"1848 and
Beyond"
posted
August 4, 2005
"An
African Queen"
posted August 11, 2005
"Near Hit"
posted August 16, 2005
"Orko
Gold"
posted August 18, 2005
"Mr.
Smith Goes To Hungary"
posted September 1, 2005
"A
Letter To
President Bush"
posted September 8, 2005
"Mr
Clarke -
Call In The Boys"
posted September 12, 2005
"Orezone"
posted September 23, 2005
"U.S
Gold Corp."
posted September 29, 2005
"Mr.
Prime Minister"
posted October 13, 2005
"The
Business of Hungary is Business!"
posted October 31, 2005
"Then
And Now"
posted November 9, 2005
"50
Relatives Worse Than Yours"
posted November 14, 2005
"Bunker
Hunt-Silver-China"
posted November 28, 2005
"The
Currency of Mass Destruction"
posted December 5, 2005
"Sonesta
International Hotels Corporation"
posted December 29, 2005
"Northern
Star Mining"
posted January 16, 2006
"Other
People's Money -Enron & Martin Siegel, Esq."
posted January 28, 2006
"Your
Money Is Not Yours"
-Enron & Martin Siegel, Esq.
posted February 9, 2006
"A
Tribute to
Rudy Giuliani"
posted February 15, 2006
"Interview
with
Robert McEwen-
U.S. Gold Corporation"
posted February 22, 2006
"Sparton
Resources"
posted March 1, 2006 |
|
BERAL,
INC.
Andrew G. Racz
Director of Research
300 East 54 Street, 26C
New York, New York 10022
Telephone: (212) 319-6949
Fax: (212) 753-1944
HARVEST
GOLD |
HVG
--- Vancouver Venture Exchange |
|
Price:
|
C.
$.13 |
Price
range: |
C.
$.19 - C. $.11 |
Shares
outstanding: |
16,000,000 |
Market
cap: |
C.
$2,400,000 |
|
A resource
company, born in the last days of
Dollar Hegemony
|
March 2, 2006
|
ANDREW RACZ:
Interview with John Roozendaal, President of
Harvest Gold
|
|
| |
| Q: Let me ask you a first question.
Does Harvest Gold exist because of the conditions in the
first decade of the 21st century, or could it have existed
ten years ago? |
| JOHN ROOZENDAAL: It could have existed
ten years ago, but its future would have been to suffer
through some of the hardest times ever experienced in
our industry. Starting now puts us at the beginning of
a major bull market cycle for Gold and other Commodities
which is the optimum time for investors. I know I'm sounding
too simplistic but we're in a whole different time right
now. |
Q: In what sense. |
| A: I say this because I don't think
the world--and I mean this from an investment perspective--has
understood the importance of holding resource stocks prior
to recent years for quite some time. As a small company
we're reliant on investor dollars to enable the Company
to grow and operate. The investing public today I think
is slowly but surely starting to be enlightened on what
gold means again. And it seemed like we had about a 20-year
period where they certainly haven't paid much attention
to it, again, from the investment perspective. |
Q: In this decade, there has been
awareness, political, monetary reason that gold exists
and it is likely to play a role in the monetary system
of the world in the next twenty or thirty years? |
| A: It appears to be almost inevitable.
I can't imagine another substitute for it right now. |
Q: Why? |
A: It's probably the only thing I can
think of that has any longevity to it, and if you want
to store value it had better be something with a longevity
attached to it. There is a number of reasons why I think
gold is going to be an important part of every portfolio,
I believe it's already happening in the media as more
and more pundits begin to endorse its value as an investment.
The media has actually started to cover gold again. But
first of all, it has fundamental attributes which make
it the truest form of money. It's divisible, recognizable,
doesn’t spoil, is rare with time etc. What's compounded
this is two things at the same time. One is the monetary
policies in the world. There's a great deal of money out
there which raises a lot of doubt because this money is
virtually backed by nothing. Actually, the Euro highlighted
the flop of the Dollar Hegemony in the reserve accounts
of nations and the investment accords.
