Dear Shareholder & Investors
It is the best of times and the worst of times
End of Year Q & A with Bayhorse President Graeme O'Neill
Q. The first question I have, and probably many others, is why add oil into Bayhorse in what appears to be a significant downturn in oil prices.
A. If you can find and produce oil at $20 and sell at $60 all day, every day, wouldn't you. Warren Buffett stated "when everyone is fearful, back up the truck and load up, and when everyone is complacent and expecting higher prices, sell, sell, sell" or words to the effect. Frankly, the best time to buy is when there is blood in the streets, and the blood that has been gushing for months, is slowing down, and new realities are being created. So we are entering into a deal that we believe is good for the shareholders long term, and my job is to look to the long term, while keeping the Company operating day to day in this fearful market downturn.
In the oil market, everyone is fearful right now because they are producing a lot of oil at $60-$80 and selling it (today) at $62.
There is a lot of oil in North America that is expensive to take out of the ground, and is very marginal at today's prices, but conventional light crude at costs estimated to be around $20 barrel is not that oil and leaves a significant margin for gain. In 1999 when they found the Tyvan oil pool, crude was $15 a barrel for WTI and they were making money then, so what is the downside now. The Little Swan and Bannock oil play in Saskatchewan promises to be just such conventional, and cheap to produce, oil and the first well will be drilled on the Bannock in two months, will take about fifteen days to drill, and in the event of a successful well, watch the sparks fly.
Look at the companies that have prospective ground in the immediate vicinity.
Tourmaline ($36.60) Cenovus ($22.80) Husky ($22.75) Questerre ($0.37) and Saturn, our partner ($0.14) while today we traded at a tax loss sale of $0.05. Don't you think these companies know something? We are looking for a Tyvan pool look alike. 23 wells and 30 million barrels on a much smaller land package than Little Swan
Bayhorse has 21,700,000 shares issued and over 50% of those shares are held by 10 strong holders who want Thanksgiving and Christmas all rolled into one, not just a taste.
Q. What about the silver mine. Are you putting that on the back burner?
A. Not at all. We are continuing to look for reasonable financing to fund putting it into operation. The fear that we referred to in the oil market is also in the precious metals because the drop in gold and silver prices in April, and a further drop in September/October, has damaged the ability of many of our traditional resource sector financiers to fund anything. They are underwater on all their resource share positions and are fearful of putting what little they have left into what looks like a bottomless pit, never to be seen again.
The image below tells the story of where the resource sector is. We are at the depression phase at the bottom of the cycle. Our share price is also at the "depression" low that Warren Buffett, and many others, talk about. We are also going through the end of year tax loss selling period that makes things worse. Everyone thinks prices will never recover and increases the blue funk that shareholders are in. Depressed resource markets, depressed share prices, depressed shareholders, and yet the smart people are telling us if we have some cash, this is the time to grit your teeth, to overcome your fear, and be greedy and buy, not be fearful and sell. We are in the Winter of our discontent, (paraphrasing Shakespeare) and it is always, always, followed by Spring, and made Summer.
But the silver mine is ready to go. US$150,000 completes the safety work on the adit and we can start mining the material that was blocked out ready for mining in 1984, when they shut the mine down. We have engaged a very creditable contractor to do the work for us. Right now they are the preferred underground contractor for Klondex. They have given us an estimate of 17 days from funding to finishing the safety work. Clearly we would have preferred this to happen in the summer when the weather was good, but as we can work all year round, even today is ok.
The reported grade is approximately 20 ounces/ton and, based upon our testing to date, we believe we can upgrade it at little cost to direct shipping ore and we have a buyer for it. Based upon our projections of a minimum 300,000 ounces of silver for the bulk sample, this will provide immediate cash flow to the Company and help us avoid future dilution.
Q. What about the prices of gold and silver and where are they going
A. Look at these commentaries on silver prices from two of the best technical analysts out there, Clive Maund and Morris Hubbert and gold prices from Clive Maund.
http://www.superforcesignals.com/video/2014no...times.html
http://www.kitco.com/ind/Maund/2014-12-03-Sil...pdate.html and
http://www.kitco.com/ind/Maund/2014-12-03-Gol...pdate.html
These commentaries put things in perspective and perspective is what is needed right now. As we head into the last few days of the year, today gold has hit $1220 and silver is at $16.80, which is good news so if prices stabilize, we will look forward to the New Year and maintain our optimism.
