Jump to content
frizzers

Tracking Junior Miners - Why Are they Underperforming?

Recommended Posts

Hi folks, I haven't posted here in a very long time just due to being very busy with running my business. I was fortunate enough to see Dominic at PDAC and resolved to try to come back here more. Hopefully everyone is doing well.

 

 

 

Here is what I currently have in my portfolio in order of largest to smallest positions:

 

1. Gold Resource Corp (GORO): I've sold about 1/3 of my position since this went up about 500-600% for me. Pretty expensive stock now. Pays a monthly dividend.

 

2. Fronteer Gold (FRG): This equity is being taken over by Newmont but I'm still holding to get the free shares of the spinoff company. Probably not worth buying now that the takeover has already been announced. Watch for the spin-off explorer that will be called "Pilot Gold" and run by the same guy Mark O'dea.

 

3. Hecla (HL): This is a good mining company in the Silver Valley & Alaska, primarily silver but also big amounts of gold, lead, and zinc. I think they are still undervalued and I wouldn't feel bad about buying some right now.

 

4. Alacer Gold (ASR.to): Gold miner in Turkey & Australia. Probably still a buy but not spectacularly undervalued.

 

5. Silver Wheaton (SLW): This is a good company but very expensive. I wouldn't buy it now. My position came from the takeover of Silverstone several years back. I've been selling this position down. It will basically track the price of silver with approximately 1.5x leverage.

 

6. Santa Fe Gold (SFEG.ob): A junior gold/silver miner in Western U.S. I think this company is a good buy right now but their performance is still unproven so it could go either way. If they are successful it will be a 3 to 4 bagger at least. They are currently taking over Columbus Silver and I've been buying shares in the latter to capture a few % in arbitrage.

 

7. Nevsun (NSU): This is a copper/gold miner in West Africa. I bought more of it in the past few weeks as the price took a big dip. I'd say it is a buy anywhere under $8/share.

 

8. Rambler (RAB.v): This is a copper/gold junior building a mine in Newfoundland. I've been buying it over the past couple months. Be prepared to wait for a couple years for the payoff. Very small and illiquid.

 

9. Rio Novo Gold (RN.to): Junior gold miner in Brazil that I just became aware of after the PDAC conference a couple weeks ago. I think it's a buy.

 

10. Silvercrest (SVL.v): This is a junior silver/gold miner. I'd rank it a hold right now as the price has already gone up substantially. Performance still unproven.

 

Good luck to all,

 

 

Ace

Share this post


Link to post
Share on other sites

It's Nice to see you posting here again, Ace.

 

Thanks for the update on your portfolio.

 

Hope all is well with you.

 

*I have shares in Columbus Silver, and I hope the takeover will bring some new energy to the company

Share this post


Link to post
Share on other sites

*I have shares in Columbus Silver, and I hope the takeover will bring some new energy to the company

 

what are your expectations for columbus?

Share this post


Link to post
Share on other sites

what are your expectations for columbus?

 

PS:

Santa Fe Gold

neg. working capital $17 Mio

convertible loan $7,6 Mio

Share this post


Link to post
Share on other sites

PS:

Santa Fe Gold

neg. working capital $17 Mio

convertible loan $7,6 Mio

 

 

I believe $15.9MM of the negative working capital is a liability related to warrants that will be non-cash??

 

I've been selling Columbus as it looks like they're having difficulty executing the buy-out. I don't want to be stuck with Columbus if the transaction doesn't go through - would rather hold SFEG here so I'm taking a little loss.

Share this post


Link to post
Share on other sites

The Coming Junior Stock Eruption

 

http://jutiagroup.com/20110426-the-coming-junior-stock-eruption/

 

The massive amount of financings (most with four month hold periods) is the most critical drag on the overall TSX Venture market.

 

With more than $5 billion worth of stock (that’s excluding an increase in value of shares and value of attached warrants) coming free trading, there’s a lot to soak up. After all, the total market value of the TSX Venture market is about $80 billion. So a $5 billion wall creates a big hurdle.

Share this post


Link to post
Share on other sites

what are your expectations for columbus?

Columbus Silver / CSC-chart

 

Has never behaved like a proper Silver share.

 

They seem not to have much silver, but Columbus Gold / CGT-chart shows they have some deal-making skills

Share this post


Link to post
Share on other sites

The Coming Junior Stock Eruption

The massive amount of financings (most with four month hold periods) is the most critical drag on the overall TSX Venture market.

 

With more than $5 billion worth of stock (that’s excluding an increase in value of shares and value of attached warrants) coming free trading, there’s a lot to soak up. After all, the total market value of the TSX Venture market is about $80 billion. So a $5 billion wall creates a big hurdle.

http://jutiagroup.com/20110426-the-coming-junior-stock-eruption/

Indeed.

