Jaguar Mining Can Easily Go Lower 10 comments
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Here is a fun little excerpt from NFTRH50 that came after some extensive analysis on the broad market (and its bearish reverse symmetrical triangle), junk corporate debt, commodities and precious metals:
Finally, let’s look at former and likely future NFTRH holding, gold miner Jaguar Mining (JAG). I wrote somewhere recently that Wall Street and the financial services establishment uses conventional investors as fuel, as food. Well, how about that miracle rise in JAG, busting higher after NFTRH sold out? Was the stock on its way ‘to da moon’ leaving me to cry in my beer? No, it was just the company’s management planning a debt offering and politely looking the other way while some financial pigs who were perfectly capable of moving a fairly low volume stock, did their thing.
Maybe it is because I run a company and have dealt with many other companies, large and small, but I do not get the investor mentality. I have dealt with so many inept corporations (large and small) and myopic managers in my life that I prefer to invest in myself and trade these clowns. This is not to say there are not exceptions, but folks, businessmen are generally nothing but card carrying yes men going along and getting along – at best. There are always exceptions however, and these people I consider investing in.
So, it’s nothing personal and someday I will likely attempt to capitalize on Jaguar mining once again, as I have several times coming out of Armageddon ‘08.
Support is noted in the 7’s and 8’s, but JAG can easily go much lower for a crack at the SMA 200 or strong support at around 5, given certain macro backdrops.
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This article has 10 comments:
Rich
Cannot argee more with what "Mayascribe" said in the comment to that article: "A quick expansion to this article taken right from Jaguar's annual reports is that they have expanded production from 70,000 ounces of gold in 2007, to 115,000 ounces in 2008, and expects to be producing 700,000 ounces in 2014. A ten fold increase in seven years." They know what they are doing and they do it well. Together with their excellent exploration properties (think ) quite explosive mixture for stock market success.
True - every stock ca go lower in the mean time, it's something wonderful we're all waiting for: another great buying opportunity.
expecting increase analyst coverage for JAG....
Volume has increased significantly....
as expected short interest has also increased...
but a takeover is certainly not remote...
fully unhedged miner...
ABX just threw their hedgebook...
The focus was not to be on the 'can go much lower' part. But that's up to SA's editors to decide. That said, some bullishness I see in these responses tells me I can get JAG back well lower, because the entire sector is going with a stock market that is likely in its latter stages for this move.
When I was buying JAG at 2 bucks, the component of its tricky management was way more than discounted. Now? Not so much.
I think Rich's point about Jaguar being unhedged is a key reason not to short this stock.
Mining companies general report two costs: cash costs and total costs. Cash costs are those which take place at the mine site, which can be impacted be the number of ounces removed from the ground and by the costs of supplies to make it all happen.
Some of the input costs in mining are diesel fuel, electricity, explosives, machinery parts and labor. During 2007 and 2008, for example, at a time of high energy costs, inputs throughout the mining industry zoomed. At the same time, however, prices of mined commodities were skyrocketing as well, at a pace faster than the cost of inputs. This was true with gold and silver as well as with other metals.
A significant cost for open-pit gold mines is in the energy it takes haul massive amounts of rock. Each ton of ore might contain only about one-tenth of an ounce of gold. With gold at $900 an ounce, each ton is worth about $90. But it's worth the cost of a $2 million haulage truck because it can carry 300 tons or more in each trip. That makes a load worth a gross of $27,000. (Cut that in half, since a mine might have to move a ton of waste to get to the ton of ore.)
But these huge trucks, with 2,000-gallon fuel tanks, burn tremendous amounts of diesel, amounting to perhaps 25 percent of total cash costs.
Underground mines, such as the deep mines of South Africa, substitute electricity for diesel fuel. This energy must move massive amounts of rock as much as 2 miles to the surface. These ores are considerably richer than the material found in the large open pit, so each ton of underground-mine ore might contain half an ounce of gold and not require an accompanying ton of waste to be removed.
Open-pit mines also need large amounts of explosives. Today's blasting agent is ammonium nitrate (garden-variety fertilizer) mixed with fuel oil. This is manufactured from ammonia, which is a product of natural gas and thus dependent on the price of the feedstock. At the same time oil prices were rising, so were natural gas prices, so mining was squeezed by those additional costs as well. In a declining market for energy products, mining benefits.
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jaguarmining.com
Obviously, Gary, you did not read the presentation before authoring this article. At Tickerspy.com, JAG is only second to Nova Gold (NG) in % increase since the March lows. Yes, there's been a pullback--there was a $150M secondary--bought up in a snap of the fingers; amazingly and brilliantly timed right on top of big boy Barrick's $4B near simultaneous offering, also snapped up in a snap of the fingers. The difference? Barrick used their money to pay off hedges. Jaguar is using their money to increase their production.
Jaguar has hit or exceeded every goal and is rapidly heading from junior to mid-tier status.
A $5.00 stock? That's almost laughable. Jag is a $25 to $30 in the making within the next three years. Maybe more, if inflation comes.
The chart tells me that it is coming down to one of the green lines I drew on there. But if there is a downside event in the sector, don't rule out the 6 area.