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Everything posted by AceofKY

  1. Perhaps Longview Capital Partners is worth consideration - Ticker "LV" on the TSX I haven't done any research yet, but at least their investee list is manageable. Nevada Copper is the real deal; a good long-term investment. The others I'm not familiar with: LV Portfolio: Buffalo Gold Finavera Gas MacArthur Minerals Oriental Minerals Waratah Coal Nevada Copper AMI Resources Inc. Pacific Coast Nickel Corp. Pencari Mining Corporation Cue Resources
  2. AceofKY

    Victory Nickel

    This one is a sleeper...I think NI is going to be a big winner over the next couple of years. But then, what do I know? - all my base metal juniors have been castrated since November. Victory Nickel Announces Continued Progress at Lac Rocher Project Tuesday February 19, 12:53 pm ET Plans call for first nickel production in 2008 TORONTO, ONTARIO--(Marketwire - Feb. 19, 2008) - Victory Nickel Inc. ("Victory Nickel" or the "Company") (TSX:NI - News; www.victorynickel.ca) is pleased to announce further positive results from metallurgical testing at its 100%-owned Lac Rocher nickel deposit in northwestern Quebec. A total of 15 flotation tests were completed by Corem in Quebec on material from the disseminated sulphide zone, yielding nickel recovery of 79.9% and copper recovery of 94.2% to a nickel/copper concentrate. "These positive findings from the disseminated material are in-line with the excellent results announced late last year from the massive sulphide zone," said President Brian Robertson. "We expect to complete an updated resource estimate shortly and receive the preliminary economic assessment before the end of March. Our goal remains to be mining at Lac Rocher before the end of 2008."..... Project Updates The updated Lac Rocher resource estimate will incorporate drilling done in 2007 and include both nickel and copper resources. Along with these metallurgical results, the resource estimate will be incorporated into the preliminary economic assessment being prepared by Roche Engineering and expected to be completed this quarter. Discussions are moving forward with respect to permitting at Lac Rocher in line with the Company's target of commencement of production in 2008. In addition to ongoing work at Lac Rocher, three diamond drills continue to turn at the Minago project on the Thompson Nickel Belt in Manitoba. The 2008 drilling is designed to expand and upgrade higher-grade mineralization at depth in the Nose Deposit, where the entire current resource is located, as well as to test the North Limb, a zone of mineralization with a known strike length of 1.5 kilometres located to the north of the Nose Deposit. The results of this winter drill program will be incorporated into a revised resource estimate that will form part of the definitive feasibility study. Metallurgical testing and evaluation of milling and other equipment is ongoing. Also at Minago, Wardrop Engineering Inc. ("Wardrop") is completing a definitive feasibility study on the fracturing or hydraulic "frac" sand, a high-value by-product used to enhance recoveries in the oil and gas industry. The frac sand marketing study is expected to be completed this quarter. At the Mel project, near Thompson, Manitoba, the Company is finalizing the work program for 2008 in conjunction with Vale Inco, details of which will be announced shortly, and metallurgical testing is planned to complete a preliminary assessment for mining.
  3. Future free cash flows from all of the royalties RGLD is holding - discounted to present value. The lack of leverage on the common is a good thing, I think. RGLD is not exposed to a falling gold price. Options can be used to increase the leverage.
  4. I built a model on RGLD this past weekend. I was surprised to find that RGLD is not very leveraged to the price of gold on a NAV basis. According to my model, if gold doubles, RGLD's NAV only goes up by about 60%. They do seem to be trading slightly below NAV by my calculations, but there's not much of a margin of safety. The good thing is they have a lot of cash, free cash flow going forward looks strong, and they are ready and willing to do some big deals. And there are lots of miners out there who may need financing now that the banks are tightening up their lending requirements.
  5. Anyone wondering why junior share prices are underperforming? Because operations continually underperform. These guys raised plenty of money in the IPO; they should not have had to return to the capital markets to get this mine running and generating positive cash flow. Anyway, this is only strike one for this management team, and the news is not entirely bad. The investment by FNX is a good thing, as FNX is very intimately familiar with the operations (their subsidiary Dynatech is the mine startup contractor.) It indicates that there is a potential for a takeover in the future. I still don't like that convert issue, however, especially at this share price.
  6. AceofKY

