Update: Luna Gold Produces Almost 75,000 Ounces Of Gold In 2014
- Luna Gold produces 20,000 ounces of gold in Q4 2014 but will still reduce its production rate in 2015.
- This was already a bit pre-announced, and Luna Gold won’t be the only victim as Sandstorm Gold will be hit hard.
- Luna Gold seems to be going down the drain and is not worth investing in anymore.
Update: Luna Gold Reports A Rebound In Production But A Planned Reduction In Production From February Onwards
- Luna Gold got its Q4 production back up to the 20,000 oz./quarter range and its ore grade back up to nearly 1.4 gpt.
- Management will reduce mining activity from February onward in order to avoid high mining costs during the rainy season.
- This is in line with expectations.
- Shares remain depressed and offer significant upside should management turn its operations around at Aurizona.
Update: Luna Gold Produces 20,758 Ounces In Q4, But Questions Remain Unanswered
- Luna Gold just announced that it produced 20,758 ounces of gold during the fourth quarter, which is its highest quarterly output for 2014.
- The company sold 22,173 ounces of gold, as it has some gold in its inventory.
- This is positive news, but question marks still remain and the stock has barely budged.
Update: Luna Gold Reports Weak Q3 Earnings, CEO To Resign
- Luna Gold reported negative operating cash flow and a large impairment charge that led to a $110 million loss.
- Days later CEO Geoffrey Chater announces his resignation.
- I had not anticipated this happening although they aren't surprising, considering the company's recent issues.
- This is a compelling high risk/high reward turnaround play that appears to have put in a temporary bottom.
- Luna Gold's CEO has announced his intended departure from the company.
- The search for a new CEO is underway, but I think a sale of the company could come before that happens.
- Still, I recommend avoiding shares here until the gold stream is renegotiated.
- Luna Gold reported a huge net loss due to an impairment charge and a negative free cash flow.
- This was quite surprising, and it now looks like the production in 2014 will be 40% lower than I originally estimated.
- This obviously has a huge impact on the investment thesis, and Luna Gold is now on my ‘avoid’ list.
- Luna Gold has reported Q3 2014 earnings.
- The company produced 20,188 ounces of gold at $1,118 all-in sustaining costs, but sold gold at an average realized price of $1,148.
- Luna was cash flow negative in the quarter and will likely keep losing money in this environment.
- I think the company is still a takeover target, but investing here comes with obvious risks.
Recent Selling In Luna Gold Is Way Overdone: Shares Have 50%+ Upside
- Luna Gold shares are down 75% for the year and 50% in the past month, with the stock plunging 30% on October 10th..
- The company has had its problems but there is no reason for the shares to be down this much..
- The company can generate sufficient cash flow at the current gold price to justify a valuation that is 50% higher, conservatively.
- There is no reason to believe that the company is in or near financial trouble.
- Other catalysts include a renegotiation of the Sandstorm streaming deal and a takeover bid, the latter of which the company is actively pursuing.
Update: Luna Gold Tanks On News The Company Will Explore Strategic Alternatives
- Luna Gold has announced a special committee comprised of its directors to explore all strategic alternatives to offer greater value to the company's shareholders.
- When you read between the lines, this most likely means the company is looking to be acquired by a larger mining company.
- This was something I expected, as I noted in my article "Luna is a Likely Takeover Target Over the Next 6-12 Months."
- For some reason, the market is not impressed, with the stock dropping 30% on the news - even though it's positive in my opinion.
- I am considering buying shares here at depressed levels.
Update: Luna Gold Is Exploring 'Strategic Alternatives' - Shares Plummet
- Luna Gold's management is looking to sell the company.
- I had not anticipated this in my recent article.
- Investors have completely lost faith in Luna Gold as shares fell 30% on the day, but this could be an opportunity in disguise..
Update: Luna Gold Announces Strong Q3 Gold Production
- Luna Gold has announced third quarter gold production of 20,188 ounces, which is up from 14,262 produced a quarter ago and on the same level as last year.
- In addition, gold recoveries were strong at 88% and average gold grades were 1.3 grams per tonne, up from 1.14 a quarter ago.
- This is positive news as it looks like the company has bounced back from one of its worst quarters ever.
- I think shares are currently a buy, even with the gold price near $1,200.
- Luna Gold's Q3 production bounced back after a lousy weather-induced Q2.
