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In 2011 Peter Epstein, CFA, MBA left a $3 billion hedge fund where he was a senior analyst to help increase awareness of a number of small cap companies in which he's invested in. Please see: On TWITTER: @peterepstein2 Mr. Epstein formed MockingJay, Inc., a consultancy for... More
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  • Skeena Resources, Gold Junior Buying Assets, Aggressively Drilling
    Skeena Resources, Gold Junior Buying Assets, Aggressively Drilling

    By Peter Epstein, CFA, MBA http:/

    Skeena Resources Limited (TSX.V: SKE) ["the Company"] announced the acquisition of 100% of the GJ Property, "GJ" from majority owner Teck Resources Ltd. (TSX: TCK) and 49% partner, NGEx Resources (TSX: NGQ) ). Skeena Resources picked up GJ for a song. These days, when no one wants to (and can't afford to anyway) explore, drill, develop or buy assets, Skeena is on the hunt. Recall that the Company recently relinquished an acquisition attempt of Dolly Varden Silver (TSX.V: DV) when CEO, Walter Coles and team couldn't get it at a rock bargain price (my opinion only). The deal announced on October 6th is important in a number of ways,

    ++ A low-cost, long-term call option on the price of copper,

    ++ Diversification into a 2nd prospective opportunity, adjacent to the east of Skeena's Spectrum Property

    ++ Substantially more property (GJ roughly 10x the size of Spectrum) and the flexibility to use it in synergistic ways,

    ++ Diversification into a 2nd commodity, copper. No longer solely a gold play,

    ++ GJ includes the Donnelly & North Donnelly, porphyry copper-gold deposits, with a historic Measured & Indicated resource of 1.1 billion lbs copper & 1.8 million ozs gold, according to a NI 43-101 technical report from 2007, [Note: this data needs to be updated, M&I figures are not currently NI 43-101 compliant]. {Note: the yet to be re-submitted, no longer complaint resource, is contained in well under 5% of the entire land package.}

    ++ More than $30 million in exploration work done at GJ by various operators since the mid-1960s, including nearly $25 million spent by Teck & NGEx alone between 2000 and 2014. In today's dollars I image that $30 million would be considerably higher.

    Can anyone throw cold water on any of my six claimed benefits? In my opinion, this is very good news, an attractive acquisition, with strong optionality, even before considering very appealing transaction terms. Red Flag? Why would Teck & NGXe abandon this property given that combined, they and predecessors had spent more than $30 million on GJ dating back to the mid-1960s?

    That includes nearly $25 million spent by Teck & NGEx alone between 2000 and 2014. Is it that since Teck and NGXe are under pressure to curtail cash outlays, lower debt, slow spending on their pipeline of assets and reduce headcount?

    Is this a vote of non-confidence in DJ since Teck and NGXe sold it instead of another asset? NO! DJ was the definition of a non-core asset. Neither Teck's nor NGXe's corporate websites or presentations made a single reference to GJ. Red Flag resolved.

    Continue Reading...

    Oct 09 1:23 AM | Link | Comment!
  • No News Is Good News For Near-Term Producer Orinoco Gold
    No News is Good News for Near-Term Producer Orinoco Gold

    by Peter Epstein, CFA, MBA posted in: Brazil, Gold, Interviews, Orinoco Gold

    My prior article on Orinoco Gold (ASX:OGX) (NYSE:ASX) (OGX.AX) was on August 12th when the stock traded at A$ 0.09 per share. Recall, Orinoco Gold is an Australian (ASX-listed), Brazilian-focused gold company. The Company is targeting first production from its 70% owned, high-grade Cascavel Gold Project within 4-5 months. What's happened at Orinoco since my article in August? Essentially nothing. End of story? No. The absence of bad news for a soon to be producing gold company in Brazil or elsewhere is actually very good news. Orinoco is on time and on budget with a cash cushion for unforeseen contingencies.

    When MD Mark Papendieck talks, people listen…. and buy shares

    I wish I could claim that my compelling article in August sparked a 100% gain in the share price, but that would not be true. The spotlight largely belongs to Managing Director Mark Papendieck who has tirelessly spent the past several weeks on the road telling and retelling the story. Obviously, Mr. Papendieck has a very good story to tell and expertly articulates it. Behind the scenes, but equally important, is Papendieck's management team and Board who share in the lofty accomplishment of generating no bad news. Recall that 9 of the 12 listed personnel on Orinoco's website have either direct exposure to Brazil or are long-time experts in mining or both. [Please see list of Management & Board members.] As yet another reminder, please consider the credentials of Orinoco Gold's Co-Founders. [Note: passage from my prior article]

    Managing Director, Mr. Mark Papendieck, Diploma of Law from the NSW Legal Practitioners Admission Board (Dip. Law, NSW LPAB).

