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  • Why Bitcoin Matters [View article]
    I am no expert on this subject and felt the same as you until I read this piece. I think you need to look at bit coin in two ways, one as a medium of exchange, just like money as the bit coin can be exchanged into currency as soon as it is received. There is no speculative risk when you do that. The second way is to view bit coin as a speculative trade. If you hold it, it can go up or down. Those are 2 very different approaches.
    Jan 27, 2014. 01:12 PM | 1 Like Like |Link to Comment
  • Why Bitcoin Matters [View article]
    Yes Memshu I do know someone that did get hosed, all retirees including me. Zero interest rates have forced people into speculative assets to get any yield. Zero interest rates are just like taxation; they are taking money from those who need it to live and have saved all their lives to have enough in retirement. Zero interest rates and money printing have caused bubbles such as the recent housing bubble. I think that may have hosed a few people.
    Jan 27, 2014. 01:08 PM | 1 Like Like |Link to Comment
  • Occidental Petroleum: 11% Upside Plus Dividends [View article]
    Thanks for pointing this out. It is a significant point that the author missed.
    From reading the transcript of the 3Q call the company is looking at selling a minority stake in the MidEast NoAfrica operations that would lower their political risk. They also want to sell their midstream operations. Most interestingly, they are considering spinning off their CA Monterey Shale operations. The CA operations are in the expansion stage and require a lot of capital. The company pointed out this is not consistent with a dividend paying entity. So a separate company would be able to retain earnings to grow that business. The monterey shale is one of the biggest reserves in the country; however, it requires a great deal of drilling expertise. OXY is the largest land holder in the area with 2.1M acres. OXY has demonstrated its ability over the last several years. Venocco, the second largest land holder now private, came up short with their initial wells.
    So the reason to really look at OXY is their divestiture plans and their potential to increase their returns on capital. From just a quick look, they would be reducing their political risk and maximizing the value of some of their biggest assets. This is not a steady-as-you-go company. Developing CA has huge potential and optimizing its capital structure should reward shareholders. Perhaps that is why it is trading at a high PE.
    Any meaningful additional insight would be appreciated.
    Jan 13, 2014. 02:27 PM | 1 Like Like |Link to Comment
  • Vanguard Natural Resources Makes A Strategic Shift Towards Natural Gas [View article]
    Thanks for the well done article. Would you please expand on the comment that upstream MLP's are a house of cards in the event the financial markets collapse?
    Is it because upstream MLP's have to replace production and, as they pay out their cash flow, have to raise more capital for cap ex? In other words, they are essentially investment banking junkies?
    What attracted me to VNR a couple of years ago was their first foray into NG where they got a large amount of hedges with the purchase of the resources. That allowed them to hedge almost 100% of their NG production out 5 year. Seemed plenty of time to for NG prices to rebound. In the meantime, they were making money at their hedged price.
    The company seems to have very disciplined management and a good margin of safety and insulation from further declines in NG prices. Therefore, dividend should be pretty stable even if they can't access public markets.
    Appreciate your help
    best regards
    Jan 6, 2014. 02:26 PM | 1 Like Like |Link to Comment
  • A Sober Look At InterOil's Deal With Total SA [View article]
    Thanks
    So if I am right and there is the possibility that IOC may have difficulty in raising the cash required to buy out the minority stake, has any figured out what would happen if they are unable to get that first piece done?
    Seems to me that the nay sayers are all focused on the tremendous upside to the play. However, there seems to be substantial risk and uncertainty involved with getting to actual production as Mr. von Altendorf points out. h2o2 may be correct but IOC still has to drill additional, expensive delineation wells and they may not have the funds to do so after they buy out the minorities. I have not read the agreement so I may be missing something. Please let me know where I am wrong.
    Thanks and best regards. Very in-depth thinking by all here. Good work
    Dec 30, 2013. 11:48 AM | Likes Like |Link to Comment
  • A Sober Look At InterOil's Deal With Total SA [View article]
    Help me out here. The company should get $613M upfront upon the minority interests agreeing to be bought out at some price between $248M and $1.2B?? The company has to use that up front payment to possibly pay off the convert debt of $70M and it has to drill some delineation wells that will be expensive. If the buyout number comes in on the high side, where would they get the cash to do all of the above - the early interim resource payment?? Am i correct in assuming that there are some real financing risks here?
    Dec 29, 2013. 02:25 PM | 4 Likes Like |Link to Comment
  • Allied Nevada Gold - Huge Relative Value And Ripe Takeover Target [View article]
    How can you say this company will not go bankrupt??? I could very easily go bankrupt. All that has to happen is for gold prices to go down to $1100 and they will be burring cash. This is the risk to ANV and all other miners that did not hedge gold prices, which I don't think any did. If you believe that gold will go back up, which it may, ANV will have a big pay off. However, if gold does not go back up you get wiped out - zeroed. That is not an asymmetric bet - one with up side and minimal downside. There are a lot of reasons to be bullish on gold but don't say the company can't go bankrupt. It can. There are other substantial risks here as well - dilution and an unfavorable stream deal as pointed out above.
    Dec 22, 2013. 12:40 PM | 1 Like Like |Link to Comment
  • Allied Nevada Gold - Huge Relative Value And Ripe Takeover Target [View article]
    Note that old management that made the mistakes is gone.
    Dec 22, 2013. 12:21 PM | 2 Likes Like |Link to Comment
  • Allied Nevada Gold - Huge Relative Value And Ripe Takeover Target [View article]
    Itinerant you make a good point. Assuming they figure out a more optimized way to mine the sulfides, they still have to spend $500M to build a mill to grind the crushed material to powder.