 

And the CDNX-chart - looks "heavy" too

Share this post


Link to post
Share on other sites

Looks cheap to me.

20110707-fh8nkbupk94c9cndegdqha3ecb.jpg

Share this post


Link to post
Share on other sites

For those who invest in Exploration stocks, this talk was excellent

 

Great - here's another (Talk from Rick Rule)

 

THE SCRIPT - used by Junior Mining promoters

 

http://www.youtube.com/watch?v=1vluCiabIvA

 

KEY QUESTIONS TO ASK

====

+ These guys are answering unanswered questions : will they make a discovery?

+ People are more important than property : inventory the IP in the co.

+ What is the co. about? What skill sets?

+ Pareto's law: 80% is done by 20% : 4% generate 65% of capital gains

( Previous success IS a useful indicator of future success )

+ Who is the second most important person in your co? Why?

+ What is this property about: describe the property - What will the prize be?

( If he is looking for a small deposit, eliminate it.)

+ What is the evidence for the potential you expect?

+ How will you test your thesis? What next, after you have a yes or no answer?

 

+ How does your previous success equip you for this current challenge?

+ Money questions: 2 years= 18mos : How much needs to be spent?

 

For more than half, it is a paper-trading, lifestyle exercise.

Share this post


Link to post
Share on other sites

For those who invest in Exploration stocks, this talk was excellent

 

"Money questions: 2 years= 18mos : How much needs to be spent?

 

For more than half, it is a paper-trading, lifestyle exercise".

 

 

Take it you mean how much needs to be spent before coming back to the market to ask for more? Timescales to achievement seem everything at the minute, unless there is near term paybacks, these explorers seem to be getting mullered by markets shorters/manipulators whatever, as they hold the upper hand knowing full well they will run out of cash before progress of substance is made.

Share this post


Link to post
Share on other sites

Yes.

Like "burning matches", they keep using up their capital, and need to raise more

Share this post


Link to post
Share on other sites

Thoughts on PDAC 2013

 

· Crowd was very good – just as many as last year. I believe that the conference organizers did a better job of handling the crowd because it seemed like lines (such as coat check, food lines, etc.) were much shorter this year.

 

· I had expected to see some empty booths due to junior explorecos not being able to make the trip. However, I was wrong. All the booths were full. There is a good chance the PDAC is the last gasp for many of them as it was noted that over 30 companies exhibiting had less than $200k working capital left.

 

· Exploration activity seems to be slowing with the downturn in finance for the sector. There seemed to be many more junior Geos looking for a job than I remember from previous years.

 

· I met multiple people who were “First Nations Representatives” (consultants/mediators, etc) of one sort or another. This seems to be turning into a big industry. Not sure what to make of that.

 

· Toronto is still cold as hell in early March and I don’t understand why PDAC doesn’t move this convention to Cancun or somewhere warm. I did learn why the conference is held at this time of year. In the old days the explorers up North could work in winter (water was frozen) or summer (via boat) but not when the ice was breaking up in early March. Hence – they had nothing better to do then go to the conference.

 

· The big “World’s biggest mining party” on Tuesday night (sponsored by Renvest this year) was even more crowded than last year. The Dave Murphy band is awesome, but they’re going to have to do something to reduce the crowd next year (or move it out of the Royal York). Keeping the students out would be a good start, I think.

 

· I attended several of the newsletter writer presentations. I had kept some notes but unfortunately lost them when someone picked up my binder (probably by mistake) during the party on Tuesday night. Here are the ones I remember:

 

o Ian McAvity – believes we’re only weeks or maybe days from a bottom

 

o Taylor Thoen – this was a new speaker this year. Apparently she is a tv personality (not a gold/investing expert) in Canada and does a lot of CEO interviews. I enjoyed her presentation and remember that her website is: www.ceoclips.com. Also she was better looking than all the other newsletter writers combined.

 

o Chris Berry and at least one other speaker were bullish on uranium

 

o Keith Schaefer was bullish on oil refineries along the Mississippi River corridor.

 

o Rick Rule – was in typical form (no powerpoint needed). His thesis was that the good stuff is cheap enough even though the sector as a whole will still trend down for a while. He likes PGMs (i.e. Sprott’s new physical fund) and gave a plug to Friedland’s new promo Ivanplats (Friedland apparently gave a presentation at PDAC but I missed it unfortunately).

 

· Here are notes from either presentations or conversations with companies:

 

o Hecla announced its bid for Aurizon on Monday morning and Phil Baker gave his presentation that morning. Supposedly the offer is accretive on all the metrics except for EPS which won’t turn accretive till 2014. There was (supposedly) no quid-pro-quo with respect to keeping Aurizon management or Board members in the merged company. I didn’t see his presentation but apparently Alamos CEO McClusky slammed Hecla pretty hard afterward.