Graeme O'Neill, President & CEO
It is the best of times and the worst of times
End of Year Q & A with Bayhorse President Graeme O'Neill
Q. The first question I have, and probably many others, is why add oil into Bayhorse in what appears to be a significant downturn in oil prices.
A. If you can find and produce oil at $20 and sell at $60 all day, every day, wouldn't you. Warren Buffett stated "when everyone is fearful, back up the truck and load up, and when everyone is complacent and expecting higher prices, sell, sell, sell" or words to the effect. Frankly, the best time to buy is when there is blood in the streets, and the blood that has been gushing for months, is slowing down, and new realities are being created. So we are entering into a deal that we believe is good for the shareholders long term, and my job is to look to the long term, while keeping the Company operating day to day in this fearful market downturn.
In the oil market, everyone is fearful right now because they are producing a lot of oil at $60-$80 and selling it (today) at $62.
There is a lot of oil in North America that is expensive to take out of the ground, and is very marginal at today's prices, but conventional light crude at costs estimated to be around $20 barrel is not that oil and leaves a significant margin for gain. In 1999 when they found the Tyvan oil pool, crude was $15 a barrel for WTI and they were making money then, so what is the downside now. The Little Swan and Bannock oil play in Saskatchewan promises to be just such conventional, and cheap to produce, oil and the first well will be drilled on the Bannock in two months, will take about fifteen days to drill, and in the event of a successful well, watch the sparks fly.
Look at the companies that have prospective ground in the immediate vicinity.
Tourmaline ($36.60) Cenovus ($22.80) Husky ($22.75) Questerre ($0.37) and Saturn, our partner ($0.14) while today we traded at a tax loss sale of $0.05. Don't you think these companies know something? We are looking for a Tyvan pool look alike. 23 wells and 30 million barrels on a much smaller land package than Little Swan
Bayhorse has 21,700,000 shares issued and over 50% of those shares are held by 10 strong holders who want Thanksgiving and Christmas all rolled into one, not just a taste.
Q. What about the silver mine. Are you putting that on the back burner?
A. Not at all. We are continuing to look for reasonable financing to fund putting it into operation. The fear that we referred to in the oil market is also in the precious metals because the drop in gold and silver prices in April, and a further drop in September/October, has damaged the ability of many of our traditional resource sector financiers to fund anything. They are underwater on all their resource share positions and are fearful of putting what little they have left into what looks like a bottomless pit, never to be seen again.
The image below tells the story of where the resource sector is. We are at the depression phase at the bottom of the cycle. Our share price is also at the "depression" low that Warren Buffett, and many others, talk about. We are also going through the end of year tax loss selling period that makes things worse. Everyone thinks prices will never recover and increases the blue funk that shareholders are in. Depressed resource markets, depressed share prices, depressed shareholders, and yet the smart people are telling us if we have some cash, this is the time to grit your teeth, to overcome your fear, and be greedy and buy, not be fearful and sell. We are in the Winter of our discontent, (paraphrasing Shakespeare) and it is always, always, followed by Spring, and made Summer.
But the silver mine is ready to go. US$150,000 completes the safety work on the adit and we can start mining the material that was blocked out ready for mining in 1984, when they shut the mine down. We have engaged a very creditable contractor to do the work for us. Right now they are the preferred underground contractor for Klondex. They have given us an estimate of 17 days from funding to finishing the safety work. Clearly we would have preferred this to happen in the summer when the weather was good, but as we can work all year round, even today is ok.
The reported grade is approximately 20 ounces/ton and, based upon our testing to date, we believe we can upgrade it at little cost to direct shipping ore and we have a buyer for it. Based upon our projections of a minimum 300,000 ounces of silver for the bulk sample, this will provide immediate cash flow to the Company and help us avoid future dilution.
Q. What about the prices of gold and silver and where are they going
A. Look at these commentaries on silver prices from two of the best technical analysts out there, Clive Maund and Morris Hubbert and gold prices from Clive Maund.
http://www.superforcesignals.com/video/2014no...times.html
http://www.kitco.com/ind/Maund/2014-12-03-Sil...pdate.html and
http://www.kitco.com/ind/Maund/2014-12-03-Gol...pdate.html
These commentaries put things in perspective and perspective is what is needed right now. As we head into the last few days of the year, today gold has hit $1220 and silver is at $16.80, which is good news so if prices stabilize, we will look forward to the New Year and maintain our optimism.
Graeme O'Neill, President & CEO
