My Thoughts On Jaguar Mining's Q412 Earnings Report And Conference Call [View article]
Anand,
I am not too familiar with GSS. I took a look at some of their presentations and reports and it looks like they have some good high grade deposits but are also struggling with operating costs.
I am pretty focused on the above list. I have also started to add some AXU and AUMN which are silver miners with good reserves (stocks have been pummeled).
I am still optimistic on JAG, and believe that management has done a good job so far with the turnaround plan. At this point the big question is what kind of restructuring they come up with for the convertible debt and what happens with the gold price. Gold at $1,300 vs $1,600-1,800 is killing them even with their new lower cash costs. I don't expect the cash costs to fall much more from this level. In terms of the cash cost sustainability, I think it is sustainable because their better production came from higher feed grades. Those higher feed grades are a result of their new mining strategy where they are mining a smaller area and having less cave ins and better supports.
My Thoughts On Jaguar Mining's Q412 Earnings Report And Conference Call [View article]
Anand,
Yes I agree with you that the recent gold sell off is going to make it harder for Jaguar to deliver. The other companies I like in this sector are: SLW, FNV, ANV, PVG, KGC, EMXX, and SAND. I think KGC is probably the most undervalued, but it also has a higher cost structure than the others ($1100-1200 per ounce all in sustaining cost), similar to JAG. KGC has a better balance sheet and staying power, and I like the new management there as well.
My Thoughts On Jaguar Mining's Q412 Earnings Report And Conference Call [View article]
I am long and continue to think that it is a "buy" because I believe that the new management is going to deliver a turnaround. If the update leads you to another conclusion, that means I succeeded in writing an objective article so that people can decide for themselves minus the spin.
My Thoughts On Jaguar Mining's Q412 Earnings Report And Conference Call [View article]
Thank you for the feedback. When I was trying to value Gurupi for this article I realized what a wildcard this asset was. I do think it would be helpful to explain these options better and look at some comparable market transactions so we can understand the potential impact.
I have lost money on Jaguar also. In fact, at this point, everyone invested is underwater unless they purchased in early March. I think given the current market cap ($42M) and the potential value of the company ($200m-$500M)if they overcame their operating problems and debt issues, there is meaningful upside which makes it worth the downside risk of $0 per share (100% loss).
Jaguar Mining - How Is The Turnaround Progressing? [View article]
I have not contacted management and would not expect them to share material nonpublic information with me. However, they will probably have another conference call after Q4 earnings release and I expect them to finally provide some 2013 guidance and maybe some insight into their strategic plan.
JAG is in a difficult position, but their short term liabilities are manageable and due to the long term debt maturity timeline, I do believe they have a genuine opportunity to turn this ship around. I also like the fact that new management has prior experience with exactly this kind of deal, the current CEO had similar success with a turnaround at Breakwater Resources, where the stock went under a $1 during the 2008-2009 crisis and was later sold for approximately $7 two years later to Nyrstar.
Jaguar Mining - How Is The Turnaround Progressing? [View article]
I mentioned those options in last month's article regarding why I place a $5.00 value on the stock. The problem is if the company is not operating from a sustainable cash flow positive position, their negotiations are undermined. Other companies would want to wait for them to fail so they can come in and buy the assets on the cheap. The new management has done a good job in making it clear that all options are on the table, but their primary focus is turning around the operations. Other opportunities should follow suit shortly thereafter.
Jaguar Mining - How Is The Turnaround Progressing? [View article]
I was being conservative as mining companies do not always sell all of their production in the same quarter as it is mined. I do generally agree with your comments and hope you are correct.
Jaguar Mining Is Priced Like A Call Option [View article]
These are all excellent comments.
Point #2 regarding Paciencia is extremely uncertain in my opinion. I agree that Paciencia would need to be restarted in order to hit 150k in annual production. However, I have no insight why the Paciencia margins would improve significantly, other than that new managements' mining approach is indeed succeeding.
