An American Success Story - Part I
- D. Stewart Armstrong
May 29, 2008
Preface: As I was putting this one to bed, I got to thinking. What really does make An American Success Story? Is it reflected in the share price? Is it the future potential? Is it in the reality or the perception? Is it the management and the project? Is it the stamina it takes over years to build a company and be ever cognizant of the single minded purpose it takes? I think it is a bit of all of all the above and then some. The relevance of any company along its growth curve it reflective of its ultimate success. What I want you to take away from the piece and the ones I’ve written in the past about Golden Phoenix is that this is a company building value for its shareholders and is doing so along the full continuum of its growth curve. I want you to review what the company said they were going to accomplish and then compare it to what has actually been accomplished within that specific period of time. It is empirically verifiable. It is a continuous process of building value for the company and hence for the shareholders. I keep saying “we all want it, and we want it now”. But the big money is made by those who understand trends in the investment arena and get in front of them; recognize true quality; appreciate integrity; and then have the patience and the ability to hold on for the long haul. This is applicable to all companies and Microsoft, Google, and Gold Corp among all the others, have been subject to the same process. How many times have you said. “Oh, if I had only bought such and such”. I think there is a such and such sitting right before us. Who wants to step up to the plate and be part of an American Success Story? I do and I believe.
Introduction
Of all the companies that I have been covering over the past 10 years or so, Golden Phoenix has been one of the most intriguing. Pure and simple, I think it is a real American success story and I personally think the best is yet to come for this junior mining company with a special focus on molybdenum (moly), gold, and silver.
I remember the period pre-Rob Martin and David Caldwell. Back then, it was a bit like the old Wild West and unfortunately the guys in the Black hats were far too many. But many things have changed since those days. The “White Hats” have proliferated and while the company plans for a TSX listing, it continues to ramp up production on their Ashdown moly project and drill for gold on their Mineral Ridge Project. The goal is to eventually run 100 tons of high-grade moly (generally between one and three percent Mo) through their mill at Ashdown. On a consistent basis, those are extremely profitable numbers.
The company turned itself around because it sought out and hired a management team that was seasoned, intelligent and creative. From the boardroom to the mine shafts, these guys instilled a work ethic and a team spirit of which all could be proud. They put into play a business plan that has every probability of success. They’ve engaged people, involved people, and endeavored to create a corporate culture that is both intense and rewarding. I honestly believe that Rob Martin, the President of Golden Phoenix, used his 25 years of success in the private business sector to create a blueprint for success within this company.
Measuring Success
We frequently measure a company’s success solely by the price of the stock; but there are many different ways to measure success. What I believe to be the most impressive trait of this company is adaptability. They have been able to evolve through the different business stages and cycles, which have kept them in the game—kept them relevant—and have done so in a very difficult economic period in America. Why? Because America has chosen to mislead the world about its own business plan, its own accounting, and has refused to be accountable for its own business practices.
Remember, when this company changed leadership about three years ago, there were so many skeletons falling out of the closet that they moved the “Orthopedic Med School of Nevada” to GPXM headquarters in Sparks, Nevada, so the aspiring med students had a plethora of subjects upon which to practice! Ok, so that part isn’t exactly true but you get the idea. They morphed from a “dead company walking”, to an exploration company evolving, to a production company coping, to a full-on producer with positive cash flow that gets better with each passing quarter. All along, they have managed to address one challenge after another while working on a shoestring budget and dealing with the aforementioned skeletons in the closet, and the necessity to change with the ever changing financial landscape. And again, I say to you that this has happened in a relatively short amount of time.
The company has grown from eight to eighty people (in round numbers). But more importantly, the quality of people they’ve attracted has been exceptional. Exceptional people rarely work for mediocre companies. They usually appreciate the challenge of working with the best, and the professionals at GPXM are no different. The three elements that have drawn so many to this company are the quality (grade) of the molybdenum, the team spirit, and the prospects for the future. Ladies and gentlemen it doesn’t get much better than this. And yet, investors are myopic and fixated on what I consider to be the wrong things.
Yes, Golden Phoenix has accomplished much over the past three years—a period that we thought was going to be very mining friendly, and to some extent it has been. But I see it as being a consolidation period as opposed to a rip-snortin’ bull market with share prices going ballistic.