    Chief Geologist, Dr. Marcelo De-Carvalho, (Metalogeny), PhD (Metalogeny & Geochemistry), CREA.

    President Brazil Operations, Dr. Klaus Peterson, M.Sc (Mineralogy & Petrology), PhD (Mineralogy & Petrology), AusIMM, CREAM.Sc (Mineralogy & Petrology), PhD (Mineralogy & Petrology), AusIMM, CREA.

    Not only is Cascavel shovel ready, permitted and funded through to production, it's also a high-grade gold mine. How high grade?

    The Cascavel Project hosts high-grade, structurally-controlled coarse gold shoots, where underground sampling has returned bonanza grades including 15 metres grading 88 grams of gold per tonne. Bulk samples from the Cuca winze (350m north) and the nearby Mestre winze (90m south) have recorded grades of 27g/t gold (2.8 tonnes) and 39g/t gold (500kgs) respectively.

    Continue Reading...

    Oct 07 3:37 PM | Link | Comment!
  • Pure Energy Minerals Ltd, A Value Stock Deserving More Respect

    Pure Energy Minerals Ltd, a Value Stock Deserving More Respect

    Peter Epstein, CFA, MBA whole article, @peterepstein2

    Anyone following the lithium sector and Pure Energy Minerals (TSX-V:PE) (FRANKFURT:A111EG) (OTCQB:HMGLF) knows that on September 16th the Company announced the signing of a conditional supply agreement with Tesla Motors Inc. (NASDAQ:TSLA). Now that the dust has settled, it's time to take a closer look at Pure Energy Minerals.

    Herein, is a rough comparison of valuations, including of a newly producing company, Orocobre Ltd. Recall that Pure Energy's conditional supply agreement is only the second announced by Tesla, both for lithium. The other is with Bacanora Minerals. The merged Western Lithium & Lithium Americas, is also a useful comparison.

    A simple valuation exercise

    Orocobre reached initial production this year. Its Enterprise Value, "EV" [all figures in C$] is ~ $275 million (Note: Orocobre owns 66.5% of the equity in the producing lithium asset, with Toyota and the local government owning the remainder). Bacanora has an Enterprise value of ~ $135 million. Western Lithium's EV (post Lithium Americas merger) is ~ $72 million and Pure Energy Minerals' EV is ~ $36 million. How does one compare these 4, each at different stages, each with company specific challenges and attributes?

    First off, including the Major lithium producers in the valuation exercise, FMC Corporation (NYSE:FMC), Albemarle Corporation (NYSE:ALB) and Chemical & Mining Co. of Chile (NYSE:SQM) is an impossible task. Each derives substantial revenue from non-lithium activities, i.e. they're not pure-play lithium companies, not even close from an investment perspective.

    Pure Energy Minerals trades at a large valuation discount, warranted?

    Pure Energy Minerals trades at an 87% discount EV to Orocobre, a 73% discount EV to Bacanora and a 50% discount EV to Western Lithium. Are these substantial discounts warranted? On average, that's a 70% discount to the other 3 pure-play lithium companies. In my opinion, Pure Energy is trading cheap vs. these select lithium entities.

    Clearly, I like Pure Energy Minerals. I like Western Lithium and a smaller company with property in both Nevada & Argentina, Dajin Resources. I'm on record proclaiming that lithium demand could double every 3 years. These particular juniors have very strong upside potential over the next 6-18 months. A rising tide lifts all boats. Other lithium juniors could be home runs, however it would take several years for these out-of-the-money junior's ships to come in.

    That's why Pure Energy's 8,000 + acre lithium brine project, containing 816,000 metric tonnes of Lithium Carbonate Equivalent, (NI 43-101 compliant Inferred resource, July 2015) is special. Located next to the only producing lithium mine in North America in Clayton Valley, Esmeralda County, Nevada, halfway between Las Vegas and Reno. Infrastructure, labor, power, roads and equipment are available. This is Nevada, one of the safest and most prized jurisdictions on the planet.

    Continue Reading:

    Oct 01 12:39 PM | Link | Comment!
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