At the same time, we have different sectors of society
and special interest groups that have worked very hard
to demonize gold and mining in general. So you actually
have diminishing mining reserves and production at a time
where there's an enhanced demand on gold as money. |
Q: I recently read that the gold supply
of the world grows about 1% a year, and everything else
grows much faster. |
| A: Yes. I'm not sure if that trend
holds true this year and even into next year. I don't.
I don't remember the references so I won't get too specific,
but I recall seeing forecasts of actually declining production,
and certainly declining reserves. Now, as the price of
gold goes up I shouldn't say that, because the amount
of reserves generally climb up with it, provided the costs
don't exceed the rise in the metal price. But I do recall
that as far as actual mines going into production goes,
I don't think they've kept pace with the demand. |
Q: Recently a Texas Republican
Congressman Ron Paul made a speech emphasizing the gold
would actually end the Dollar Hegemony, that at the moment
the people who have power are those who print the press.
But very soon there will be a major change. |
| A: : I think it goes back to a book
I'd read sometime ago called The _____________ of Jekyll
Island. One of the premises of the book was that when
dealing with inflation, it's not that the value of oil
has really changed dramatically. It still does the exact
same things that it's done through history, but what's
changed, (although demand may have increased) what's changed
is the value the currency that you're purchasing it with.
Just look at a chart of comparing the price of oil against
dollars and against gold. How much an ounce of gold will
buy you is really what's important. |
Q: At this stage, very briefly,
can you describe what Harvest Gold has as assets? |
| A: I'll start by saying the primary
value in a company like Harvest Gold, and you have to
understand again what its actual physical value is in
terms of the number of shares out and its stock price,
which is extremely low on both fronts. So it has a paper
value of approximately $3 million Canadian dollars right
now. What is has though, and this is what I think as our
story becomes better known, is a tremendous intellectual
capital in the form of the geologists that we have and
the business people that are on our board, and our projects
which all have very large deposit potential. When you
combine these attributes and some money, big things can
happen in our industry as people like Robert McEwen and
many others have proven to us. |
Q: Assuming money is not a hindrance,
if you had an unlimited amount of money, how much gold
would you identify in the territories that you control? |
A: The potential of our projects
is for large tonnage high grade gold deposits like those
found else where on the Canadian Shield in camps such
as Red Lake. Each project has its own unique geologic
attributes, but let me start with our project at Rice
Lake which is in the oldest and most prolific gold belt
in the Province of Manitoba. If your listeners don't know
this, the Province of Manitoba borders with the Province
Ontario, and which is home to about 200 million ounces
of gold production. The geologic structure which runs
right through the middle of the famous Red Lake gold camp
runs through another gold camp to the east called Pickle
Lake, but this important feature also runs into the Province
of Manitoba through the Rice Lake gold camp.
Secondarily, the rocks, 80% of the gold produced out of
that prolific Red Lake gold camp, approximately 28 million
ounces, are hosted in or very near to one package of rocks.
The only other places on the Canadian Shield where those
rocks occur are at the Pickle Lake Gold camp, where there's
been four million ounces identified, and the little camp
of Rice Lake, Manitoba. But this camp isn't so little.
It just happens to have missed an awful lot of exploration
relative to Ontario properties over the past years in
my opinion. The excellent work done previously in the
camp gives us a tremendous advantage in making new discoveries
such as the one we made in October of last year in our
very first drill program. |
Q: Let's say you take the next three
years, and let's say that you have an unlimited bank line.
How many reserves do you think you might be able to identify? |
| A: I think we might be able to identify
anywhere from one to five million ounces on our each of
our projects with the possibility of discovering major
new mining camps with many times this number of ounces.
If you're chasing another Red Lake style gold camp, given
the size of those deposits, you're looking at mineral
deposit sizes of a million ounces or more. These are the
targets on those projects I just mentioned. In Nevada
we have a project called Long Street where there's currently
a small resource of 100,000 ounces of gold and about 2.2
million ounces of silver on a property which we think
is analogous to a Round Mountain style deposit in many
respects. I don't know that it'll be as large as Round
Mountain but it certainly has the potential to be and
only future exploration will tell. |
Q: If you identify 100,000 ounces, that
would be at a $50 price equivalent to $5 million. That
is twice the capitalization of the company. |
| A: It's about $3 million. |
Q: $50 times 100,000 is $5 million. So
it's almost twice, in U.S. terms, the capitalization of
the company. |
| A: Just that one deposit. |
Q: So if you go up three or fourfold,
then you come to a different number. |
| A: What we're chasing are districts
and camps really where you expect to find multiple million-ounce
deposits. That's what we expect to find in our exploration
on these projects. So the leverage from that, just using
your mathematics, is just outstanding. |
Q: In other words, your requirement at
the moment, the geological territory, the climate in your
mind about gold, you basically have to get higher equity
valuation, access to money partners. In other words, this
is an organizational problem. |
| A: Yes. |
Q: I trust that this is where you spend
your time. |
| A: Indeed I do. That's exactly right.