 

o Midas Gold – this project looks interesting but I’m worried it will take a long time to get permitted

 

o Silvercrest – this story keeps getting better and better. The expansion of Santa Elena is underway and an updated resource estimate & production schedule will be forthcoming. I was originally skeptical about the low grade La Joya project but I’m now confident that they have a plan to develop it successfully. Metallurgy still needs to be confirmed, I think. Production should double for Silvercrest with the Santa Elena expansion and then double again when La Joya is brought online. I already have a large position (due to ~500% capital gains over the past years) or I’d be buying more of this one.

 

o Sandstorm Gold – Nolan Watson promised he would never do another deal similar to the Entrée/Mongolian deal due to significant shareholder complaints.

 

o Continental Gold – I first became aware of this Columbian project at last year’s PDAC but didn’t buy in as I thought the market cap was too high. The price has come off some since then but I think it’s still in that “boring” part of the construction/development phase where the stock price continues to drift down. The project itself is very high grade and they are spending a lot of money developing it right now. This is one to keep an eye on for next year.

 

o Rob McEwen/MUX – still promoting his S&P 500 by 2015 goal. I don’t think he’s going to achieve that in the timeframe left with no better assets then what he has. Still trying to sell the big copper project. Will need more financing for the gold projects this year. Not interested in a stream deal and was critical of mining companies who resort to this type of financing.

 

o Rambler – their production dropped somewhat early in the year due to some equipment problems. The solution is not yet in place but shouldn’t be very expensive. The loan with Sprott will be renewed/refinanced as they can’t pay it off yet. The hot IR chick from last year is no longer with them (big disappointment for me.)

 

 

That’s about all I’ve got time to write up.

Share this post


Link to post
Share on other sites

Endeavour Mining (EDV.t) :

... is merging with an African Gold miner controlled by an Egyptian billionaire Naguib Sawiris, who seems to be a "bright fellow".

And the idea is to create a substantial new African Gold Miner

 

The Sawriris family will have 30% of EDV (and 2 of 9 board seats), and the company gets 55% of the ITY Gold mine, and $63 Million in cash

EDV regards the merger as "accretive." The relationship is meant to be "long term", and Sawriris has agreed to a 2-year standstill agreement

 

No.shares : 413.14 mn + 177.06 mn (30%) = 590.2 mn x $0.63 = $ 372 million, prospective Market Cap

 

EDV.t ... 10-yrs : 5-yrs : vs-GDX / 3-years : vs-GDX : 6-mos : Last : C$0.63

EDV-3yrs_zpsuzklavdo.gif

 

6 months - versus GDX .... update : GDXJ-vs-GDX : SLW-vs-UGLD (3xGold)

EDV-6mo-etc_zps7q7zmxxr.gif

 

Note the Non-confirmation - GDX is back down retesting the lows, but EDV is above them.

If/when gold stocks bounce back, EDV may be one of the super-charged stocks - same with SLW perhaps

 

Looking at the merger - at C$0.58, La Mancha is getting 177million shares, worth approx, US$78million,

after contributing US$63 Million cash and 55% of Ity - that's just $15 million of 55% of the Ity Mine in Cote D'Ivore,

and that values 100% at $27.3 million. EDV mgmt regards the transaction as "highly accretive.".

 

Gold------------- : Old EDV : 100%Ity : Combined : - 45% T : NetComb. :
Reserves, P&P-- : 3.930M : 0.870M : 4.800M :
Cost per Oz.----- : $ 00/oz : $ 09 / oz : $ 00 /oz :
Reserves, M&I--- : 6.900M : 1.600M : 8.500M :
Cost per Oz.------ : $ 00/oz : $ 17 / oz : $ 00 /oz :
Production, 2015 : 580.k oz : 80.k oz : 640.k oz :
==============

 

PRODUCTION:
Gold-------------- : Old EDV : 100% Ity : Combined : Impact of Ity
Production, 2014 : 466.k oz : 081.k oz : 547.k oz : + 17%
All-in. Sust. Cost- : $1010-- : $921 /oz : $997 /oz : - 1 %
Revenues--------- : $ 584 Mn : $100 Mn : $684 Mn: +17%
Operating EBITDA: $ 143 Mn : $036 Mn : $179 Mn: +25%
. . .
6 months, 2015 -- : 255.k oz : 045.k oz : 300.k oz : + 18%
All-in. Sust. Cost- : $ 922 -- : $696 /oz : $888 /oz : - 4 %
Revenues--------- : $ 307 Mn : $052 Mn : $359 Mn: +17%
Operating EBITDA: $ 098 Mn : $027 Mn : $125 Mn: +28%

In the future, Ity's upside will be mainly in a new type of production from CIL

Capital Costs / NPV */ (for the Ity mine)
Heap Leach : $32mn : US$ 18.2 Million, to the end of 2017
CIl projec--t- : $87mn : US$ 219. Million, of which $128.5 mn are direct costs
===
*AT $1,150/ oz.

