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  • Orosur Mining: Cheap Cash-Flow And A Free Call Option On Gold [View article]
    Mine life is the main problem with Orosur even though they did recently extend Arenal Deeps life by 4-6 quarters. On the positive side Orosur certainly turned the ship and finally concentrated on lowering cash costs with its new CEO which I have much more respect for but I think the probability of this company getting to the next stage past the San Gregorio era with an investor thriving is a very low probability which explains its large discount. I think the company will eventually become a dilution trap because it currently has a very low quality pipeline of marginal projects that they will be unable to fund.

    I know this company wasted time and money on really bad project prospects and I believe the company has to really stop being in denial and position itself as one that will eventually meet an end except potential expanding within the San Gregorio area with their current portfolio of properties.

    When I was an investor with the company (I sold out when they attempted to perform a PEA on Pantanillo with only 600K of recoverable oz ) I pushed the dividend approach to the company but it finally took 18 months later for them to finally propose it then gold collapsed.

    CALVF is a more logical way to hold gold as a defensive hedge in a portfolio right now if you are thinking longer term with their stronger balance sheet and high dividend payout. Even though I think CALVF will post a challenged quarter with its temporary ore dilution problem.
    Apr 15 03:08 PM | Likes Like |Link to Comment
  • Orvana Minerals: Strong Cash-Flow And 20% Undervalued [View article]
    This would probably be my second choice of a microcap gold producer that is also defensively positioned for an investor.

    I think the company made some recent good moves of improving their balance sheet by selling out their Copperwood project which required too much capital and the project economics were only average at best.

    I think the discount in value is related to the credibility damage this company had done to investors when it grossly overpromised expectations in its production numbers during the brownfield build out periods of their mines thus sustained plenty of confidence damage as they failed to overcome the many challenges encountered since they shifted production from the LMZ to the UMZ and EVBC .

    At the UMZ the attempt to process the oxide ore was a total flop which negated more precious metal recovery potential from the CIL process and EVBC's problems that Rio Narcea encountered upon their closure still remain.

    However, operations can be optimized in Spain with an operating lift and greater throughput through the mill.



    To my knowledge the company also has the positively hedged gold collar with 33600 oz of $1550 puts and 5480 tons of Cu hedge at 3.29.

    The mine life at Don Mario since they processed it approx 40% above design will be only another 10-12 quarters so the Bolivian factor really is overblown.

    The company always had a habit of processing much lower grades of Au than what is published on the 43-101 esp. when they were processing primarily the skarn ore which also gave Rio N problems. I believe they designed the underground at a 2g/ton cutoff
    Apr 15 02:21 PM | Likes Like |Link to Comment
  • Nevsun Resources: Think Zinc [View article]
    This company has a very high quality mine and I will almost always favor mine quality over jurisdiction.

    The only knock I have on the company is 2014 should be its peak earnings year for the entire mine life of Bisha so from an earnings momentum perspective an investor likely will find another patch of earnings lumpiness although likely not as severe as the gold/copper transition while they transition into the zinc phase assuming metals prices remain stable and provided they do not have cash flow from other sources. Grades of supergene ore continue to slowly decline until the last 1 million tons of 1.5% Cu at the NW satellite which likely will be processed last and take 2 quarters to process


    This implies you likely will have to have to still be conscious of value and potentially find points to sell into strength.
    Apr 3 04:27 PM | Likes Like |Link to Comment
  • Caledonia Mining Is Too Cheap To Ignore [View article]
    I highly doubt Mugabe will totally alienate the elites supporting him and impose higher taxes on them especially during a period where they are paying off debt.

    Although when speaking of industries in Africa undergoing indigenization I do much prefer the terms given in Nigeria.
    Mar 19 11:22 AM | Likes Like |Link to Comment
  • Caledonia Mining Is Too Cheap To Ignore [View article]
    Ben I increased my position here by a very large amount on the Fidelity news sell off and see a big return if you are patient given the future ramp up at Blanket.

