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  • Silver Wheaton Meets a Lot of Buffett's Core Criteria [View article]
    You are mistaken about SLW not having a moat. Actually it has a huge moat or competitive advantages in its business. Nearly all of its silver-streams are Life-of-Mine (LOM) contracts meaning +10yrs later they will still getting the same silver-stream. In many cases LOM is even longer than that. The idea of a moat is that it prevent competitors from taking away their business. How can anyone take away their current business if it is contractually set? The long-term contract is the moat. In terms of future business, there really are not any comparable sized competitors to really threaten their position in silver-streaming market. Perhaps the the larger gold royalty could push their way in but their niche is gold.
    Aug 24 03:23 AM | 1 Like Like |Link to Comment
  • BNN: Los Azules: Rob McEwen on U.S. Gold and Minera Andes Proposed Merger and its valuation tnr.v, ilc.v,, tck, cuu.v, czx.v,,,,,,,,,, bhp, fcx [View instapost]
    I stand corrected, TNR in the new claim does contend that "Xstrata and Minera Andes did not complete the required exploration expenditure required for Xstrata's exercise option on April 23, 2007 to Properties" as per their May 16, 2011 press release.

    However, TNR can claim anything they want but proving it in court will be another thing. I would contend the chance of them being successful in their new claim is low considering the facts.

    On Sept. 6 2007 press release titled "Xstrata PLC Vests its interest in the Los Azules Property, Argentina" within which it states:

    "To earn the 100% option, Xstrata agreed to cash payments totaling US$560,000 and incur exploration expenditures totaling US$1,000,000 by May 15, 2008. ... All cash payments due by May 15, 2008 have been received. All exploration expenditures have been incurred."

    So basically they are contradicting themselves between then and now. Thus, it will be tough for them to make much of a case in court of why they took the money and said the obligations were fulfilled yet 4yrs later they comeback when things are not going their way and claim the obligations were not fulfilled. This is a TNR pressure bluff.

    Now, even if one considers this low probability event to occur and TNR gets 50% of Los Azules, the valuation of Minera Andes (as you have noted above) under such a circumstance would be reduced by 10% from $4.26 to $3.82 ($4.26 - 0.5*$0.88). This is not that much relative to the company's total assets. Consequently, no matter how the litigation turns out the underlying effect on Minera Andes shareholders will be small. Even if the litigation did not exist, the sale of Los Azules would not likely happen until a (pre)feasibility study is completed which will take 1-2 more years. So all those out there worried about this event can relax.

    Regarding the merger with UXG, it is a share exchange or more fundamentally an asset exchange; MNEAF gives up 56% of their assets in exchange for 44% of UXG's assets. Thus, one can not credibly determine the merits of merger unless an independent valuation is performed on UXG as well. Is the market overvaluing or undervaluing UXGs assets? Your entire discussion of the merger terms as equivalent to $2.15 should be revised because it is not correct. Your valuation should be based on fundamentals not efficient markets. Here is an example of a back-of-the-envelope valuation of UXG:

    Best of luck.
    Jul 6 08:32 PM | 1 Like Like |Link to Comment
  • A Value Investor's Case For Clearwire [View article]
    All I am implying is the spectrum-valuation should include a PV of the spectrum-lease-expense. You can assume whatever values you want for MHz-POP for owned or leased spectrum and whatever discount rate you think is best.

    But what the above analysis implies in your pessimistic case is
    value_(owned spectrum) = $0.21 per MHz-POP
    value_(leased spectrum) ~ $0.41 per MHz-POP*

    I am not implying that any of the numbers I used should be construed as accurate appraisals. My point relates to method & procedure only and I am pointing out that further clarification would be needed to take into account the inherent financial difference between owned vs leased spectrum.

    *again assuming PV5%
    Oct 10 05:35 PM | Likes Like |Link to Comment
  • A Value Investor's Case For Clearwire [View article]
    $0.20 : Revenue (Leased Spectrum)
    +($0.20) : PV5% of lease expense
    $0.00 : Gross Profit to CLWR for leased spectrum

    $0.20 : Revenue (Owned Spectrum)
    +($0.00) : Cost
    $0.20 : Gross Profit to CLWR for Owned spectrum
    Oct 10 10:13 AM | Likes Like |Link to Comment
  • A Value Investor's Case For Clearwire [View article]
    If I am buying spectrum already subject to a lease agreement then I am not going to pay $0.20 per MHz-POP to Clearwire AND then pay another yearly lease-fee of $0.01 per MHz-POP per year to another third-party which is equivalent to another $0.20 at PV5%. Thus, if Clearwire were to sell its leased spectrum for $0.20, one can make the case that all that $0.20 would flow through to underlying leaser and NOT to Clearwire. Thus, Clearwire would only get paid in-full for its owned spectrum.
    Oct 10 09:35 AM | Likes Like |Link to Comment
  • A Value Investor's Case For Clearwire [View article]
    Hi Cale,

    It looks like you are taking both the owned and leased spectrum to be the financially equivalent which is a mistake in my opinion. Clearwire has 19.32 b MHz-POP of owned spectrum and 26.68 b MHz-POP of leased spectrum. For their leased spectrum they paid a spectrum-lease-expense of $280m in 2010 or $0.01 per MHz-POP. Taking the present value of that lease-expense at a 5% discount gives roughly $0.20 per MHz-POP ($0.01/.05). The EV / MHz-POP (owned) = $0.23 (i.e. $4,400m / 19,320m MHz-POP). Basically, one can make the case that your pessimistic scenario is roughly equivalent to the current share price if one looks solely at the spectrum value.

    Oct 10 12:20 AM | Likes Like |Link to Comment
  • BNN: Los Azules: Rob McEwen on U.S. Gold and Minera Andes Proposed Merger and its valuation tnr.v, ilc.v,, tck, cuu.v, czx.v,,,,,,,,,, bhp, fcx [View instapost]
    The information contained within this post is incorrect regarding what land-claim is contested by the TNR dispute. Simple fact-checking will show that none of the Los Azules copper deposit is within the contested claim. See the Exhibit 4 of the June 27, 2011 press release. The consequence of which is that however the litigation turns out it will have negligible effect on Minera Andes.
    Jul 6 02:41 PM | Likes Like |Link to Comment