    Geovic Mining

    At this point, I'd settle for mere return of capital.
  7. We've already had huge falls in base metal stocks and some base metal prices as everyone is pricing in a recession.Check out this link (click on "metal producers") for charts that show that the money flow into the base metal stocks has turned around and is now going up. Will prices follow? http://www.willain.com/EV/index.html
  8. The boat hasn't even fueled up yet. I have several juniors down 20-30%, and one down 50%, and that's from where I bought them which was well off of their highs. Volume is still low to non-existent. Look at SRZ.to, for example. They are fully financed and will be producing concentrate by the end of this month. They should FREE CASH FLOW somewhere around 25 to 30million THIS YEAR. Their market cap is only $100 million, and a big chunk of that is cash in the bank. Granted, SRZ is a high cost miner, is very highly leveraged to zinc price, and they have some debt. But by approximately mid '09 they should have a process in place to recover gallium and germanium which will drive their cash costs of zinc production very low. Management owns a significant chunk of the shares, and the CEO just bought another 10k on the open market. SRZ's costs are all denominated in $US. And who really thinks zinc price is going down with the world's central banks flooding the economy with freshly manufactured $$?
  9. Many juniors, and certainly most exploration stocks, ARE dependent on large amounts of financing. However, there are also many that are near-term producers that already have enough financing in the bag to carry them through to positive cash flows. These juniors may be helped by a tightened financing environment, since it will reduce the amount of mines coming online in the future. Just because they haven't extracted the gold yet doesn't mean that it's not worth anything. The majors will pay over $200/oz for a good-sized proven deposit in a safe area. One rule of thumb is not to buy a junior for more than 10% of in-situ deposit value. Any company can fail. The most important factor in determining whether a gold mining junior will fail or not is the price of gold which can and has (in the past) gone down to very low levels. So to say that it's better to buy gold because a gold miner may go bankrupt is not really good logic. In general and over the long term, buying a gold miner gives you leverage to the price of gold - similar to options but without the timed expiration. The reason for this is that companies are valued based on anticipated future profits rather than the price of the underlying commodity. A 10% rise in the price of gold may yield a 20% rise in the miner's profits (and vice versa.) Also, a good well-managed mining company can still generate shareholder value over the long term even if metal prices stagnate or fall (as long as they don't fall too far.) GORO, I think, will be able to make nice profits even if gold goes back to $600-700/oz. That being said, lately the miners have lagged gold's price rise, the explanation of which is the purpose of this thread. One thing is for sure: the junior mining market is NOT an efficient market. The market caps of these companies fluctuate much, much more than typical large-cap stocks. I'm not sure if anyone has ever attempted to calculate the average beta of, say the CDNX versus the S&P500 but I suspect it has a beta of at least 2 or more. It gives you an opportunity to find values that just isn't possible if you're dealing with companies like Proctor & Gamble or GE.
  10. Stillwater is up about 60% since I posted this a couple weeks ago. If I had bought it, it would have went down 60% instead.
  11. Most of them are much better values now than they were at the end of July 07 or Oct. 07! But, generally speaking, the gold juniors didn't sell off nearly as hard as the base metal juniors. I think GORO is a slam dunk for a double here once they reach full production in a year and a half or so. Possibly a triple if drill results keep coming in good. My base metal favorites (SRZ.to, GMC.to) got beat into the ground over the last few months, but I still think they're both good buys. Also, I like Victory Nickel (Ni.to) at current prices even though it didn't fall much. I guess my feeling is that the Fed is going to try to inflate its way out of this financial crisis. Thus, I'm not too concerned about holding base metal stocks. At some point, they will need to be sold when the fed no longer has the tools or the political mandate to continue devaluing the dollar, but I don't think we're there yet. What we really need are some acquisitions by the majors to reignite the market in base metals. Ni.to and GMC.to are excellent takeover prospects, in my opinion.
  12. AceofKY


    I like (and own a little of) CML and the new CEO. He used to be with Desert Sun. That reminds me, the rest of the Desert Sun group is now running Largo Resources. I was very impressed with their potential after listening to their presentation in San Francisco. Largo will be one to watch in the coming years; they're still a long way from production. Victory Nickel seems to have better metrics than CML, but they are also farther from production. CML should do well with nickel price holding strong.
  13. AceofKY