Although I do like to participate in what's going on in
the ground, because it's difficult to speak with any degree
of confidence unless you are participating in it. But
that's exactly right. |
Q: In the oil business, and I go back
to the great Texas Sid Richardson, the Hunts controlled
the world. They were trading up territories, sell 20%
and get oil, then the 20% you sell at a higher level.
Actually, Diamondfield used it, called the salami technique.
I worked with them. The express was mine but they like
it. The other avenue is you go to foreign governments
who have no gold mining and would like to get into the
exploration program, and they have plenty of capital.
You are too small for this or have you at least thought
about it? |
| A: No. I would say my reaction to that
is we've very deliberately chosen where we want to go
work, and currently that is in Nevada and Manitoba, Canada,
both jurisdictions offer great advantages for the Companies
operating there. In mining you have enough risk already
when you're out there and looking and exploring for new
mineral deposits. You don't need the added risk of a jurisdiction
that may or may not allow you to mine or ultimately nationalize
the investors property which is more likely outside of
these jurisdictions. |
Q: But let's say a foreign government.
Let's say Dubai. Dubai people come in, buy 20% of the
company, issue a huge loan. Have you thought about it?
|
| A: I shouldn't say I haven't thought
about it, but we've yet to make a contact in Dubai that
would facilitate that. But absolutely. Of course, we'd
be very open to something like that but at the stage we're
at, I suspect they'd want to see more reserves in the
ground. If they have an arm that actually backs exploration,
I think we'd be a very good partner for them because of
the talent that's on board and the projects we have. |
Q: Another example. When you have a small
capitalization, you in fact attract smart people with
money because their entrance fee is very small. They come
in, buy the stock at 154 Canadian per share and do a private
placement and give you a million dollars. In the long
run it can turn out to be very profitable for them. It's
a good investment. |
| A: It's very leveraged, absolutely. |
Q: Have you been approached by people
like that? |
| A: People like what exactly? |
Q: Let's say we like your stock. We come
to you, buy some on the open market, and say look, we'll
put together half a million, a million dollar package,
we want to do a private placement. Now, if you become
successful it turns out to be a tremendous investment
on our side because we got in on the ground floor. |
| A: The answer to your question is yes.
We have had people come to us of various degrees of interest
and financing our company. Usually the dollar figures
are under $200,000 individually but when those financings
take place, they tend to be part of a larger private placement
with a number of other investors. But as far as single
individual investors doing that, we have had some approaches
like that and they participated in our last financing.
We had several groups take a large percentage of it. |
Q: The investors have to recognize which
small company is right. But I have an example in mind
because I knew it from the beginning. Columbia Pictures
was selling at $2.50 after the 1973-74 market decline.
Allen & Co., an investment banking firm, bought 30%
of the company, or 40%. There were originally 16 million
shares and they bought 4 million or something, a $50 million
market cap. That was 1974, and sometime in the mid-1980's,
they sold out to Sony for $3.2 billion. That story I know
well. It was a time when people discovered movie libraries.
Turner bought another company. That was the beginning
of television residuals, movie residuals.
You have in many respects residuals on the ground, your
brain work in terms of mining. You have a library actually
which can appreciate substantially in value. So a repetition
of the movie industry, then you will not stop till $3.2
billion |
| A: That's a terrific analogy, Andrew.
