MUX is very volatile because of the stage it is in (limited production, trying to earn/raise funds for future builds). I maintain a long position that I have accumulated over multiple years and another position that I trade in and out of to smooth the volatility a little bit and take advantage of oversold conditions. MUX was very oversold... this could be due to multiple things including the move down in silver and gold, liquidation from funds that can't hold stocks below $2/share, and a growing short position. Shorts are very active in MUX which only adds to the volatility. If you're going to stick with MUX for several years to hopefully reap the rewards of their aggressive growth goals, I would use the big moves down to average into your core holding. If you're just going to trade in/out of the stock regularly, I suggest you watch the charts very closely. There's also a great thread on silicon investor that has some members that do great trade analysis: http://bit.ly/wKTrId
MUX has made a significant move over the last few days, so it wouldn't surprise me to see it pull back again, but I still think the multi-year outlook is positive and should yield much higher share prices. There's been very good exploration news released about the El Gallo property, and production costs start falling off dramatically after 2013 if EG2 is built on time. I firmly believe everything presented in this article and the news releases from MUX since then continue to show a positive long-term story. Their annual meeting is coming up in a couple of weeks, so I would definitely listen in on that to hear what management has to say before you decide whether you want to keep trading it or start building a long position that you intend to hold.
Since the Right's Offering was initiated at $2.25, I use that as a value target -- a share price below that seems too cheap based on the RO having been oversubscribed.
MUX put up a new corporate presentation on 4/18... worth a look: http://bit.ly/17ZIDmO
Thank you, I appreciate you taking the time to read it. I probably look silly to most readers because of the share price performance, but MUX is a compelling story. The next few years will be interesting.
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I actually am liking COP more. I sold COP after they spun off PSX and have added to XOM and PSX since then, but now I am leaning towards exiting XOM for COP. COP and PSX together looks like a better growth, dividend, and PE play to me.
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Separate, but same CEO/Chief Owner, Richard Brissenden is on both boards, both companies share the same office building, if not the same office space, in Toronto.... I think it is highly likely that Lexam VG will be merged into McEwen Mining within the next few years. My guess is after MUX's El Gallo 2 and Gold Bar builds are completed. If Rob wants to turn MUX into another Goldcorp, rolling his exploration companies with promising properties into MUX is how he'll get it done, in my opinion.
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As Los Azules grows, it's more unlikely McEwen will sell it for only a penny or two per pound of copper, not to mention that it is full of other minerals as well. Rob McEwen has the personal means to fund the construction of EG2 and Gold Bar himself. Unless BMO finds a buyer for LA that is going to pay a good value for it, I'd rather see them hold onto that land and fund EG2 with reasonable debt or by Rob loaning the money to the company or increasing his ownership in the company. He recently exchanged his MAQ shares into common MUX shares, so he is in the same boat as the typical shareholder. The stock performance sucks, investor sentiment towards miners is horrible, but the long term prospects of this company remain good. You also have to keep in mind that there is a huge short presence and activity depressing the share price--eventually they are going to have to cover. Rob McEwen didn't build Goldcorp overnight; this endeavor is going to take time as well. The upcoming annual shareholder meeting should be interesting to listen in on. I'm sure shareholders are going to have a lot of questions, and I'm hopeful management is going to have a lot of good news to share.
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That's simply not an accurate statement.
Margins are certainly compressed with gold lingering around $1,400, but that's still above cash cost estimates and all-in sustaining cost estimates, and both producing mines are generating operating cash flows. What's more, 2012 results actually showed their costs came in below estimates, so it's reasonable to assume that they are conservative in estimating their costs.
You might want to review the 2012 full-year results and 2013 estimates again: http://bit.ly/178mwcA
"TORONTO, ONTARIO--(Marketwire - March 11, 2013) - McEwen Mining Inc. (NYSE:MUX)(TSX:MUX) is pleased to provide a summary for its fourth quarter and full year operating results, including 2013 production and cost guidance, for its mines and projects in Argentina, Mexico and Nevada. ...
Estimated 2013 production is expected to grow by 24% to 130,000 gold equivalent ounces (72,310 gold ounces and 3,000,000 silver ounces) at a cash cost between $800 - $900 per gold equivalent ounce. All-in sustaining costs are estimated at $1,200 - $1,325 per gold equivalent ounce. All-in sustaining costs include operational, development, exploration, royalties and reclamation costs."
They also say that 2013 estimates are higher vs. the life of El Gallo's because of the need for "higher pre-stripping required to access deeper mineralization and lower grades, early in the mine life." Although, this could easily change thanks to the new mineralization they've identified between planned pits. Of course, Life of Mine total costs/ounce are far lower.
Now, is planned exploration and construction going to eat up all cash flow, reserves, and more? Yes, but that's not the same as saying their current operations aren't running profitably.
Again, I just don't think you have portrayed a current or complete overview of MUX in this article. And, you haven't presented any information that hasn't been previously covered by other SA writers either; in fact, some of it is arguably dated.
Here's a link to the most recent corporate presentation that gives a very thorough overview of what's happening now and what is planned at MUX: http://bit.ly/12sMQNs
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You can't expect an emerging junior that is transitioning from exploration alone into exploration/production and further mine building to be a quick winner. All capital raised and earned is being reinvested in expanding resources, procuring equipment and building out facilities. MUX is not a scam, but if you're going to invest or trade it, you need to understand what the company is doing and the time frame in which it expects to produce free cash flow.
