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  • Playing The Deficit In The Zinc Market For Expected Higher Prices [View article]
    Even in light of an 8 year bear market zinc has been a tough road especially given the lack of visibility from an inventory point of view as Glencore recently has been able to scrape up a 9 month supply off of the books and dump it on the open market hence the rise in stockpiles and as a result weakness in price.

    Barring any other surprises from additional off of the book inventories I think the future window for zinc will be positive at least until production from the Kipushi mine commences. It is still unclear at what ultimate rate the ore will be produced at that mine but that mine should surpass Red Dog as the world's largest producer.
    Oct 8, 2015. 11:48 AM | Likes Like |Link to Comment
  • Endeavor Mining: The Ity Gold Mine Acquisition Will Drive Upside [View article]
    I think Sawiris got the much better part of this deal because he gets a much longer extension on an option for the price of gold. It really was the end of the line for La Mancha.

    For 30% of the company EDVMF got 63 million, a mine with only a 2 year life and a project for 3 producers with a 10 year plus mine life 1 with a 3-4 year life and a project..

    In order to get the other 2 projects into production it will take around 300% of the current market cap to get both of them going. That is not attainable without more dilution. The company's growth will take more equity thus is not self sustaining and I define these kind of companies as a management empire.

    The only way you make money here is another bull market in gold.
    Oct 5, 2015. 09:26 AM | Likes Like |Link to Comment
  • Trevali Mining Has Been Pummeled - We Are Buying The Dip [View article]
    Part of the issue for the recent freefall here has been related to the recoveries well below design plan at the Caribou mine. If Trevali can resolve that issue without any further dilution I agree it should see a nice upside over time.
    Oct 4, 2015. 12:54 AM | 1 Like Like |Link to Comment
  • Volkswagen AG: Expect A Dividend Cut, Dilution, And Lower Profits Going Forward [View article]
    The can of worms that I find challenging to determine from a legal liability perspective is the from the rest of the world since I do not know their specific lemon laws but I suspect it would have a lower impact under laxer emission standards.

    In addition, I think they are very vulnerable to a potential shareholder's suit for fraud.

    In the US I think to quantify the most likely scenario in a settlement will be equivalent to what is covered under the California's lemon law. (Retail price of the car plus attorney's fees). I highly doubt a litigant will collect treble damages.

    Potential liability in the US related to this would be 15 billion plus the EPA fine.
    Sep 29, 2015. 08:08 AM | Likes Like |Link to Comment
  • Nevsun's Drill Results Continue To Impress [View article]
    C1 costs are projected to rise as the trend of Cu ore grades continue to fall as the ore depletes. I am surmising the firm will transition to zinc at a 2% Cu cutoff and stockpile the lower grade supergene ore when it becomes economic.
    Sep 24, 2015. 12:57 PM | Likes Like |Link to Comment
  • Nevsun Further Improves Harena's Attractiveness With A 250m Extension [View article]
    A good find for potential future development but it will require higher cost underground mining methods my estimate between $30-35/ton vs $3/ton in the open pit. The ore grade is on the low side around a 7% Zn eq grade for such development. I am expecting all in costs of somewhere between .90-1.00/lb for this specific ore and as an investor expect a conservative view on a capital spend to develop it as I don't want at all to see this development partially cannibalize the rest of the operation.

    One thing for sure this dumping of zinc by Glencore onto the market sure leaves a bitter taste in my mouth for the lack of transparency of the data and the serious oversupply/overcapacity the sector currently has implying most mining commodities turning around for supply reasons at this time is just not going to happen anytime soon and shows how bad especially the copper market looks going forward given the amount of that metal being pledged as loan collateral.

    While NSU has some minor issues they pale in comparison to the majority of the firms in the mining sector and is the best value in a very tough market.