Thank you for explaining that to me. As someone who comes
from a geologic background, I'm always interested in finding
out how investors value companies. It's always difficult
because as a geologist, I have my own ideas which are
science based on why we will be a success. But it's quite
another when you can express an analogy like that to another
industry.. In a sense, you're talking intellectual capital,
if you will, or in this case entertainment. In our business
it's the opportunity to have large amounts of relatively
rare commodities, particularly in gold discovered at a
fraction of the cost it takes to buy refined gold out
of the market. |
Q: Now let me ask you, what would happen
to you if gold jumped to $800 in a few weeks? |
| A: What would happen to us? What I
would say is that as a sector, of course, people would
be flocking to the sector itself. Also, I would think
the value of our stock would rise dramatically as that
new money began to flow in and the people who own stock
weren't inclined to sell given the bullish market. So
I think a couple things would happen. One is the value
of our stock would rise dramatically. Two, the resources
that we have in the ground would likely be attractive
to be mined, so we'd probably be moving into partnership
with a company that would mine our resources. Three, we'd
have a great deal more capital to work with to actually
make discoveries quicker and possibly even larger. |
Q: Who owns your company? Who are the
major stockholders? |
| A: I'm the largest shareholder. |
Q: How many shares do you have? |
| A: I have approximately 800,000 shares
I believe in Harvest Gold. Maybe a little bit less than
that. |
Q: You have 800,000 shares? |
| A: Yes. |
Q: Out of a total of how many? |
| A: Sixteen million. So roughly 5% of
the company. |
Q: I added up today how many options,
warrants I have in various gold and silver companies,
how much they went up today. Apart from wishing you all
the best, I want to finish my most favorite story of gold.
In 1981-82, I did work with President Nixon. He was, of
course, out of office. And I wrote an article called "Russia
in Bankruptcy". The first page was that Karl Marx
was after all wrong. Capitalism may be able to cope with
wars, but communism simply cannot afford it. Nixon asked
me to come over and the theory was as follows. America
issues bonds, borrows against its total gold reserves.
It's off-balance sheet financing, not hurting the treasury.
And we go to a bank in London like National Westminster
and say, Mr. Banker, how much do the Russians owe you?
I said well, $25 million reward we crack it. So America
goes, here is $25 million and now the Russians owe the
money to us. Then you go to Barclays, $50 million, the
story is the same. Then you go to some Italian banks with
$250 million or $300 million Russian debt comes to the
U.S.
Then comes the 30th of the month and the Russians came
back to renew the money. America says no, we want cash.
So Nixon said I like it. I said, Mr. President, what would
happen? He said, the Russians call, I would send Kissinger
over there, but eventually I would sit down with Brezhnev.
He said what would happen? I said Brezhnev would get up,
hit the table, yell, scream. And then you? I said I would
do exactly what you just said. I would ask for another
cup of coffee.
But the President said if he had been President, he would
have studied it but he probably would have done it. And
there were a few articles on this subject here and there,
and Governor Connolly actually made a major speech out
of it and hitting the table. He said the Romanians bought
$22 million. They want to renew it. I said oh, no, go
to your friends, the Soviet Union. We want cash. Nixon
said it could have ended the Cold War because what can
you do to a banker to lend money? You can't shoot Chase
Manhattan. So gold has power. |
| A: It has power even today. |
Q: Thanks for the interview. |
| Information
contained herein is based on data obtained from
recognized statistical services, issuers reports
or communications or other sources believed
to be reliable. However, such information has
not been verified by us and we do not make any
representation to its accuracy or completeness.
Any statement non-factual in nature constitutes
only current opinions which are subject to change.
BERAL INC. or their officers, directors, analysts
or employees may have positions in the securities
or commodities referred to herein, and may as
principal or agent buy and sell such securities
or commodities. An employee, analyst, officer
or a director of BERAL INC. may serve as a director
for companies mentioned in this report. Neither
the information nor any comment expressed shall
constitute an offer to sell or a solicitation
of an offer to buy any securities or commodities
mentioned herein. There may be instances when
fundamental, technical and competitive opinions
may not be in concert. This firm may from time
to time perform investment banking or other
services for or which investment banking or
other businesses from any company mentioned
in this report. |
Andrew Racz
Dated: March 2, 2006
|
(Article
23 - posted March 2, 2006)
e-mail: mlikar@aol.com
Home |
Biography | Links | Contact
All Content &
Articles of This Web Site
© 2005-2006 Andrew G.
Racz |