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I may be mistaken, but I think most financial websites have the dividend rate incorrectly stated because SDRL accelerated the first dividend payment for the year to give shareholders a tax benefit.
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It's not uncommon for miners to hold metals as part of their treasury if their margins are being squeezed or if they see higher prices in the future. I know Rob McEwen favors holding at least some metals reserves, but they will have limited capacity for this as they're working to fund an aggressive drill program and the El Gallo Phase 2 build. Yes, margins are being pressured here, but market prices are still holding above their all-in costs... for now at least. CAPEX subsides as mine construction ends and production matures. MUX is a gamble on its growth prospects. The merger in 2012 that created MUX transformed the company. If you go through their corporate presentations and other press releases you will see that the production growth over the coming years is significant and their costs decline. El Gallo 1 is running well and the resources across the property are expanding, and the 49% owned San Jose mine is operating well, too. The headwinds right now are the funding for El Gallo 2 and pressured metals prices. As Los Azules resources grow, it's unlikely McEwen will sell it at a fire sale price, so the company will either have to take on debt to fund EG2, Rob can backstop it, or they can do another rights offering, but with shares under pressure that seems more unlikely now. I suppose they could also delay EG2 until EG1 and SJ production can provide more funding for it. The stock is certainly volatile enough to trade frequently and profit from if you study the charts. For the long investor, you have to approach it with at least a 3-year-out view.
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No offense, but it doesn't sound like you know this company besides what you gathered from very quickly browsing through a couple pages of its website. MUX is not based in Colorado either, McEwen Mining is based in Toronto. You make no mention of MUX's aggressive drill program across its properties that continues to expand resources and mine life estimates and additional official releases are due out in the coming months. Los Azules is more resource rich than imagined, El Gallo exploration continues to reveal new mineralization, and the San Jose mine is running well despite the conditions in Argentina. You paint an incomplete picture of MUX and management's plans for building out future mines.
Management has already said that the exploration budget in Argentina would be winding down in Q3 and dividends and intracompany loans would begin being paid back to MUX, so they will be getting funds out of Argentina. Also, any parties interested in LA have to sign a non-disclosure agreement, so it's unknown how the sale talks are going; but considering the drilling results, and that the current government is unlikely to be in power for the decades it would take to mine the entire resource, I think a sale or JV will come together.
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MUX getting crushed still. Really disappointing considering all of the positive developments coming out of the company. Must stay focused on the long-term.
I'm starting to wonder if Rob will go for a partial sale or JV instead since the resource continues to grow and they're looking further into the economic feasibility of the project and producing copper cathode over the concentrate. I don't know if they would put all that effort into additional testing and studies if they were simply going to unload the asset. I'm eager for more news.
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MUX has made a significant move over the last few days, so it wouldn't surprise me to see it pull back again, but I still think the multi-year outlook is positive and should yield much higher share prices. There's been very good exploration news released about the El Gallo property, and production costs start falling off dramatically after 2013 if EG2 is built on time. I firmly believe everything presented in this article and the news releases from MUX since then continue to show a positive long-term story. Their annual meeting is coming up in a couple of weeks, so I would definitely listen in on that to hear what management has to say before you decide whether you want to keep trading it or start building a long position that you intend to hold.
Since the Right's Offering was initiated at $2.25, I use that as a value target -- a share price below that seems too cheap based on the RO having been oversubscribed.
MUX put up a new corporate presentation on 4/18... worth a look: http://bit.ly/17ZIDmO
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Margins are certainly compressed with gold lingering around $1,400, but that's still above cash cost estimates and all-in sustaining cost estimates, and both producing mines are generating operating cash flows. What's more, 2012 results actually showed their costs came in below estimates, so it's reasonable to assume that they are conservative in estimating their costs.
You might want to review the 2012 full-year results and 2013 estimates again: http://bit.ly/178mwcA
"TORONTO, ONTARIO--(Marketwire - March 11, 2013) - McEwen Mining Inc. (NYSE:MUX)(TSX:MUX) is pleased to provide a summary for its fourth quarter and full year operating results, including 2013 production and cost guidance, for its mines and projects in Argentina, Mexico and Nevada. ...
Estimated 2013 production is expected to grow by 24% to 130,000 gold equivalent ounces (72,310 gold ounces and 3,000,000 silver ounces) at a cash cost between $800 - $900 per gold equivalent ounce. All-in sustaining costs are estimated at $1,200 - $1,325 per gold equivalent ounce. All-in sustaining costs include operational, development, exploration, royalties and reclamation costs."
They also say that 2013 estimates are higher vs. the life of El Gallo's because of the need for "higher pre-stripping required to access deeper mineralization and lower grades, early in the mine life." Although, this could easily change thanks to the new mineralization they've identified between planned pits. Of course, Life of Mine total costs/ounce are far lower.
Now, is planned exploration and construction going to eat up all cash flow, reserves, and more? Yes, but that's not the same as saying their current operations aren't running profitably.
Again, I just don't think you have portrayed a current or complete overview of MUX in this article. And, you haven't presented any information that hasn't been previously covered by other SA writers either; in fact, some of it is arguably dated.
Here's a link to the most recent corporate presentation that gives a very thorough overview of what's happening now and what is planned at MUX: http://bit.ly/12sMQNs
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