- I had anticipated this in my recent article.
- I remain constructive despite the stock's underperformance, although we have not seen a restructuring of the streaming deal which remains a risk.
Update: Luna Gold Decides Not To Proceed With Second Tranche Of Private Placement
- Luna Gold recently announced that it has decided not to proceed with the second tranche of its previously announced private placement.
- The announcement was a surprise to me as I had expected Luna Gold to issue the additional 10.5 million shares to bring in more capital.
- I think the move is very smart, considering Luna Gold is priced at just $.72 a share, or 30% lower than when the private placement was first announced.
- Even without the share issuance, Luna has $33 million in cash and working capital of $40 million; I think the stock is a strong buy at current prices.
Update: Luna Gold Withdraws Second Tranche Of Its Secondary Offering
- Luna Gold will no longer be issuing 10.5 million shares of the 30 million shares it had initially planned on issuing.
- I had not anticipated this in my August article.
- There are several ways to read this development, most of which are bullish.
Luna Gold: A Takeover Is Likely Over The Next 6-12 Months
- Luna Gold is a junior mining company that produced 80,000 ounces of gold in 2013 and has a total resource base of 4.6 million ounces of gold in Brazil.
- The company has struggled this year, suffering from cost overruns and above average rainfall during Brazil's wet season. Production guidance was lowered 10,000 ounces, with higher all-in costs.
- Despite its struggles, Luna Gold is a strong takeover target as it has more than 4 million ounces of gold resources with further exploration and production upside.
- Luna Gold broke even in Q2 as the company's production declined on heavy rainfall.
- The company was forced to process lower grade stock-piled ore which pushed costs higher.
- As I suggested in my article last week, this shouldn't be a regular occurrence and the company should benefit from its strengthened partnership with Sandstorm Gold.
- Shares are in the doldrums at multi-year lows: maybe the bottom hasn't been reached yet but the risk/reward is favorable.
Luna Gold Is A "Buy" As Sandstorm Will Likely Restructure Its Streaming Agreement On Aurizona
- Luna Gold recently issued 30 million shares as a part of a secondary offering led by Sandstorm Gold.
- Embedded in the announcement was a statement suggesting that Sandstorm Gold will restructure its streaming deal with Luna Gold on its Aurizona Mine.
- This will directly benefit Luna Gold shares as the company's effective realized gold price will rise.
- With the stock down 15% and the potential for Aurizona's effective realized gold price to increase I am now bullish on Luna Gold.
Update: Luna Gold's Q2 Production Falls Due To Heavy Rain, Partner Sandstorm Gold Suffers As Well
- Luna Gold recently announced that heavy rainfall decreased mining activity at its Aurizona Mine and management was forced to process low grade ore stockpiles dragging production down 24%.
- Sandstorm Gold gets a third of its attributable production from Aurizona, which means its total attributable production for the quarter will be about 8% lighter than expected.
- This was an unforeseen event in my previous articles on both companies.
- This is negative for both companies, although given the weakness in Luna's share price I am open to reconsidering my mildly bearish outlook, pending a positive PEA for Aurizona's expansion.
- Sandstorm Gold has done an excellent job diversifying away from Aurizona although it is still heavily dependent, and it is an interesting stock to buy on pullbacks.
Why Now Is The Right Time To Consider Luna Gold Corp.
- Luna Gold Corp. is poised to outperform the junior mining sector, with a growing production at low cost.
- Current resources top 3.6 million ounces of gold and this is hardly the end of it. New exploration program started and resource update coming.
- The time to get in is now. Luna Gold is undervalued, fully funded and greatly leveraged for the second half of 2014.
- The next 6 months could provide an explosive mix of catalysts, setting this undervalued junior miner up for a considerable re-rating.
- Luna Gold could surprise us in becoming a 300,000 oz. mid-tier gold producer within the next 2 to 3 years.
- Luna Gold is significantly under-performing its peers in 2014.
- While this could be due to short term catalysts a closer look at the company reveals significant constraints to its upside valuation potential.
- There are two reasons for this--the fact that the company sold 17% of its gold to Sandstorm Gold at a fixed price, and uncertainty regarding future capex.
- While the company has enormous speculative upside potential the reward is not worth the risk at the current valuations.
- Investors looking for a speculative play on gold exploration should hold off for now.
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