Allied Nevada Gold: It's A Gold Mine! [View article]
Fundamentally nothing has changed. The washout we are witnessing in the miners is pretty incredible. The GDXJ is under $15 per share, which is a price few thought we would see, and all while the market is near all time highs. I suspect we are at the tail end of a major bottom. I still own my shares, and will probably increase my position in several names significantly in the next few weeks. Sorry I have been away so long, but work can be pretty demanding.
Thanks for the question. I used 15% as a rough proxy for things like SG&A, taxes, and share dilution from option grants. If I totally removed the estimated 15% in operating expenses, total value per share would only increase from $.03 to $.27.
Silver Wheaton: Future Prospects Are Dimming, But Not Dark [View article]
I agree precious metals are and will continue to be provide an alternative to dollars, euros, yen, and just about every other currency out there. Silver is forming a major bottom, and the company needs to increase their streams, as opposed to accumulating cash while prices are down. At the end of 2013 they lose three of their Barrick streams that accounted for approximately 3mm ounces of production in 2011. Even at $15 in upfront consideration they will have a nice arbitrage profit, and increase their leverage to silver even further. My concern is that if silver goes on another big run, and it could happen quickly deals will become unreasonably expensive, like they were when silver went to nearly $50 per oz in 2011. Accumulate more streams, and increase leverage to silver, even if it is expensive by historical standards, because that's what will benefit investors the most in the long term.
Silver Wheaton: Future Prospects Are Dimming, But Not Dark [View article]
I understand most people are unable to accept anything but a glowing article with zero mention of any possible negatives when it comes to a stock they've fallen head over heels for. Like being in love where your partner couldn't possibly do any wrong. Any comment board about a passionate stock that isn't just a cheerleader piece will have some people acting like the sky is falling. Half of the comments here are from shareholders who though it was an excellent piece, and a few upset people who just wanted to see another puff piece. It is pretty clear you haven't read any of my articles about the miners being extremely undervalued, or silver forming a major bottom. Instead it is much easier to just write someone off to being a pessimist. I guess no acquisitions in 28 months is not even slightly dimming for their external growth prospects, even if it is still a great company that offers solid value (I know it is pessimistic to be a bit less bullish than I was 6 months ago about external acquisitions). That 5mm ounce hypothetical acquisition may very well happen, but to put things in perspective it would only be just over 10% growth coming from external acquisition in 3 years, and at what price. Silver Wheaton is making money hand over first with silver under 30, and they will be making a lot more when silver goes to 50, and then beyond, but that wasn't the topic of the article. Don't forget that 52mm ounces of production in 2013, because that is both of your estimates now. You should know though that they did 25,374 ounces in 2011 and 6,716 ounces in Q1 2012.
Silver Wheaton: Future Prospects Are Dimming, But Not Dark [View article]
Summary: Not saying they aren't levered to silver, because I clear stated they are. I am also not saying they won't do a deal. What I am saying is the deal will not be cheap compared to historical prices. I have a lot of respect for Mr. Morgan, and have only had the pleasure of speaking with him a few times by email. I know SLW is one of his picks, and I like the company too, but analyzing the positive and negative is part of being an analyst. Net net it is pretty clear I am bullish on the company, but a blue skies permabull I am not, not with any investment SLW or otherwise. Every good analyst and investor should play devils advocate with their investments, and focus on the upside as well as the downside. Reread the article and my previous two part analysis. I think you may see my point after reading my responses.
52mm ounces in 2013. I guess that is possible, but the company is only projecting 43mm ounces by 2016. Even adding in your 5mm stream acquisition leaves you high by 4mm and 3 years too early. Please refer to slide 11 of their June Singapore presentation, but it is pretty outdated since it was only done this month.
Silver Wheaton: Future Prospects Are Dimming, But Not Dark [View article]
9) Yes I am familiar with Keno Hill. More potential upside that may or may not happen many years from now. Growth is coming from existing contracts, not new ones, as this was the premise of the article.
Silver Wheaton: Future Prospects Are Dimming, But Not Dark [View article]
8) For the San Dimas mine I have 6mm ounces in 2015 and 2016, but growth to 7mm ounces in 2017 and 8mm ounces in 2018 and after. Possible a bit low in the earlier years, but I am coming in at the high end of your forecast for the remainder of the mine. I guess my projections are the upside case for this mine as opposed to yours.