    Regarding the comparison to Pasqua Lama, ANV's original estimate to get the mine fully operational with the mill was $1.243B. Dividing that by the 20.793 P&P reserves, you get $60 per oz. So you are spot on in that the reserves are very cheap at this mine. But any purchaser would have to lay out the $500M to finish the mill.

    The other point about this mine is that it has a very large amount of silver deposits that can significantly reduce their adjusted gold production costs. Going back to their Jan 24, 13 presentation, they expected production of gold to be 582k per year from 2015-24 and silver to be 29M ozs, which they predicted would drive the average cash cost to $166 per oz. Point being that Hycoft has the potential to be a very cheap operation. However, that may have been too optimistic. They have a ways to go to figure out how to optimize mine production.

    An additional favorable point is that next year their Merrill Crowe plant will be operational and that will allow them to maximize silver extraction, which will drive down cash costs below '13. Capex is projected to be a lot lower at around $35m including sustaining.

    However, results still depend on the price of gold. $1200 AU is below their all in cash costs including sustaining capex and interest. Given that interest rates seem to be rising, AU may be low for a while. Don't know how many buyers there are out there.
    Dec 21, 2013. 11:11 AM | 1 Like Like |Link to Comment
  • Allied Nevada: Solvent In The Short Term, Risky For The Long Haul [View article]
    I understand what you are saying and I have emailed the question to the IR person. If you are right, then it means I did some shoddy work here.

    In thinking about it, one would have to back out interest expense from the future obligations as that would be met by operations. So you would only have the $100M of cap ex, next years sustaining cap ex, and principal repayments, so I suspect they are still solvent as they claim.

    Once I hear from the company I will respond in detail. thank you for pointing this out.
    Dec 16, 2013. 02:28 PM | Likes Like |Link to Comment
  • Allied Nevada: Solvent In The Short Term, Risky For The Long Haul [View article]
    Thanks, I saw a comment after I posted the quote.
    However, it was a good question and the response is helpful
    Dec 16, 2013. 10:56 AM | Likes Like |Link to Comment
  • Allied Nevada: Solvent In The Short Term, Risky For The Long Haul [View article]
    After doing a quick review of their 3Q call transcript, I could not find where they said they were going to keep inventories flat. They did mention a few times that current cash and cash from operations would be adequate. I assume that inventory liquidation would be part of CFFO's.

    See my quote from the transcript below from David Einhorn question.
    Dec 13, 2013. 01:40 PM | Likes Like |Link to Comment
  • Allied Nevada: Solvent In The Short Term, Risky For The Long Haul [View article]
    I just reviewed the call transcript for 3Q and found this bit. Apparently David Einhorn was on the call and asked the following 2 questions. One addresses the potential for a buyout.

    "Operator

    Your next question will come from the line of David Einhorn of Third Point Capital.

    David Einhorn
    Yes. I'm just calling my question in regards to -- regarding the share price and the 20% flow that is being shorted. Is management doing anything in regarding to this issue?

