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A. Portmann's  Instablog

A. Portmann
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I have over 15 years of experience in the banking and finance industry. I hold a BBA and am a Certified International Investment Analyst (CIIA) and portfolio manager. I am the fund manager at GPA Portfolio Management in Zurich, Switzerland. We offer professional portfolio management with a... More
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  • Timmins Gold - Growing Gold Producer - Lots Of Upside

    Timmins Gold TGD is well positioned for continuous growth as a gold production and development company. The Company owns and operates the San Francisco Gold Mine in Sonora State, an open pit heap leach operation from which Timmins Gold is expanding production to 125,000 - 130,000 ounces of gold in 2013.

    On the exploration front, Timmins Gold has over 200,000 hectares of claims contiguous to its mine along the highly prolific Northern Sonora Gold District. Exploration success around the mine has significantly increased gold resources and reserves. The Company is committed to an extensive 200,000 meter program in 2013 for further resource and reserve growth.

    Source: www.timminsgold.com

    Valuation

    (click to enlarge)

    Source: TD Securities

    Our own discounted cash-flow valuation (DCF) puts Timmins Gold's net asset value as follows:

    NAV: CAD 3.60

    P/NAV: 0.68x

    The current share price does not reflect the company's future cash-flow from production, nor does it value its current gold resources adequately. Current market capitalization of Timmins Gold prices their entire (unadjusted) gold resources at only $115 / ounce.

    We therefore see Timmins Gold at the current price levels of CAD 2.28 as a buying opportunity.

    Fundamental Considerations

    ESTIMATED PRODUCTION FOR 2013 OF 125'000 OUNCES OF GOLD SHOULD LEAD TO A SIGNIFICANT RERATING OF THE COMPANY, ONCE THE MARKET RECOVERS FROM ITS PRESENTLY OVERSOLD CONDITION.

    IMPORTANT FACTS THAT SPEAK FOR TIMMINS GOLD ARE:

    · POSITIVE CASH FLOW GENERATED IN 2012 AND GOING ONWARD

    · EXPANSION OF PRODUCTION IN 2013 AND 2014

    · PROMISING EXPLORATION RESULTS

    · CASH COSTS OF $750 / OZ. ARE AT THE LOWER END

    IN REGARDS TO OCF AND GOLD OUNCES IN THE GROUND TIMMINS GOLD IS VALUED WITH A DISCOUNT TO OTHER PRODUCING MINES IN MEXICO AND SOUTH AMERICA.

    My entire report can be downloaded following this link: http://pzim.ch/file_uploads/reports/25_0_tmm1.pdf

    Disclosure: I am long TGD.

    Tags: TGD, Gold Miners
    May 08 9:36 AM | Link | 1 Comment
  • When Gold Gets Nationalized- Gold Equities Are The Only Place To Go

    There has been a lot of talk about "nationalization" of gold. Basically like 1933 the government would confiscate gold and make it against to law to own gold (above a certain quantity).

    In the last couple of months we have seen more signs that there could be a "real" shortage of physical gold, especially in the US. The April 12th gold crash was obviously orchestrated (who would sell almost 400 tonnes of gold into a thinly trading market...?). Rumors were that some bank needed to buy gold (at lower prices), as they couldn't deliver physical gold against their "paper" promises.

    Investors all over the globe have decided to rather own physical gold (vs. paper gold). Further it was interesting to note that the German Bundesbank is repatriating its gold from the USA. The Swiss National Bank by the way just last week reported that it does not have any of its physical gold in the US (but only in Canada and Great Britain). That is very interesting, as one might argue that Switzerland had a substantial amount of its gold in the US after WWII. What happened. Is really all the gold at Fort Knox. Why is there no audit at Fort Knox?

    Enough of conspiracy theory. Fact is that should the US government decide to put its hands on physical gold, then not only are the US based gold markets (COMEX, etc.) finished, but as well most gold ETFs will be closed down. There remains just one alternative to benefit from raising gold prices: the gold miners! Buying shares of the gold miners would offer the only "legal" and profitable way to keep ones exposure to the gold price.

    The gold miners are trading now at record low valuation levels. Why not take this unique opportunity and get some exposure to this "ultimate" safe-haven investment?

    May 06 8:22 AM | Link | Comment!
  • The Potential Of Junior Miners

    Current Valuation of Gold Mining Equities offer substantial Upside

    The chart below show just how much gold miners are currently undervalued in regards to the gold price. The equity/gold ratio calculated below (The Philadelphia Gold & Silver Mine Index divided by the Gold Spot price) shows that the equities have never in the last thirty years traded at such low levels.

    (click to enlarge)

    Junior Miners offer larger Potential

    Normally Junior Gold Miners have a higher leverage (or beta) to the gold price than the Senior Gold Miners.

    This can be seen on the chart below:

    (click to enlarge)Times of Junior Miner Outperformance

    The green marked time-periods show where Junior Miners outperformed the Senior Miners. This usually occurs while the gold price is in a massive upward trend.

    We expect this outperformance of Junior Miners to repeat itself in the next up leg of the gold price.

    Mar 25 10:43 AM | Link | Comment!
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