    Sep 24, 2015. 10:15 AM | Likes Like |Link to Comment
  • Manning & Napier Inc. - Good Value Hiding In Plain Sight [View article]
    Finally a perceived safe quality potential value buy outside the realm of commodity stocks in the midst of a persistent crisis of fund outflows at the company. For one at this level I think this stock starts to make sense to own from a potential offer from an insider if you assume the interest on the debt would generate enough savings vs its dividend obligation and the difference to its current premium to enterprise value. At this price an insider could technically pocket all of the cash and own its real estate assets for nothing irregardless of market value from operating earnings if financed 100% at 5% or less interest rate.

    In addition, I believe this company would make a good income vehicle AARP for a patient investor with a very high yield in excess of 8% given its starting to close in on a zero enterprise value and has a strong debt free balance sheet to easily weather a bearish market cycle.

    Given the trend in the stock continues to fall when should you logically begin to scale on a value basis?

    In my critical analysis my buying point it will take a valuation at or below a zero enterprise value for me to become interested here assuming patience to hold it for the next bullish market cycle.

    The company is currently imploding because of the large reduction in assets managed which is how they generate the majority of their revenue from a combination of poor performance compared to and investment outflows.

    I will admit the company's mix of products are pathetically dated, somewhat limited and should contain a more diversified mix (like at least one or two product(s) that favor(s) bear markets and something smaller cap for bull markets) in order to justify an investor to want to keep assets within the company. To add the corporate structure is very top heavy which is a plaguing problem of most financial firms.

    If a firm offers SPY type portfolios and can't beat the SPY or a major index of its niche products to me it starts to have a credibility issue of accepting fees.

    Another major problem and the biggest one of all which will always have its presence there is absolutely no way to institute change at the company as an investor given the structure of its voting rights on its common which is why this stock continually remains undervalued on a peer basis so that sort of approach to analysis is moot. On investing here it is more about timing the peak and trough of assets in the respective market cycles and relative valuations where it might be better off being in private hands.
    Sep 15, 2015. 11:39 AM | Likes Like |Link to Comment
  • M&A Activity In Kurdistan Might Accelerate In Coming Months, Too Cheap To Ignore [View article]
    Great article about the region. I agree the operating risk profile in Kurdistan has improved and balance sheet wise Genel is the safest. One thing I do not like about Genel is its foray into high risk/cost African exploration which the article did not focus on. If they want derisk its portfolio they are better off looking for producing assets.
    Aug 22, 2015. 10:52 AM | 2 Likes Like |Link to Comment
  • Genel Energy: The Best In Class Kurdistan-Focused Oil Producer [View article]
    The stock has fallen a large amount since this article. The political operating front certainly has greatly improved in Kurdistan given the growth in production YTD but I don't at all like Genel's casino risk model of taking these hard earned cash flows to diversify their asset base into high cost African wildcatting assets especially in an energy world that is creating more low risk opportunities with acceptable returns.

    If you want to diversify why not acquire proven assets from an overleveraged company(ies) that have financially failed and whose properties in the past exhibited decent technical reservoir qualities instead or even a share repurchase instead of foolishly gambling at 20% COS odds?
    Aug 12, 2015. 05:08 PM | Likes Like |Link to Comment
  • The Oil Price: How Low Is Low? [View article]
    Just an observation if you look at a long term pricing chart since the OPEC era the most the oil market corrected from a peak to trough is a little over 75% from the price highs.

    I think if we get macroeconomic market conditions where margin calls are in order. I think that percentage sell off will be achieved. If market conditions can avoid such condition which it has seem to have fended off to date with the longest bull market in duration. I think support will probably be around to the 2008 lows in the upper 30s.

    Long term hedges that still provide a healthy netback need to expire before supply imbalances start to enter into the equation for pricing.
    Aug 11, 2015. 02:19 PM | Likes Like |Link to Comment
  • Is Tullow Oil Set For A Rebound? [View article]
    The momentum in this stock petered out when their exploration successes failed to result in a higher price. It certainly was an easy clue for me to move on and sell my position in the company years ago.

