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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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  • 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!
  • Dynamic, Modern, Small Cap Websites MUST Stand Out


    Dynamic, Modern, Small Cap Websites MUST Stand Out
    Many small cap company websites leave much to be desired….


    In these opening paragraphs I describe an, "Old School" corporate website. It looks like it was made 10 years ago because it was. No one knows much about website design or how to place information in desired locations. Therefore, the homepage is a tragic mess of unorganized, dated material. Articles from 2012-13 are linked, but the links don't work. "Analyst coverage" by analysts who no longer cover the company or by firms that no longer exist. Recent, critically important industry events are not referenced. The latest presentation is from Feb 2014, and capital structure from Sept 2013. Several management changes have transpired and the company's name has changed, twice. Why would anyone invest in a company like this?

    Trading volume in small cap stocks has collapsed, allowing retail investors to buy oversold stocks that bigger investors would never look at. Several sell-side research firms have departed, leaving hundreds of small cap companies unfollowed. This is not necessarily a bad thing. Corporate websites can serve to bridge the gap in a very positive way, or be an embarrassment. A company's website is extraordinarily important as a tool for engagement, attracting serious visitors to seek more information.

    I divide sites into two camps, "Old School" and "Dynamic Modern." Even though I'm an Old School person, Dynamic Modern sites are clearly superior. Serving a visitor's needs AND anticipating information that a visitor might seek, these are prerequisites. Dynamic Modern's new features and functionality are completely within my Old School grasp. Dynamic Modern sites are robust, idiot proof. With junior miners, grade is king, sometimes cash is king. On Dynamic Modernsites, Fast is king. By fast, I'm not referring to the speed at which a web page loads, but the speed that information is posted. Websites need to evolve week by week. That means that they must also be Smart. Too much information scares readers away. Bare bones sites require extra navigation, causing viewers to bolt.

    In a fast paced world, a Dynamic Modern website stands out

    Even Fast and Smart are not enough to be at the very top of the heap. The best sites are relentlessly Relevant. Websites that aggregate industry news and press releases are Fast, but lack focus. FAST IS EASY. Smart and Relevant much less so. Fast, Smart and Relevant. This is where things get interesting. A knowledgeable person has to be in charge of Fast, Smart and Relevant.

    That person has to filter relevant information coming through the gigantic Internet pipe. Fancy algorithms aren't the answer. A single person can routinely update a website and presentation. When it comes to incorporating social media, all hands on deck. Social media for Old Schoolers is not intuitive or easy to grasp, it's NOT idiot proof. Therefore, help on the social media side may be required. However, once the social media stuff is bolted on, it usually doesn't need to be changed.

    Continue Reading...

    Sep 28 2:19 PM | Link | Comment!
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