    Geovic Mining

    She continues to plummet - down another 20% today. The babies are getting thrown out with the bathwater here.
  14. Notes on Stillwater: * In general, Stillwater looks like a good buy if one expects platinum to maintain current high levels. * They have plenty of proven/probable reserves at decent grades. Current market cap is about $33/oz of P&P PGMs (80% of which is palladium.) * Stillwater is highly leveraged to PGM prices, and specifically palladium. Platinum is only 20% of production. * They have some hedges in place (at $1035/oz) on ~1/3 of platinum production between Oct 07 and June 08. Some of the loss was already taken last quarter. I suspect there will be another $5-10MM hedging loss taken for Q407. * They have the assets in place to make a lot of money, but they are a high cost miner and thus highly leveraged to the commodity price. My model indicates that constant platinum price of $1350 and Palladium of $300 would support the current market price. Platinum at $1500 and Palladium at $360 (constant over time) doubles the intrinsic value. * They should cash flow around $2/share in 08 (at current prices) which could support a $20 share price. I'd like to compare to other PGM producers, and research supply/demand fundamentals of palladium market, prior to reaching a conclusion on this one.
  15. Good questions, but it's not just platinum stocks. Base metals miners/explorers and many gold juniors are also trading well off of their highs despite high commodity prices. See Frizzer's recent thread regarding why juniors haven't responded yet to gold price for potential reasons. That being said, I think you are asking the right questions. I'm going to take a look at Stillwater again this weekend. It seems to have fallen to an important support level this past week. Let me do a little research on fundamentals and report back.
  16. I studied Ridge Mining for a while some months ago, but they wouldn't send me their feasibility study (it had not been made public). I'm not sure what they have to hide. It's unlikely the big fund from China made that big investment without getting a copy of the feasibility study, and I don't like having less information. Canadian companies don't get away with that stuff. I took a pass on Ridge, although it looked like they had good assets. A trusted friend of mine likes Eastern Platinum, but I think they've already had a big run in the share price. Let me know if you find a junior producer or near-term producer.
  17. AceofKY

    Geovic Mining

    The feasibility study highlights were recently released, to the great disappointment of investors. NPV and IRR of the project has dropped using the base case futures prices. And the higher capital costs likely means more equity will need to be raised. Any way I work the numbers, however, $1.58 is still a good buy and I'm holding my shares.
  18. AceofKY

    Pinetree Capital (PNP)

    Yes, I use DCF to evaluate companies. But I also use it to evaluate engineering/construction projects for clients and for things as simple as deciding whether or not to install a geothermal system in my home. Companies (especially in the mining sector) use DCF to evaluate takeover targets. I have had three stocks bought out by other companies in the past year (Rio Narcea, Tiberon Minerals, AUR Resources) with a nice profit on each. So DCF is a good way to identify the minimum value of a company (i.e. - when to buy.) Unfortunately, it is not very helpful in identifying when to sell. I am a buy-when-the-stock-is-cheap and sell-when-someone-will-pay-me-much-more-than-the-stock-is-worth type of investor. Sometimes this takes a couple years. Sometimes only a few months. But I am not a trader, if that's what you are asking. There are various resource mutual funds available in the U.S. I will try to dig up some names. However, I do think that with your interest in the sector (otherwise you wouldn't be reading GEI, right?), you might want to attempt some fundamental research of individual companies. Resource/commodity companies that have achieved the feasibility stage are very easy to evaluate. Usually the only major unknown is future commodity price (use conservative assumptions and check sensitivities.) Here is a Due Diligence checklist that I put together last year that gives a reasonable process (I think) for evaluating the fundamentals of a mining company: http://www.investorvillage.com/smbd.asp?mb...amp;mid=2388964 Here are my holdings in a few sectors that I think are still selling for reasonable prices: Gold: GORO.ob, YNG.to Nickel: Ni.to, CML.v cobalt: GMC.to Zinc: SRZ.to, LMC Take a look at these and their competitors and do comparisons. The BM/PM sector has taken a beating in the past couple of months so there should be some good values out there. The best thing to do is to research as many companies as possible and compare statistics. As a rule of thumb, you should be rejecting at least 10 companies for every one that looks good. If you are interested, email me at benlmurphy@hotmail.com and I will send you a DCF spreadsheet on one of the companies listed above. Want to start off with an easy one? I'd suggest Bubb's favorite: Royal Gold. It's a royalty company so the DCF analysis is extremely simple. Use a spreadsheet to find the net present value of the royalty streams to the end of their respective reserve lives, add working capital, and subtract debt to obtain Royal Gold's intrinsic value. Divide by # of shares to get intrinsic value per share. Then compare to market price. I like to buy with a 40-50% discount to intrinsic value (this is very difficult to find in a gold company with the futures in cotango.) All of this takes time (as my wife will tell you) of course, but unfortunately I haven't yet found a way to make good money without investing a lot of time. It helps having boards such as GEI to point in the right direction of potentially good investments.
  19. AceofKY

    Pinetree Capital (PNP)

    Unlike Bubb, I'm a fundamentals kind of a guy and can't give much guidance on timing. I don't buy funds, specifically because I believe their value is the sum of the parts and it makes more sense to me to just own the best of the best rather than a gazillion different companies. I prefer to create my own much-smaller fund of well-researched companies that I am comfortable with. I am a little concerned with Pinetree's heavy uranium exposure and poor performance in 07 (when even a non-professional like myself was able to scratch out a 20% gain after a spanking in Nov/Dec.) If you are interested in the uranium exposure along with gold, you might want to consider Fronteer Group (FRG). These guys are hitting almost 1 oz/ton gold at the surface in Nevada of all places and still the share price is going down with the rest of the market. Half of their market cap is in Aurora Energy (uranium) stock. I'm not long this one, yet, but likely will be in the near future if I can come to terms with the heavy uranium exposure.
  20. AceofKY