    With regard to Zimbabwe I actually see the light at the end of the tunnel with most of the wealth transfer completed and this move with Fidelity is a first step to get in good graces again with the western banking cartel which is all about a positive re-rating of the country. I really can't see nationalization here because the new elite here have little access to capital thus need the western financial system to facilitate commerce and also lack the technical expertise to efficiently run a mining operation. They will gladly sit on their behind and collect a dividend check.

    I actually see the main risk here is labor costs which is approximately 1/3 of South Africans who are currently on strike wanting even more. That will hurt its cosh structure advantage. Hopefully this problem can be sequestered by the ZIM gov't entities.
    Mar 17 01:30 PM | Likes Like |Link to Comment
  • Swift Energy's CEO Discusses Q4 2013 Results - Earnings Call Transcript [View article]
    I don't want to write a dissertation but I can definitely see the shorts point of view here. Simply stated the problem is the company looks like a value trap dying a very slow death and it appears Terry Swift is milking the firm to his maximum benefit with a generous salary and bonuses as long as he can.

    It appears they wrote off the Niobrara play and the high debt level keeps them limited in options.

    The major problem is the company has a very limited ability to increase production within its operating cash flow budget so its goal is to just maintain stable production within its operating cash flow by utilizing its best inventory of properties as long as it can and milk the firm through a relatively high salary and bonuses.

    Without any production increase it has no upside catalyst and thus can be easily argued a company under such consistent conditions should begin to show a multiple contraction more in line with a cyclical stock and not one given a market multiple. In addition, the gas production is now unfavorably hedged to the current spot price so this current polar vortex weather pattern will not show a major upside surprise in Q1 which would be one opportunity for a long to exit.

    Although I think the company can still keep production level relatively stable for many years with its better properties as time expires its day of reckoning will happen unless per chance natural gas prices rise and the firm is unhedged.

    As for the asset sale plan the recent going rate was only 30K/ producing barrel which was what Sandridge recently received for its conventional production. I think the probability of any favorable deal materializing will be close to nil.
    Feb 28 07:40 AM | 1 Like Like |Link to Comment
  • Aura Minerals: High Risk, Higher Reward [View article]
    My only regret here is your piece was a few days too early and the article altered my original intentions of buying shares with my Crocodile Gold proceeds which had a tremendous run higher. The automatic sale of my cost in Crocodile Gold at .30 CDN (which had the most production leverage at the time of my acquisition) occurred on the 18th after a large percentage gain. My original intention was to put the proceeds into this stock which at the time was the cheapest on the chart I refer to.
    Feb 26 10:33 AM | Likes Like |Link to Comment
  • Aura Minerals: High Risk, Higher Reward [View article]
    Good call and very timely piece. At the time of your writing ORA had the most production leverage to market cap of any junior company if you eliminated the bankrupt cases (Jaguar and New Dawn) to the upside.
    Feb 25 04:00 PM | Likes Like |Link to Comment
  • SilverCrest Mines - Junior Mining Buy Of 2014 [View article]
    You take dilution risk when your cash flow and cash position is insufficient to for capex expansion projects which I pointed out is the risk here and if per se costs become out of control which I would estimate happens 90% of the time in building a mine with the knowledge of it reflected in the stock price you have to do these equity offers at a stink valuation.


    Most of the time management will wait to the last minute to raise money and with the investment banks knowing this deliberately keeps the stock price down. If raising cash is necessary it is actually good to see the company issuing shares at a relatively high valuation compared to its peer group over the long run as the dilution impact will be smaller. A very shrewd management IMO.
    Feb 21 10:44 AM | 2 Likes Like |Link to Comment
  • SilverCrest Mines - Junior Mining Buy Of 2014 [View article]
    No question I think the Santa Elena mine was the highest greenfield IRR mine built in North America since the credit crisis so yes it is a very high quality stand alone operation but it is hard for me to justify buying the stock back after it has already appreciated approx. 140% off of the low and trading at high levels on some metric comps and I still see capex execution risk with their porphyry project .