Silver Wheaton: Future Prospects Are Dimming, But Not Dark [View article]
7) Yes there is opportunity for Penasquito to increase silver production. As an upside case I think mine production output growth should be considered, but the research I publish on this site is the more conservative base case. This provides a margin of safety, and potential upside when doing a valuation. On the other side of your upside case is also a downside case. I don't want to value any company using a blue skies priced for perfection approach, as that would not be conservative. I perfer to think of these opportunities as potential bonuses, as they are not certain. I have SLW's 25% share projected at 7mm ounces per year as stated on Goldcorp's site linked below.
Additionally this has nothing to do with the thesis of the article as it pertains to new acquisition pricing. Growth has come from existing contracts, not new ones.
Silver Wheaton: Future Prospects Are Dimming, But Not Dark [View article]
6) This is simply a disclosure issue. I provide unbiased research, as the readers comments in this and other articles mention numerous times. As an analyst, I do not take a blue skies approach. Potential risks should be disclosed to allow readers to make the most informed decision. I mentioned they were covered by 3 other mines through 2015, but just as the company's financial statements disclose investment risks, so do I. After going mine by mine and estimating the annual output of each mine through 2039 it is clear Pascua-Lama is at least 20% of the company's future streams at this point in time. For this reason, I personally feel it would be inappropriate as an analyst not to disclose the protests, and environmental issues going on at the site. I never said the mine wouldn't enter production.
Silver Wheaton: Future Prospects Are Dimming, But Not Dark [View article]
5) Please refer back to comment number three. Not stating everyone will get credit, because obviously they wont. Simply noting that strong margins, balance sheets, and future profitability outlook decrease the industry's need for this type of funding, but the need is obviously not zero.
Allied Nevada Gold: It's A Gold Mine! [View article]
Silver Wheaton: Hudbay Acquisition Analysis [View article]
Thanks for the question. I used 15% as a rough proxy for things like SG&A, taxes, and share dilution from option grants. If I totally removed the estimated 15% in operating expenses, total value per share would only increase from $.03 to $.27.
Allied Nevada Gold: It's A Gold Mine! [View article]
Facebook Shares: Click Dislike [View article]
Silver Wheaton: Valuing The Silver Giant (Part 1) [View article]
Chipotle: An Actionable Short [View article]
Silver Wheaton: Future Prospects Are Dimming, But Not Dark [View article]
Silver Wheaton: Future Prospects Are Dimming, But Not Dark [View article]
Silver Wheaton: Future Prospects Are Dimming, But Not Dark [View article]
Not saying they aren't levered to silver, because I clear stated they are. I am also not saying they won't do a deal. What I am saying is the deal will not be cheap compared to historical prices. I have a lot of respect for Mr. Morgan, and have only had the pleasure of speaking with him a few times by email. I know SLW is one of his picks, and I like the company too, but analyzing the positive and negative is part of being an analyst. Net net it is pretty clear I am bullish on the company, but a blue skies permabull I am not, not with any investment SLW or otherwise. Every good analyst and investor should play devils advocate with their investments, and focus on the upside as well as the downside. Reread the article and my previous two part analysis. I think you may see my point after reading my responses.
52mm ounces in 2013. I guess that is possible, but the company is only projecting 43mm ounces by 2016. Even adding in your 5mm stream acquisition leaves you high by 4mm and 3 years too early. Please refer to slide 11 of their June Singapore presentation, but it is pretty outdated since it was only done this month.
http://bit.ly/KPFGMj
Silver Wheaton: Future Prospects Are Dimming, But Not Dark [View article]
Silver Wheaton: Future Prospects Are Dimming, But Not Dark [View article]
Silver Wheaton: Future Prospects Are Dimming, But Not Dark [View article]
Silver Wheaton: Future Prospects Are Dimming, But Not Dark [View article]
Additionally this has nothing to do with the thesis of the article as it pertains to new acquisition pricing. Growth has come from existing contracts, not new ones.
http://bit.ly/L5o4NQ
Silver Wheaton: Future Prospects Are Dimming, But Not Dark [View article]
Silver Wheaton: Future Prospects Are Dimming, But Not Dark [View article]