    Stephen M. Jones - Chief Financial Officer, Principal Accounting Officer and Executive Vice President
    David, I think -- this is Steve. Yes. I mean, we're well aware that there's a big short position on. The main thing we're doing, David, is everything we've been talking about this morning, which is trying to make sure that we're generating cash flow from operations, that we're getting more efficient in everything that we do, so that we can show that there's not a liquidity issue here. And as well as all the work that Randy has been talking about with M3, relative to the oxidation, to get us to the point of being able to know exactly what the mill is going to look like, and then go out and raise the money and begin construction on the mill. So, I mean, our focus is fundamentally, if you will, is to be able to prove the short is wrong. I know it's frustrating to have that big of a short position out there. It's frustrating for us to do that. But the biggest thing that we can do is just deliver from an operational and cash flow perspective.

    David Einhorn
    Okay. And the other short question that I have was being that during our company's research, we've noted that there's over $100 billion in private equity funds that are out there looking to buy mining assets. So in the near future, would you consider teaming up or selling out to a bigger mining company that would have already the equipment and the expertise to develop this, the Hycroft Mine?

    Stephen M. Jones - Chief Financial Officer, Principal Accounting Officer and Executive Vice President
    Well, we consider -- we're happy to consider all alternatives. And certainly, we'll do what's best for all of our shareholders. So we would consider something like that, but we would only consider it if it's best for all of our shareholders. I mean, we think there's still a major opportunity here with the sulfides, and that's not being -- that's not currently reflected in our share price. And it's management's goal to change that and to get that reflected in the share price. And so that's really the focus. I mean the day-to-day focus is to generate cash from the oxide operations, but the longer-term focus is to be able to prove that value to the sulfides. And when we can do that, stock price will increase and will give us a lot of additional opportunities, including opportunities to develop assets like Hasbrouck that we have."
    Dec 13, 2013. 01:34 PM | Likes Like |Link to Comment
  • Allied Nevada: Solvent In The Short Term, Risky For The Long Haul [View article]
    Mr. Porter,
    Great point. In truth, I have not read the call transcript. However, I recently talked to the company's IR director and she confirmed that they plan to liquidate the current inventory and ore on leach pad.

    Note on page 25 of their 3Q13 10Q they say, "In addition to liquid assets on hand...our current inventories and Ore on pads contained approximately 177,299 ozs of gold which we belied may provide us with additional liquidity as such ozs are expected to be sold within the next 12 months." Note that they say "may" provide.

    That is where I got that assumption. It seems to be to be a do or die requirement given they can't borrow under their revolver. I admit I do not know the risks or potential complications of actually converting inventory to cash at a gold miner. However, I do believe they have completed their MC plant, which will give them the ability extract the gold from solution. Previously they had to send their solution to the 3rd party. So it seems as though they are set up to be able to reduce their large inventory. Note that in the first 9 mos, they burned $100.6M of cash to increase recoverable gold ozs in inventories and stockpiles and ore on leach pads by 81,093 ozs. (page 26 10Q, 2nd paragraph under table)

    Am I missing anything you know of?? I'll try to find the call transcript.

    Thanks and best regards
    Dec 13, 2013. 12:04 PM | Likes Like |Link to Comment
  • Allied Nevada: Solvent In The Short Term, Risky For The Long Haul [View article]
    Point of clarification - I said 1.5 to 3 years. That was based on current company estimate of cash production cost of $750, which included by product credit. That could move around and have a big impact. The company said they are going to release revised estimates at the beginning of the year. Also, the recovery rate could be lower. They had problems with saturation of large amount of leach this year. They have not executed well. Note the deferral of the Mill. And, I don't know what risks there are in liquidating the inventory. Remember this company may be technically in default under their line. They have to get that fixed. There are a lot of worrying aspects to this company. Its a good short if you believe that gold prices will remain low for a long time and they have some problems along the way. You get a zero.

    That said, I think they should have some margin of safety in the short term giving them time for gold prices to increase. And, you would get a big pay off. But its a bit like relying on prayer, not a safe strategy, at least to me

    Glad to know TAV is in the stock. They are smart guys with experience in troubled credits.
    Thank you.
    Dec 13, 2013. 10:39 AM | Likes Like |Link to Comment
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