    Honestly, I think Red Tiger Mining will be the mining stock buy for 2014 because it still has a stink comp valuation and its commissioning and debt problems are now officially behind it. The annual cash flow is conservatively 20 mil for a 20 mil MC company with operations in Mexico.
    Feb 19 01:33 PM | Likes Like |Link to Comment
  • Petrobras: Challenging Times Ahead [View article]
    PBR remains on my watch list. Quite a few value metrics have me interested however, the EV/EBITDA which I put more weight is still above my target range. One observation is it appears the oil producers that show overall negative free cash flow from expansion continue to be severely punished in the market. The market preference is for opportunities that can show sustaining growth from internal cash flow.
    Jan 22 01:11 PM | 1 Like Like |Link to Comment
  • Now Is The Time To Buy Petrobas [View article]
    While very helpful YPF recovered under a socialist regime. So a regime change is not the sole potential catalyst.

    I think the drag here at this point is the make up of its assets. Capex with deep offshore wells continues to rise with more exploration risk while shale costs continue to fall and has virtually eliminated exploration risk.
    Jan 7 11:55 AM | Likes Like |Link to Comment
  • From Frac Sands To Oil Sands: Athabasca Minerals Has It Covered [View article]
    ABM is definitely an investment with a much longer time horizon behind it with decent upside potential and I agree with you the project economics here is likely going to be rather high considering the mine life of the project. I have no qualms at all with your LT investment thesis here especially using the US producers as comps.

    A shorter term trading catalyst is the EA.

    From experience my concern is with the final divisor (not the numerator) being the watershed event (for me) as an investor. There is a big habit in mining from feasibility studies of underestimating costs in a build out and the share price deliberately being kept undervalued by investment banks while you are in the phase where you are dependent upon them in the build out process (especially with low priced stocks)-

    Once those underpinnings are behind it provided the niche is still in strong demand and with strong economics it will then focus on the profit growth.
    Jan 6 03:46 PM | Likes Like |Link to Comment
  • From Frac Sands To Oil Sands: Athabasca Minerals Has It Covered [View article]
    I agree this is a stock to keep a very close eye on. I would like to see more clarity on how it first manages its capex requirement(s) for Firebag. Chances are like with most mining stocks is you will get a better price during the construction stage because of the consistent missteps the sector has had on implementing a timeline and estimating costs. Another issue of concern is I think the premium valuation for the silica sand stocks being very rich from a historical perspective.

    Personally, I think Victory Nickel is a more pressing timely investment right now given it should be in commercial production by the end of the quarter. Although the implementation plan appears risky especially for the long term. Operating inefficiencies are acceptable in the shorter term when the sector is in favor margins very fat and supply limited. The attraction to NI is valuation of the company which is still trading at a large discount to book value.
    Jan 6 01:39 PM | Likes Like |Link to Comment
  • Sandstorm Should Benefit From Primero Deal [View article]
    To think CSI raised all of this money just for a 300K oz deposit.

    A mining firm meeting a capex budget is a very rare exception to the rule these days but yes it will have allowed them to continue this illusion.

    The problem really is the lack of due diligence the company performed on CSI especially when the company circumvented the normal rules for building a mine just for the sake of profit growth. The allure of low cash costs in a bearish environment made the company feel desperate to make a deal.

    One thing that I noted and confirmed by a SA article by The Critical Investor noted was the resource expectations between analysts and taking the individual deposits assuming they were all commercial (which is unrealistic) and performing the calculations the numbers were off by more than 100%. That in itself looked like a peculiar red flag to me couple that with no 43-101 it just didn't seem right.
    Dec 24 11:02 AM | Likes Like |Link to Comment
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