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First stock transaction was back in the early 80's when nothing was electronically processed. Since that time, and thousands of transactions later, i have refined my stock searchs based on many criterias and fundamentals data. WARNING: Before investing in any of the mentionned stocks, do your... More
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  • UWN : When small is beautifull
    When small is beautiful: That could be the story of Nevada Gold & Casino Inc.
    When I indicated that this corporation was under my radar last year:
    (Shares were trading at 1,07$ at that time) I was far from believing that suddenly with some great acquisitions, that company could double its share price and that I would still believe that it was only the beginning. Think about that: market crash, unemployment in the 9%, no economic growth and your company double its market cap???  They definitely must have done something right and here is what I found and by the way based upon recent market activity, I am no longer the only one that is starting to be interested into that success story.
    Naturally we should not compare UWN to some largest company like LVS, MPEL or WYNN as they are clearly not competitors. But it is very important to note that the entire entertainment sector has been very profitable lately especially in gambling outside the United States and this is where UWN does make a difference. They have been able to create their own niche in a very difficult market. So, what is this all about?
    UWN owns and manage small scale casinos almost directed toward the clientele of Mr. everybody that does some gambling for fun and in an environment very friendly where customer seems to be the number one priority. One point that I should mention is the fact that all employees from their newest acquisition (Red Dragon) went to a customer service training seminar almost immediately after they finalized the acquisition.
    It would also be very difficult to compare with any other company as there is not too many that are operating that kind of mini casinos and operating more than 1.
    So, what should we expect form UWN ?
    They have the intention to acquire some casinos in Nevada and it could add some 3-4M$ for each unit they buy BUT it could add to the total debt already in the 15M$ range.
    And even if debt is a problem to come, especially with some being due in 2012, their latest association with Wells Fargo to find a refinancing solution could ease that one out if negotiations are successful. If they were to find a new loan agreement covering all the debt and at better terms and at somewhat a bit lower interest rate, this could give them a break and allow them to breathe easier.
    On the other hand they have the right to issue up to 20M$ in stock and this would cover more than the total debt load leaving even some more money for other acquisitions.
    If UWN consolidate their actual assets and integrate them rapidly they should be able to generate a lot more net revenues and be ready for some more expansion AS LONG as they do not have to overspend in company management. At this point, it would not be wise to get that expansion in areas that they do not operate actually due to overhead expenses.
    So here are my expectations for Q2 2012 if everything goes as expected:
    -          Net EBITDA of 1M$ (increase provided by increase in earnings, expenses staying at current level in % , lower management and legal expenses)
    -          Earnings of 16M (due to the revenue increase from Reg Dragon)
    -          Net revenue per share of 0,03 to 0,05
     
    In my opinion they will definitely continue to be very aggressive in their development and as long as they stay within their ‘know how’ range there is no doubt that UWN will be a great winner in 2012. Markets will stabilize, unemployment will get better and consumer confidence will be brighter. All the needed elements will be in place to send UWN on track for a record year.
    Yes this is not a lengthy analysis but I could come on with many more reasons why they are on the right track: great business model almost exclusive, passionate management, enthusiast employees and surely many more.
    For these reasons, UWN is now a top pick for the remainder of 2011 and for 2012. Price expectations are within 2,90$ and 3,70$ before December 31st 2012 for a decent 50% to 100$ return.
    Give them the favourable market conditions and UWN could means UW(i)N
    As usual never invest more than you can afford to lose and always do your own due diligence before investing.