    Lurkers Hello thread

    So, do I understand correctly that Britons are getting paid to make babies now? That is interesting indeed.
  21. 1. I think most gold stocks were valued very highly until August 07. I assemble discounted cash flow models on every miner that I research, and prior to August it was impossible to find a gold miner in a safe country that traded at NAV or lower. Most, in fact, traded at prices at least 2 times NAV. The market was already pricing in a big jump in gold price. 2. I know I've been beating this like a dead horse, but the mining companies haven't been increasing their profits during this period of high prices. Construction costs and operating costs are rising as fast (or faster) than the gold price. Since corporations are valued based on expected future profits (rather than a simple proportional relationship to gold price), there has not yet been sufficient justification to bid up the already high valuations. Even things such as the acid used in heap leach operations are experiencing significant cost increases. If/when the U.S. goes into a recession, this may relieve the pressure on the cost side of the equation and allow the miners' margins to increase.
  22. AceofKY

    Gold extraction

    Dude, no one would ask you to invest in a 12 oz/ton mine where all the ore is at the surface. They would put up a 16 foot fence with razor wire around the site to keep you out.
  23. There's plenty of chickens and dogs around here. I don't have much in the way of pictures. When you live here, you don't really think to take photographs of the countryside. We raise sweet corn, green beans, tomatoes, okra, peppers, cabbage, etc. Also have several types of apple trees, 4 peach trees, and a couple cherry trees. Plenty of walnuts here, also, but they're too much work to eat. In fact, the name of our subdivision is "Walnut Meadows." It is a small neighborhood that is subdivided into 5 acre lots, bordered by farms on all sides. I have named my new LLC (set up to hold my investments and capture tax deductions) "Walnut Meadows Capital, LLC" Here is a picture at our annual barbeque in May. That tractor was purchased with Rio Narcea profits: Here are my two kids, Anna and William. They thoroughly enjoy wagon rides in the evening when I get home from work. We go see the local horses, chickens, cattle, and ducks. And I like the exercise. Unfortunately, it is too cold in January to do this: I really enjoy living out here, but Bubb is correct that we use a lot of fuel. My question is, how can I conserve energy and still live in the country? Or will it still be possible in the future? Some ideas I have thought of: * geothermal energy (common in KY - I design these systems for schools. Payback is a little long on a house, however, since we have very inexpensive electric rates at $0.05/kwhr) * solar collectors (sometimes used to help heat hot water, but I'm waiting on the technology to mature enough to be able to economically sell power back to the grid) * More fuel efficient vehicles (still waiting on this; hybrids aren't quite worth the money, yet) * Use more firewood rather than burning propane for heat Most of these will likely become more viable in the near future if energy costs continue to rise.
  24. Well, obviously land costs are cheap here because there's so much of it. Labor costs - especially in the construction and agricultural fields - have been held down by a continuous influx of Hispanic immigrants from Mexico. Material costs have been skyrocketing over the past few years. Construction costs have been increasing somewhere around 30 percent each year - mainly due to material costs. There used to be a lot of manufacturing in the area, and there is still some, but much of our manufacturing capacity has moved to places like China and Mexico. Why? Because they say labor is too expensive here (go figure). So you have manufacturers like Lexmark (one of our largest employers in the area), who have all their head office personnel and engineering still in Lexington, but all of their manufacturing now takes place overseas. What to buy? I don't know. I wish I had that crystal ball. Jim Rogers says buy good farmland, and we have plenty of it here. Farmland prices are being driven up right now (even as home and commercial prices have stagnated) due to the high corn prices that have left the farmers flush with cash. I know a lawyer from my hometown of Owensboro a couple hours away. Back in the 90s he bought up a lot of farms in that area. This past year, he made more money on a single corn crop then he paid for the entire farms. And he is just the landowner which means he probably only gets ~1/3rd of the profit - the rest going to the farmer.
  25. Actually, many people would not do what you say. We have an example in Eastern Kentucky - the Appalachian mountain region. There is no industry there except for coal mining and government-paid jobs such as teaching. Many of the people there are considered very poor - even by Kentucky standards. They have no desire to leave, however, as they are very happy where they are at. Increasing taxes on gasoline would literally take food off of their plates. They would still not move, however, as Appalachia is their home and they will be buried where their grandfathers are buried. And in the U.S., we don't force people to relocate. For people like this, who are unwilling to relocate, the coming energy crisis is really going to hurt. They are more self-sufficient than one would think, however, which allows them to survive with no money. One thing there is no shortage of in the mountains is firewood. I burn some at my home, but only when it gets really cold, to save on the propane usage.