    But with this carnage Tullow is certainly on my list of potential buys from this bear rout in oil producers. I think this stock is vulnerable to an acquisition from a major given the quality of their assets which have always received a very large premium in the marketplace. Although I haven't taken a position I am still on the sidelines hoping the bearish momentum takes it down to a level of 50% of NAV or below. At that level I would feel the risk/reward would be certainly worth it.
    Aug 6, 2015. 12:24 PM | 1 Like Like |Link to Comment
  • Nevsun Resources (July 2015 Update) [View article]

    My BV assumptions were based on USD accounting which the company uses so the stock in USD as of today's trading is now equivalent to that low price range. I started my rescaling on the buy side a portion of the shares I sold at 4.20 US where I sold 1/3rd of my holding.

    I think at this level this stock becomes vulnerable for acquisition especially for a cash desperate major. It also is a good starting point for a share repurchase consideration.
    Aug 5, 2015. 11:32 AM | 1 Like Like |Link to Comment
  • Market Outlook: Commodity Prices, Mining Equities, TSX Venture Index, And Energy Metals [View article]
    A great article.

    The sector from a cyclic point of view still has an inventory of too many companies IMO and still needs to undergo the painful process of sorting out the survivors from bankruptcy or consolidation. This process will take some time as companies are still being to hold on by high grading operations and can use deflationary energy costs to their advantage to further reduce costs.

    Many marginal mines will not recover their capex investment and are really producing zombies. We need to go through the process of time taking effect of reducing this supply before the sector is in condition for a sticking reversal of trend other than a timing trade in a bear market.

    I totally agree the sector has been very guilty of over capacity and mal investment as reflected by the percentage of mines currently making all in production costs and greed due to their foolish decision making by the lack of hedging into price euphoria but the clones who run this sector tend to overstate the quality of their assets and are permanently positioning their company for growth at any cost.
    Aug 4, 2015. 12:16 PM | 1 Like Like |Link to Comment
  • Nevsun Resources (July 2015 Update) [View article]
    This company had a few minor negative issues that has impacted production guidance for the year. One is recoveries which has consistently averaged between 2-4% points below feasibility study expectations. To compound matters their excuses made last year using the high grade ore hasn't held water.

    The other is the vandalism incurred a few months ago likely had a greater negative impact on operations which of course the management refuses to discuss.

    Lastly, I am also surmising the company is now forecasting a quicker pace of falling Cu grades.

    As for the pricing they get. To me it is obvious the Cu concentrate receives a negative penalty in the marketplace for an impurity (perhaps lead) as they typically receive a 10-15 cent lower price than other unhedged producers.

    My personal feelings here is on a near to mid term basis the company is battling negative macros on top of operations with no positive production catalyst due to the continuing deteriorating fundamentals caused from processing consistently lower grade supergene ore. In addition, the company really hasn't conveyed any indication at what cutoff level they will stop processing this ore as the company has approximately over 2 million tons of sub 2% Cu supergene in reserve.

    I think from a long term perspective if you assume they wisely implement spending their cash into a decent asset the company should be bought during this period of fundamental weakness. Just an observation the stock bottomed out at 90% of book value during the last production transition.
    Aug 4, 2015. 09:59 AM | 3 Likes Like |Link to Comment
  • Golden Reign Resources: An Undervalued Compounding Machine [View article]
    On the subject of an appropriate discount rate used to determine the NPV for a 1 mine operation my feeling is it should be at the minimum pegged at a similar rate where you assume the firm borrows 100% to finance it so in almost all cases it is going to be greater than 10% and variable based on jurisdiction.

    With this said I thank you for the article and I agree with you this stock has some potential viability in a challenging macro environment for gold with some caveats like producing at the optimal economies of scale which is more than you can say than with most projects out there which have absolutely no chance of making an acceptable return over all in costs for an investor to have some chance of making money from company specific fundamentals.

    Jul 15, 2015. 10:23 AM | Likes Like |Link to Comment