    Disclosure: I am long UWN.
    Sep 28 6:17 PM | Link | Comment!
  • TVI Pacific from Au to Zinc
    The last quarter report did show again another very strong revenues stream and profitability when removing the 1 time event being the repayment of the ‘shark loan’ to be replace in part from a very low interest rate (compared to the previous one).
    By analysing TVI we can easily see a very low cost copper producer that has a stream of revenues that will enable them to continue exploration and operation of new mine sites.
    TVI still has 3 years of production in the bank (before low % cut off) and are generating enough cash on a quarterly basis to increase mine life significantly.
    So what is going on and coming for the last 3 months of the year.
    First, Balabag results should start the fun around the end of august (early September) and based upon comments from Mr. James (ceo) stating that they were very very pleased with the preliminary results. As a matter of fact they are still drilling on another vein and I think this could mean a good positive surprise. But remember that TVI never intend to start up themselves a 400,000 Au ounces mine project as it would be too costly and time is not on their side to accomplish that task. If they were to prove that kind of resources, that would be great for share value but would only be accomplish small steps at the time.
    They are looking at a bootstrap mine site where cash generated will be reinvested to increase capacity over time. This being said it would still be a very profitable operation and would add up great mine life.
    Do not forget also that there are many other opportunities lying in front of them like Tamarok area. I do not expect development right away but prospect out there are really interesting.
    So why invest in TVI when shares are moving sideways?
    Sure the money invested there could be in a small upward pattern at this time but when you look at the charts you can see that there is a battle between buyers and sellers. Nobody wants to sell at these levels and nobody wants to buy either. I mean nobody because of the number of transactions in any given day. It is very rare that you see a company with so many shares not being traded daily in the million shares range. It is as everything was frozen until something great happen. And, I still think it is coming. Yes there will be some lows and some getting discouraged but I think that the reward is by far greater than the risk. Maybe also Canadian buyers have already picked up their shares and they might find interesting to try grabbing more investors somewhere else in the world. Do not expect financial analyst to come on board at this time to help as the market cap and mine life is still a problem. But get ready if market cap was to be in the 100M$ and a 10-15 mine life remaining.
    Look at the cash generated per share, then look at market cap versus real value. Look at the debt ratio, shareholder equity almost positive, a price to book ratio at only 2,62, a P/E ratio at 1,66 and you can easily see that something is wrong with this company share price BUT the value is there.
    Many have mentioned confidence toward management: no. Not a good reason because in the market, numbers talk and TVI does have great results.
    Some have mentioned mining in the Philippines: no again I do not agree. Nationalizing the mines is not in their interest. Their people are getting far more from private companies than what their government would ever give them if all non-Philippines corporation were to leave.
    So where is the exact reason: in my opinion it is a question of company valuation: you have 3 years of mining left that will generate some good money and this is the factor on which it is evaluated. How much money would you invest in a company that has a net projected revenue of about 60M$ over a span of 3 years? Would you invest 45M$ and have a return of 10% per year? Well it would make sense from that point of view and actually I think this is where the market value TVI: a 45M$ corporation that will give a return of 10% per year.
    The expectation of getting more copper (and expanding mine life at the same time) and expectations about Balabag are pure expectations where nothing has been confirmed as of today explaining why the premium is almost 0 at this time but when Balabag results do get out in a couple of weeks that will change the scenario.
    Your investment calculation will be based upon the same 60M$ over 3 years + any net earnings expected from Balabag. Then from that number do the maths and you will get a fair market evaluation. Anything over proven resources would be the speculator premium over share value.
    So for the rest of the year let say we remove zinc from our estimations and keep 2 good copper shipments per quarter. TVI will end up close to 75M$to 80M$ directly in line with original plans from TVI so meaning that they will have again delivered as they planned.
    But what will happen next is interesting as Balabag will not get into production mode until probably Q3-Q4 2011 and even at the time they will need some commissioning move real production to Q1 2012. At that time, they will be left with 1 year and 4 months of copper production at the actual Canatuan mine.
    So here is what I suspect for the coming 6-12 months
    1)      They will find the right way to extract zinc from copper if there is a way to do that properly. May not be before year end but remember that this VMS (volcanogenic massive sulphite deposit) is not easy. You have to apply the perfect recipe not to lose copper but only remove infamous zinc. But by doing so you win on the 2 sides of the story: you get $ for the zinc and you increase your copper % (and at the price copper now standing it does make a great difference). But each time to try it out you have to stop and start the actual circuit. (explaining why 6 weeks shipments and not 4 as in the past)
    2)      They will still ship every 6 weeks and at actual copper price their revenues will be as expected
    3)      Balabag will confirm a minimum of 50,000 ounces and other steps needed to start mining and gold producing will follow. I think the total process and mine production could happen within a year.
    4)      Other Canatuan prospection will continue and some interesting sites will be announced as there are no reasons why the actual Canatuan could be the only site where copper exist in % enough to be profitable.
    5)      EBITDA will continue to improve
    6)      Interest expenses will drop dramatically due to repayment of the loan
    7)      No more charges related to debt repayment
    8)      Other join venture will be explored with major partners
     
    Now let see some ratios and numbers compared to last year
     
    6 months ending June 30th 010
                                                  
                                           2010                2009                               Diff
    1) Revenues                42,4M$          18,2M$               133%
    2)Exploration                  2,4M$            0,2M$             1200%
    3)Net income                7,2M$          (1,3M$)            
    4)Total Liabilities           17,5M$        34,7$M$              (50%)
    4A) Long term debt         2,7M$           19,5M$              (80%)
    5) Due to related Parties 0,1M$             1,2M$              (90%)
    6) Accumulated deficit      6,5M$          32,4M$              (75%)
    7) Net income per share   0,013           (0,003)

