My interest here now isn't one driven by a traders perspective rather than an investors perspective...
It is simply a fact that these shares aren't traded heavily and aren't well known to the market. They are traded like they are shares in an early stage junior explorer, not like shares of a well established producer. There are a lot of reasons for that... and there are a couple of straightforward items of awareness that investors doing the DD here will appreciate...
Given where we are, and how the company is perceived... I'll take an investors approach to holdings here.
A first item of awareness here should be that we aren't near the cyclic peak in gold and silver markets, rather than in the early interest stages of a cycle where there is early stage speculation, not commitment, to the concept that there is GOING to be some inflation at some future point, of some unknown magnitude. Most well known mining stocks are not yet back to where they were before the market meltdown last year... which is not the definition of a market peak in mining shares ?
The bull market cycle in metals tends to have the junior producers, and even more, the junior exploration stocks LAG the larger producers by a fairly wide margin... for good reasons.
The penny mining stocks are a market backwater... where you need to know geology, and know mining, and know mining management, and know the people in the industry, to handicap potential.
The mining majors are vetted by the money managers, and will trade into the portfolios of money managers, AS the shift in the cycle becomes more apparent... As metals prices rise, and mining company profits grow, the majors will make money, and they will use that money to grow rapidly by acquiring others. Those with no debt now will have larger growth potential than those who are already fully leveraged. As acquisition growth accelerates along with the big company profits... about mid point in the market cycle... junior producers will be bid up... not by mom and pop... but by institutional investors and by the attention the sector gains by the need for larger producers to grow production rapidly, with immediate accretion from FUNCTIONAL PRODUCERS who also have ability to accelerate, given investment from larger partners, or acquisition by deep pocketed majors. A key driver is the timeliness of the ability to move a property to production without needing to engage a learning curve in the geology, or prove the potential through exploration over time...
Buyout pressures more than metals prices will move junior producers higher. Junior explorers will tend not to benefit from that interest at all. They aren't THERE. When you see junior EXPLORATION companies moving much higher... as money flows in to enable them to DRILL, and EXPLORE... rather than squat on leased properties... THEN they will EXPLODE... and you will know you are nearing the cyclic peak. Within a year or so of the explorers going nuts, with exploration fever driving pennies to dollars based on rumors or "indications"... the peak is approaching. Explorers are ALWAYS late to the party... and investors are ALWAYS wondering why... and the reason is obvious.
CYLPF is uniquely positioned... because they are SEEN now as a junior exploration STOCK... when the fact is that the COMPANY runs a MATURE PRODUCING operation... with the potential to rapidly become a MAJOR PRODUCER in their own right... AS the prices going up convert them to profitable producer status.
I expect that means CYLPF will still lag the moves you will see in the majors as their profits grow, with the market paying attention. And investors here should expect price appreciation here will be tied to the same thing, driven at first by metals prices in the time it takes for that change in metals prices to be reflected on the bottom line as PROFITS... This ISN'T a junior exploration company. It also ISN'T seen by the market as an established producer...
So, there should be a two stage change in price here...
The first will occur roughly in parallel with the majors based on the next two or three quarters of moves in metals prices, IF those moves prove the thesis that metals prices ARE going higher, and profits will prove the fact of that shift makes CYLPF into an overlooked and usefully PROFITABLE producer...
The next will occur in parallel with the shift to recognition of the bull cycle, as majors begin recognizing they can't ride the cycle for most benefit by taking years and years to develop an exploration target... so, at that point, where acquisitions drive market interest... either CYLPF will transition to being recognized and fairly priced as a PRODUCER in its own right, or else it will become an acquisition target.
Tell me where we are now relative to the coming inflation... where we are in timing relative to the explosion in a bull market in metals... and I'll tell you how far away from the first shift...
PRIOR to that time... share prices are likely to drift higher in anticipation... but, note, it is us few lonely realists here with an interest now that ARE the market...
My preference is for my timing expectations to be met. I think the big bout of inflation is still a year or more from really ramping up... but could be wrong.
I think there is enough awareness that metals prices aren't going lower, but, we may be nearing the point at which they begin to go a bit more vertical... based on growing DEMAND and not yet based on realizing the risks of inflation.
I think, for now, CYLPF will be limited to trading higher based on the PE they show us based on current and near future metals prices. So, there is a ramp up in price that will occur BEFORE the first stage drivers above kick in... which should happen within a year or two...
Three steps to watch, here...
I'll give CYLPF two or three more quarterly reports... showing profitable operations... to drive it to a decent PE as a producer, PRIOR to the first stage ramp up. I expect Montanore to continue to be frustrated by the sluggishness of the moves... as it "drifts" more than is "driven" higher... by maybe 5 or 10X in a year, depending on how management gets us through this period. Then, pairing a hot metals market with success in the effort to open closed shafts, expose new mine faces, better manage grades moved to the mill, etc ? The multiple should change with metals prices....
Third stage ? Two to five years out. If they pinch pennies and are smart... they may become the acquirer rather than the acquisition target... price targets depending on metals prices capped with the multiples showing froth.
As you near the peak... you might expect a PE of 50 or more... with price AGAIN not being about value, only on the opposite end of the scale in the extremes from where we are now...
Then, after a first round effort related to acquisition and consolidation in mid cycle, you might see them shift focus to longer term acquisitions of lower cost production potentials... the CDE strategy, again, only funded with $$$ from profits focused on exploration, rather than leverage loaded on at the peak of the market ?
As the market peaks and reverses, they'll sustain profitability only by reducing costs more than they can mining in Idaho... they will have used the Silver Valley resources to become another CDE, but, by that time, most here now will be long gone... the whole cycle will take maybe eight years...
Wildcards... include that IF we aren't on track to have massive inflation kick in "soon" and BEFORE having another collapse in finance, things could take longer to develop... and, if they do, the probability is that the shifts that occur will perhaps be MORE dramatic rather than less so...
There is potential that might not pan out... for reasons you'd rather not have realized... an implosion in the structure of global trade, trade wars leading to real wars, etc. There is more than the financial issues following 1929 that you'd like to see avoided in the next two decades.
So, how much do I care about the difference between $0.12 and $0.15 ? Not much. The only thing I left out of this bit on my perspective and expectations, is the part from November 08 up until now.
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