Golden Phoenix has been consolidating right along with the rest of the markets. In this consolidation phase they have been adding value to the company and this is the true value by which measuring success in any company. They are not only purchasing equipment such as drilling rigs, they are developing the total infrastructure at the company from accounting to exploration; from production to sales. This is how one goes about measuring real success for a company.
Finally, remember that all of this “company building” will eventually be manifested in a higher stock price. I know, I know, because I’ve heard from many of you. We all want it and we want it now. I understand that and I am totally on side. Developing a company for the long haul is much more difficult than a cosmetic short term fix; but ultimately, when done properly, it offers up profit potential of enormous magnitude. This is the path the GPXM has chosen.
Please review my past articles on GPXM found on my site at www.seacoast-consulting.com . I’ll be the first to admit I thought the price would be higher by now. But I still believe that part of the equation will be settled in favor of the company. We all have to consider the horrendous financial landscape, which is smacking us firmly on the forehead.
I know this has been a long road—but it feels longer than it really has been. If I could offer but one piece of advice it would be that now is an excellent entry opportunity and this company is going to prove worthy of its name: Golden Phoenix. I fully admit to working for the company and helping them to get the story out. But for those of you following me for some time, you know that I am rather circumspect about whom I choose to work with.More…
New People on Board and on the Board
Creativity has been employed especially when it came to hiring new people. If you review the company roster right now, and then review the resumes of the people involved, you cannot help but be impressed. This is a company with top rate personnel, top rate projects, and a future so bright you do indeed need shades. The latest addition to the team is Roland Vetter, an executive with an excellent background in mining. He strengthens an already illustrious Board.
The Criteria and the Challenge
I challenge you to review the five most recent press releases and then ask yourself if you can see the long term merit of this company. These recent press releases address the (6000 foot) drilling program at Mineral Ridge; the appointment of Roland Vetter, just mentioned; national promotion by the President (Rob Martin) via Stu Taylor’s radio talk show on business related matters; excellent Q-1 results from their molybdenum project at Ashdown; and a recommendation by another well known analyst, Jay Taylor.
Lets see how well these press releases fit in with my own particular criteria for evaluating junior mining companies. Here are the Criteria for Junior Mining Companies I’ve listed for the past five years:
1. Intelligent People
2. Quality Projects
3. The ability to fund
4. The willingness to promote
5. Integrity
As I write this and review these past five press releases the company is engaged in all aspects of the above-mentioned criteria. We know that this company has the roster—please visit their website at www.golden-phoenix.com and witness firsthand. You may not recognize the names if you’re not involved in this mining community on a daily basis, but you certainly can review their resumes. There are some of the best people in the business currently working for and with GPXM.
Conclusion for Part I
I’m not trying to sell you anything nor am I asking you to buy. I want you to do what I’ve always requested. Learn about this company via their website, evaluate the facts, and then make your own decisions.
The old saying about leading a horse to water holds water. It’s true! You can lead a horse or a dog to water but you can’t make them drink. Cats? Forgetaboutit! But I’m sure you get the idea.
Currently, as Americans, we find ourselves in a difficult financial environment. Many of us are sending kids to college, trying to pay the mortgage, getting ready for retirement, paying medical expenses, and so on and so forth. We recognize the fact that we need to make our money grow, and to do so means we have to be a bit more aggressive. We don’t really want to go too far out on a limb and we certainly don’t want to lose all of our capital. We have to walk a fine line.
It is my opinion, even as someone who works with and for this company, that Golden Phoenix offers the potential for excellent returns. If you take the time to really understand this story and recognize the potential, and the success that can be empirically proven over the past three years, I think you may see the same opportunity that I see.
I know that the molybdenum at Ashdown is where the cash flow begins. But I also know that there is no rush like a gold rush. Gold is at around $900 and yet it should be closer to $2200 in inflation-adjusted dollars. I think that when GPXM is cranking on all cylinders, it will be an exciting time.
The move to the Toronto Stock Exchange is in play and has been announced. This has all sorts of positive long tern implications. When America finally wakes up to the fact that $900 gold is still inexpensive, even dare I say “cheap”, there will be a serious gold rush. I see Golden Phoenix right in the middle of it because of their re-development of Mineral Ridge, a mine that produced gold for a hundred years.
Until next time and Part II
D. Stewart Armstrong
Consultant to the Junior Mining Industry
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