    8)
    Cash on hand              6,1M$           5,1M$                 20%
    9) Administrative cost                                3,8M$            3,8M$               
    10) EBITDA                                               21,7M$          4,7M$      400%
    11) EBITDA as % of revenues   51 %         24%             110%
     
    1)      Revenues are on the rise when compared against last year. Naturally shipments did not begin in January as it did in 2010. But even by adding 3 shipments for Jan, Feb and March 2009, the first 6 months of 2010 are well over mostly due to copper prices rising.
    2)      This number just proves that TVI is not sitting on their cash and are advancing at a fast pace to increase overall mine life.
    3)      This number speaks by itself. What a difference 1 year can make.
    4)      Overall liabilities does include short and long term debts even accounts payable considered as current and very short term
    4A) the long term debt has been eliminated totally. The 2,7M$ comes only from pension fund and asset retirement. The last one is at 2M$ and is eliminated as an amortization expense and not cash related. As for the bank loan it is repaid every time a shipment is received and another loan is made after with only the take-off agreement.
    5)      Very interesting to note also that all related parties transactions have been reimburse except for the current portion that I think is payable on a quarterly basis and must be accrued in the financial statements. Remark also that shares issued to reimburse loans made by company officer were issued as they had no other choices. From the shark loan agreement I would assume that they were banned to make any kind of cash payment.
    6)      Look at this one. WOW they have made a tremendous effort to maximise net earnings (it is the only way to be on the positive sign). Also please note that a new ratio will be in place whenever they become deficit free. It is called shareholder equity! This is a great ratio for establishing a share price.
    7)      Very very good for a development mining company that generate their own needed cash flow to expand. Normally used as a great ration to establish share price. In mining it is normally between 12 and 20.
    8)      The cash on hand is extremely high. Remember that they repay completely the shark loan and replace with bank margins at very low interest rate. There is somebody there that knows their maths…
    9)      Administration costs have been reduced a bit showing a good control over management expenses and salaries. If somebody was to become greedy for salary, stock compensation, trips etc. It would have shown right there.
    10)   EBITDA is a non GAAP measure but used my mostly all corporations around the world as it gives a good picture of gross profit and not final results that very often include amortization and depreciation that does not involves cash. Although it is not a perfect ratio it is consider a great indicator about business health and when used quarter over quarter does reflects the real growth of the company.
    11)   This is how I view business: do they make profit and are they better than they were. Do cost growth faster than revenues? Does administration becomes sharks and think about them first? As you can see, this business is totally exploding on the positive side.
     
    When you look at all these figures it is easy to understand why TVI is still one of my favourite picks. Will it takes 3 months, 6months or a year? This I do not know. But based upon their past results and their actual performance, they will definitely increase mine life to a greater extend and this within the next 12 months.
    My final thoughts about share price.
    Tvi is totally disconnected form their real value. It is very rare that you will find a company valued at about their yearly cash generation AND ½ of their annual gross earnings as their market caps.
    Only based upon their gross earning they should be trading NOW at about 0,16 (which is TWICE than there actual value) then add the cash value 0,01 means that it is almost incredible to be able to buy TVI under 0,17.
    Sure the remaining mine life is killing them at this moment and this is great for investors because unless they face 0 gold discovery in Balabag, 0 Canatuan extension this company share value and share price will be multiplied by 10-20 within 24 months. What is also so great is the ratio risk reward: risk is 0,08 per share and reward is 0,80-1,60$ So whenever you see a company that is profitable and this ratio is 10-20 times the possible loss GO. It’s a buy
     
                                  