Point #3 regarding the convertible debt obligations is semantics. Secured or unsecured if JAG is insolvent on a cash flow basis at the time the debt comes due, the creditors can push them into bankruptcy. The issue that they are unsecured, may involve some strategic moves during the bankruptcy proceeding, but the noteholders are still the largest creditors by an order of magnitude.
I am Long and adding but you have to look at what can go wrong / not just what can go right.
Jaguar Mining Is Priced Like A Call Option [View article]
The possibility of a merger or buyout is not currently priced into the stock. That said, no potential acquirer would buy assets at $10.00 now if they could pick them up for pennies in a bankruptcy liquidation months later. The new CEO is in my opinion, taking the correct approach which is along the lines of - a merger could happen but we are not counting on it to deliver value to shareholders.
My Thoughts On Jaguar Mining's Q412 Earnings Report And Conference Call [View article]
I am not too familiar with GSS. I took a look at some of their presentations and reports and it looks like they have some good high grade deposits but are also struggling with operating costs.
I am pretty focused on the above list. I have also started to add some AXU and AUMN which are silver miners with good reserves (stocks have been pummeled).
I am still optimistic on JAG, and believe that management has done a good job so far with the turnaround plan. At this point the big question is what kind of restructuring they come up with for the convertible debt and what happens with the gold price. Gold at $1,300 vs $1,600-1,800 is killing them even with their new lower cash costs. I don't expect the cash costs to fall much more from this level. In terms of the cash cost sustainability, I think it is sustainable because their better production came from higher feed grades. Those higher feed grades are a result of their new mining strategy where they are mining a smaller area and having less cave ins and better supports.
My Thoughts On Jaguar Mining's Q412 Earnings Report And Conference Call [View article]
Yes I agree with you that the recent gold sell off is going to make it harder for Jaguar to deliver. The other companies I like in this sector are: SLW, FNV, ANV, PVG, KGC, EMXX, and SAND. I think KGC is probably the most undervalued, but it also has a higher cost structure than the others ($1100-1200 per ounce all in sustaining cost), similar to JAG. KGC has a better balance sheet and staying power, and I like the new management there as well.
My Thoughts On Jaguar Mining's Q412 Earnings Report And Conference Call [View article]
My Thoughts On Jaguar Mining's Q412 Earnings Report And Conference Call [View article]
I have lost money on Jaguar also. In fact, at this point, everyone invested is underwater unless they purchased in early March. I think given the current market cap ($42M) and the potential value of the company ($200m-$500M)if they overcame their operating problems and debt issues, there is meaningful upside which makes it worth the downside risk of $0 per share (100% loss).
Jaguar Mining - How Is The Turnaround Progressing? [View article]
JAG is in a difficult position, but their short term liabilities are manageable and due to the long term debt maturity timeline, I do believe they have a genuine opportunity to turn this ship around. I also like the fact that new management has prior experience with exactly this kind of deal, the current CEO had similar success with a turnaround at Breakwater Resources, where the stock went under a $1 during the 2008-2009 crisis and was later sold for approximately $7 two years later to Nyrstar.
Jaguar Mining - How Is The Turnaround Progressing? [View article]
Jaguar Mining - How Is The Turnaround Progressing? [View article]
Jaguar Mining Is Priced Like A Call Option [View article]
Point #2 regarding Paciencia is extremely uncertain in my opinion. I agree that Paciencia would need to be restarted in order to hit 150k in annual production. However, I have no insight why the Paciencia margins would improve significantly, other than that new managements' mining approach is indeed succeeding.
Point #3 regarding the convertible debt obligations is semantics. Secured or unsecured if JAG is insolvent on a cash flow basis at the time the debt comes due, the creditors can push them into bankruptcy. The issue that they are unsecured, may involve some strategic moves during the bankruptcy proceeding, but the noteholders are still the largest creditors by an order of magnitude.
I am Long and adding but you have to look at what can go wrong / not just what can go right.
Jaguar Mining Is Priced Like A Call Option [View article]