more chumps in before dumping the price again.   However, that 11,000,000 shares on Friday was huge.  Someone wanted a lot of the stock at the end of the day for whatever reason and that is generally bullish when the price goes up on the sale, which it did.

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Almost 4 million shares traded in the after market?

It has been my understanding the pre and after market are generally illiquid. So the question is where did all those shares come from? I am assuming it was some kind of short covering event as it pushed the price from $1.73 to $1.78. Also the fact it happened in the after market when most people have stopped watching also is a clue. Was this a legal action? Was the market maker part and parcel to some dirty dealings? Also this end of the day hugh volume did not occur on the TSX where a different market marker resides.

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It is hard to say who

It is hard to say who initiated it.  It sort of looked like a market at close order where someone wanted to get a lot of stock but didn't want to bid the price up during the day.  This way they keep from moving the price up as much and they can buy it easily if there are limit orders somewhat above the current price that can be executed at the close on other market participants unaware of the intentions of this large buyer.  The sellers actually get hosed and the buyer gets a better price.

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