International Tower Hill Mines (NYSEMKT:THM) CFO Tom S. Q. Yip is going to resign at the end of the year. The company has yet to find a replacement, although Yip has agreed to stay on as a consultant during the process of transition to a new CFO. The announcement wasn't specific as to Yip's reason for resigning, although it is clear that this is his decision rather than the company's.
Recently, we've seen several senior executives leave in the mining space, and the announcements are vague and immediate. This has aroused my suspicion, and in expressing that I've met with backlash. So in this case, I appreciate how International Tower Hill announced Yip's leaving: the company gave notice, it gave a reason (he is pursuing other interests, meaning he probably got another job), and he has agreed to stay on as a consultant as management locates a replacement. While I never like to see an executive leave, especially at what looks like the (near) bottom of the market, I think this was handled very well.
With that being said, International Tower Hill Mines unfortunately still suffers from the problems that have dragged its share price down >95% from its peak. As I pointed out this summer, the company's Livengood Project is not economical at $1,200/oz. gold, and the gold price would need to double in order for the project to become attractive. With that being the case, management has worked towards putting together another study, in which it explores a smaller mine plan with a lower initial capex. The company's financials have never been an issue, and in fact, throughout much of the company's downfall, it has been well-capitalized, indicating that Yip had done his job more than adequately.
Going forward, there are two reasons one would own the stock. The first is as a de facto call option on gold. You're essentially buying gold ounces in the ground for a little more than $1/oz., because they will be so expensive to extract. But for investors looking for much higher gold prices (again, at least double) this may be the best leverage vehicle out there if you're looking at only current resource estimates. The second is a successful optimization plan. Several companies now are exploring or have explored how to lower their initial capital needs by building smaller mines. Small projects are less risky from a financier's standpoint, and they can always be expanded if market conditions are conducive.
With that being said, International Tower Hill Mines is not dead, in spite of the horrendous price action. This is no slam dunk, but it is a long shot with even longer rewards at the current valuation.
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