Share this post


Link to post
Share on other sites

Oh yes, been posting about it the last 6 months over on ADVFN, finally it's time has arrived.

 

From lows of of 4p this year, it's started moving fast the last few days. Turnaround is coming quickly here and well overdue.

 

Making up for other disappointments.

Share this post


Link to post
Share on other sites

Oh yes, been posting about it the last 6 months over on ADVFN, finally it's time has arrived.

From lows of of 4p this year, it's started moving fast the last few days. Turnaround is coming quickly here and well overdue.

Making up for other disappointments.

AAZ touched the intraday 14p today, with little sign of sellers after a mini stock squeeze yesterday. Have to remember the IPO price for this.

 

Should be significantly raking it in this quarter, very bullish on this ones change in fortunes, without getting too carried away.

Share this post


Link to post
Share on other sites

AAZ H2 figures and production update was out today. this really is turnaround year.

 

Containing such snippets as increased production, lower cost efficiencies, more to follow through investment in operating equimpment eg 2nd mill, water purification, local electric sub station and also benefits from a hedge on half forecast gold production. Additional in country benefits of local currency devaluation as all earnings in U.S dollars.

 

There really was not much to like!

 

Shares touched new highs of 20p early in the day, settling at 19.5p :)

Share this post


Link to post
Share on other sites

Some terrific picks here - I wish the thread had received more attention

 

THESE Stocks did very well !! Average gain over 124%

 

Some spectacularly well; ( GZZ, LRA , RRI ) - these were the 3 stocks I liked most.

And at their highs, ALL were well above the initial prices

 

Sym.: Company------- : C$price: Low-to-High: ShOS: MktCap: $Cash : BkVal.: Last !! : +%chg : HighC$ :
AVU : Avrupa Res------ : $ 0.160 : $0.07-$.400 : 55.48 : $8.88m : $0.29m : $0.040 : $0.090 : - 43.7 % : $ 0.25
AZM : Azimut Explor.-- : $ 0.130 : $0.10-$.285 : 37.64 : $4.89m : $1.44m : $0.180 : $0.310 : +138.5% : $ 0.68
ALS : Altius Minerals*- : $ 13.25 : $9.86-15.47 : 39.93 : $529.m : $15.5m : $8.750 : $12.21 : - 7.85 % : $14.06
CKG : Chesapeake Gd: $ 1.540 : $1.39-$2.90 : 44.42 : $68.4m : $28.7m : $1.950 : $3.570 : +131.8% : $ 6.50
GZZ : Golden Valley--- : $ 0.100 : $.075-$0.21 : 99.20 : $9.74m : $2.37m : $0.200 : $0.350 : +250.0% : $0.495
LRA : Lara Exploration : $ 0.305 : $0.20-$0.55 : 31.21 : $9.50m : $0.81m : $0.080 : $1.010 : +231.1% : $ 1.58
NGE : Nevada Explor.- : $ 0.180 : $0.05-$0.35 : 30.91 : $5.56m : $0.03m : $0.250 : $0.345 : +91.67% : $ 0.72
RRI- : Riverside Res. - : $ 0.155 : $0.15-$0.36 : 37.00 : $5.74m : $5.90m : $0.230 : $0.475 : +206.5% : $ 0.60
====
Average Gain of these 8 stocks: +124.8% to yesterday's close - to the High, much better

 

I owned only one (GZZ), and did well with that, but could have held on longer

 

> see thread: http://www.greenenergyinvestors.com/index.php?showtopic=20364

Share this post


Link to post
Share on other sites

Mentioned on U.K miners thread, this could be a big month for AAZ, all the ducks have been lining up again this year after a bit of a false dawn when mining was halted and the market misunderstood reasons I.m.o

 

Anyhow, newsflow been positive and just over a year on bounced back up to a closing mid this week of 29.25p.

 

Interims likely in a week or so, should really show the balance sheet turning healthy. This is well primed now.

Share this post


Link to post
Share on other sites

GCM / Gran Columbian Gold has been a big winner the last few weeks

 

> see thread: http://www.greenenergyinvestors.com/index.php?showtopic=20537

 

How very nice for me:

It's my largest single share position through the convertible bonds.

t has been a long term holding, but I have added to my position over the years,

including another buy of the 8% Bonds just before the latest price surge

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×