    Disclosure: long on TVI
    Tags: mining
    Aug 22 8:12 PM | Link | Comment!
  • Finding a gem in the Philipines
    After reviewing Q1 results from TVI Pacific (tsx: TVI), the AGM webcast and the Q&A session, many things are exceptional about this small but so profitable mining company.
    Sure copper did take a beating recently as did zinc.
    Sure TVI Q2 results could be lower than Q1.
    Sure that the new zinc circuit is still in the adjustment phase
    Sure the daily share volume is not there actually as if nobody wanted to buy and nobody wanted to sell (not a bad thing by itself…)
    Sure China seems to be lowering growth expectations
    Sure that the many presentations around the globe has not given the expected results (it take some time to decide an investment in a mining company)
    Sure that remaining mine life is about 3 years and 2 really profitable
    BUT:
    How many times have you been able to buy shares in a mining company for about the same as cash generated (using 4 X Q1 results) ?
    Q1 net earnings results are not due to any 1 time event: no particular credits, no tax rebates etc. No, they have earned every penny by mining in their Canatuan property and keeping their cost per ton very very low.
    How about also a company with only about 10M$ in debt: 4M$ in a high interest loan (should be repaid in Q2 or Q3 maximum) and near 6M$ with a bank loan with an interest close to 4%?
    How about a company with over 16M$ in the bank (end of Q1 2010) ready to either pay everything off or do some acquisitions in the Philippines?
    How about a company actually at the end of a 4 months drilling program to confirm gold presence in Balabag (100% owned by TVI) with results soon to be released?
    How about a company that has signed an agreement with DCMI (one of the major Philippine Company operating in many areas) to develop near Canatuan property in a JV form agreement?
    How about a company that has so many properties or mining right that they cannot drill them all right now by themselves?
    How about a company that can move around from bankruptcy (or close to) and become, within 1 year, a very highly profitable corporation?
    How about a company that has a facebook site and corporate web site so complete that nothing is hidden anywhere and any questions can be asked and answered at any time?
    How about company making copper shipments almost months after months on a very regular basis?
    How about a production cost per ton of close than 0,60 cents?
    How about 0,10 cents per share and a market cap of 49M$ when revenues will be close to 80-100M$ ?
    Is that possible at all? Yes it is and it is the story of TVI Pacific lead by Mr Clifford James.
    This little (but very profitable) company was facing bankrupt in early 2009 when they were able to obtain the necessary credits to go ahead with their Canatuan copper circuit that was commissioned in march 2009 and shipments started in April of the same year. Since that time 15 shipments have been realized and profit is absolutely incredible. In early 2009 plan was to get about 3M$ in revenue per month but ramping up production and keeping cost down made TVI able to get revenues over 26M$ in the last quarter and a very profitable 3months with 8M$ in net profit even when amortization of loan was taken into account (paying off debt earlier than expected forced TVI to recalculate their original loan expenses on a yearly basis instead of a 5 year term). Without that recalculation net profit would have been over 10M$ IN ONLY 3 months. If this is not performance I am wondering what could be…
    So what’s missing?
    Mine life extension:       How about the zinc circuit coming operational soon with a take-off agreement very profitable?
    How about Canatuan expansion with Dacon? Are they not the experts in road, bridges, almost all kind of infrastructure so dearly needed to access those hard to reach areas?
    How about Balabag where maybe close to 1M ounces of gold will be proven? Is this not close to 1B$ (1000 million dollar$ project)
    How about jv ventures to explore the lands where mega budget are needed?
    Why not partnerships with a company like Xstrada to join TVI in developing some areas?
    It could be just plain speculation from my part but could you imagine the result on the share value?
    Honk Kong Listing            Why not? Do you really believe TVI has all the audience in Canada they deserve? Who care about a Canadian company operating in the Philippines? Do they know that Philippines are one of the biggest resources area and most of it NOT being mined? I would bet that the mentality in Asia is a lot more investment based than speculation…What would be an initial IPO in Hong Kong: 50M$, 100M$ or a regional listing for Canadian shares? Had you had a look recently on the way foreign company listed in Hong Kong have been received? Well a lot better than we do with our own companies. My impressions are they know more about finance than we do. Maybe it is also a difference in the mentality. Maybe they know where they want to go but also knows the time needed to get there.
    It is fascinating to see many companies with share price based solely upon expectations and speculation. They have neither revenues nor profit but they still manage to have sometimes their share valued higher than a company like TVI. They climb really high really fast then the drop like a rock when they find out nothing was to be drilled out there. They sometimes look like some gas and oil drilling companies promising to drill so many barrels per day that they will all become billionaires and end up finally with not even oil enough to fill a lighter…(I can name a few but will restraint myself..)
    Maybe our way to evaluate a company is more from a speculative view than financial reviews…Maybe it is time to even evaluate our own analysts…Maybe it’s time to evaluate our own way of investing (or the radical definition of investment).
    But in the stock market business you always like to find a great company before everybody else ear about them and in my humble opinion, that is the case for TVI Pacific. A perfect company for an investment in Asia where the money is, where the resources are and where the people have the ‘know-how’ to be profitable.
    To me TVI was, is and will still be one of my favourite pick for 2010 and unless something dramatic happen, it will also be for 2011 as I think their future is a lot brighter than their past and with all projects underway, one will someday catches a lot more attention and guess what: share value will sky rocket.
    So this deal on share is ‘WHILE QUANTITY LAST. SORRY NO RAINCHECKS…’


    Disclosure: long on TVIPF
    Tags: Mining
    Jun 04 11:32 PM | Link | Comment!
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  • Just wrote up an article about UWN on my instablog. Check it out!
    Sep 29, 2011
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