With trading volume already topping the 45 million mark and shares climbing as high as 0.01570 during Friday’s trading session Graystone Company (OTCQB: GYST) is closing the week in style with both figures representing massive jumps from where they started the week. Shares of GYST were actually as low as 0.00220 on Tuesday but received a nice boost on Wednesday following news that they had completed their initial shipment of gold from Peru.
That news release also stated that GYST was expecting to begin mining operations in the next few months, having already identified and in the process of acquiring the necessary heavy equipment to start those activities.
Of course the news of the gold shipment wasn’t exactly earth-shaking as GYST only shipped about 10 ounces of gold as a means to test exporting methods from Peru to refineries in the United States. While 10 ounces isn’t anything to turn your back on it certainly doesn’t make you a big player in the gold market.
Obviously GYST intends to produce more gold from their mining operations and if they can achieve their goals then they might be on to something. The company has had success with their retail division thus far, announcing in late June that they had sold nearly 100 ounces of gold and silver to date directly from their retail site graystonegold.com.
Unfortunately GYST didn’t find it necessary to inform investors about the breakdown of the gold and silver sold. Visit their retail site and a one ounce gold bar sells for $1,720 and a one ounce silver bar sells for $33.50. If the majority of the 100 ounces sold to date is in silver then the news really isn’t that impressive.
GYST is really pushing their retail division and why not as they say they can increase their margins by 15-20% compared to selling to refineries for 5-7% below spot price. Commenting on the success of their retail division thus far company President, Paul Howarth, stated, “The company expects to continue its retail operations and expects to sell up to an additional 100 ounces of precious metals before year end, adding approximately another $200,000 to GYST’s annual sales in 2012.”
Howarth went on to say, “The Graystonegold.com retail division’s sales have become very helpful in maintaining adequate operating cash flows while the company completes the build-out of its mining operations. In fact, the retail division has grown faster than expected and we are in the process of revamping our website to better serve our clients.”
Hopefully for shareholders of GYST “revamping our website to better serve our clients” means having inventory as the products listed, from a one gram bar of gold to a one ounce bar of gold and a one ounce silver bar to a 100 ounce silver bar are listed as currently out of stock. It’s hard to make money when you don’t have a product to sell.
Again, if GYST’s mining efforts in Peru produce gold and silver in meaningful quantities then these shareholders could be rewarded as selling directly to consumers and jewelers is much more profitable than the traditional route. The concern though is that GYST won’t be able to do so, at least not in respect to gold.
GYST is also in the business of oil wells, having acquired a 50% working interest in up to 100 oil and gas leases in Kansas last month. That move cost GYST $700,000 and the company estimates the cost of the rework and re-drilling is to be between $25,000 and $75,000 per oil well. Once more, there is a considerable disparity between those two figures.
On this front Howarth stated “The recovery and drilling in these shallow well Kansas oilfields is a great opportunity for the Company. The commercial production of these oil and gas wells will allow Graystone to improve the diversity of our holdings in natural resource commodity properties.”
Diversity is great but there probably aren’t too many shareholders of GYST that would express disgust if they company would just concentrate on getting the gold out of Peru. We should see soon enough if that’s going to happen as GYST has promised updates in the near future.