RoX''s Investment Forum

[cleverrox]

Working on Petrobank roundup.

Dawson - 203M barrels * 44% recoverable via THAI = 88M barrels reserves AND 25K bpd extraction rate (Source 1)

Conklin - 669M barrels proven and probable and contingent reservers



Source 1: http://www.ogj.com/index/article-display.articles.oil-gas-journal.drilling-production-2.production-operations.ior_eor.2010.11.petrobank-receives.QP129867.dcmp=rss.page=1.html

http://www.newtechmagazine.com/issues/story.aspx?aid=1000363947

[cleverrox]

TTIL ($1.58) Assessed the business and saw that the share price jumped on EPS of $0.07 last quarter. However $0.06 of that was a financial gain. Only $0.01 was core operations. Because of that I wasn't willing to take a position even though they have an extremely good balance sheet and a positive outlook. I think if investors are expecting another $0.07 quarter the stock might tank. There are better opportunities out there.

[cleverrox]

MFLU ($0.77). I reassessed and took a position at $0.81. They have a robust turnaround in their business underway. It will take some patience to bear out though as revenues can be lumpy Q to Q. I and predicting EPS of $0.12 for MFLU in 2010 and I am comfortable taking a position paying under 7x 2010 EPS of $0.12 or $0.84 - though I am shooting more for a position under $0.80.

[cleverrox]

Assessed MFLU ($0.94) and did not buy. I would be interested in getting into it around $0.80 a share. I may place an open order for it. They look to have at least a little growth potential and it will be interesting to see if they can keep increasing gross margins. They have done so the last three quarters. It seems to me they may have squeezed a lot of the easy waste out of their system already.

From 10bagger post:

MFLU..$0.89

This IMO is one cheap stock..hank

Microfluidics International Corporation Announces Third Quarter 2009 Financial Results

Company Reports Net Income, Strong Demand by Vaccine Developers and Manufacturers

NEWTON, Mass., Nov. 2 /PRNewswire-FirstCall/ -- Microfluidics International Corporation (OTC Bulletin Board: MFLU - News), today reported unaudited financial results for the third quarter ended September 30, 2009.

Third quarter accomplishments:

•Earned net income for the third quarter of $425,000
•Achieved $650,000 in earnings before interest, taxes, depreciation and amortization (EBITDA)
•Delivered strong bookings in the third quarter of $4.8 million and a backlog of $4.75 million as of September 30, 2009
•Generated $4.5 million in revenue for the third quarter, a 27% increase over the same period in 2008

"I am pleased to report that the strategic plan we implemented a year ago has led us to our first profitable quarter since my joining the Company," said Michael C. Ferrara, Chief Executive Officer of Microfluidics. "We will continue to innovate with new products, increase international representative and distributor coverage, streamline costs and improve quality in support of our customers as we strive to carry this positive momentum through the second half of the year and into 2010."

"The initiatives and strong cost controls implemented in the first half of the year are yielding tangible results," said Peter Byczko, Vice President of Finance and Chief Accounting Officer. "Demand in our product line remains strong, especially within our core biopharmaceutical markets and customers are exhibiting increased interest in value-added services as they realize the importance of maximizing machine uptime and availability. We are pleased with our results and will continue to work to improve the financial position of the Company."

Third Quarter Financial Results:

Revenues for the three months ended September 30, 2009 were $4.5 million, an increase of $1.0 million, or 27%, as compared to revenues of $3.5 million for the three months ended September 30, 2008. North American revenues were $3.2 million, an increase of 63% as compared to $2.0 million in the third quarter of 2008. The increase in North America was offset by a 19% decrease in foreign sales from $1.5 million for the third quarter of 2008 to $1.3 million for the third quarter of 2009. Our gross margin increased to 66% in the third quarter of 2009. This increase is attributable to pricing actions taking effect and appropriately adjusting our pricing to cover additional services requested by our customers. Net income was $425,000, or $0.04 per diluted share, for the three months ended September 30, 2009 as compared to a net loss of $1.1 million, or $0.10 per diluted share, for the same period in 2008.

EBITDA was $650,000 for the three months ended September 30, 2009 compared with a $930,000 EBITDA loss for the same period in 2008. EBITDA is a Non-GAAP financial measure. A reconciliation of GAAP net income to Non-GAAP EBITDA is provided in the financial tables that accompany this release and is discussed under the section below titled "Non-GAAP Financial Measures."

Year to Date Financial Results:

Revenues for the nine months ended September 30, 2009 were $11.5 million, an increase of $83,000, or 1%, as compared to revenues of $11.4 million for the nine months ended September 30, 2008. Net loss was $442,000, or $0.04 per diluted share, for the nine months ended September 30, 2009 as compared to $2.3 million net loss, or $0.22 per diluted share, for the same period in 2008.

EBITDA was $230,000 for the nine months ended September 30, 2009 compared with $2.1 million EBITDA loss for the same period in 2008.
http://investorshub.advfn.com/boards/board.aspx?board_id=10347
http://investorshub.advfn.com/boards/board.aspx?board_id=5211
http://investorshub.advfn.com/boards/board.aspx?board_id=3251

[cleverrox]

Assessed ERSO ($1.41) and did not buy.

From researcher59:

ERSO (1.25) looks interesting at these levels …. Stock hit $1.75 a few weeks ago but has corrected sharply. Q3 was disappointing, with operating EPS of only about $0.01, but may have marked the cyclical bottom for earnings. Aluminum prices have risen significantly in recent months and are now the highest in over a year. Furthermore the company took a big charge in Q3 to eliminate its money losing extrusion business so that will no longer be a drag on earnings going forward.

Other noteworthy positives - an ongoing share buyback program with nearly 6% of outstanding shares bought back in the past year. Tangible book value of $3.23. A dividend yield of around 8%.

Peak EPS was nearly $1 both in 2005 and 2006 when the company traded under symbol ERS and was IBD’s #1 ranked stock as it ran all the way up to $64 in a momentum frenzy. It's basically the same company now as it was then.

I think the Empire Resources is likely to experience a solid turnaround in 2010 and I'm accumulating shares at these levels, a whopping 98% discount from its 2006 high !

My comments:

ERSO is a pink sheet stock with no SEC filings. I just can't do pinks any more.

[cleverrox]

Added medium size GORO ($9.60) position on news of more reserves. I wanted more exposure to gold and GORO has a first class property, no hedges, no debt and clean management. Plus I feel a buyout of GORO is in the cards.

[cleverrox]

Added to IACAF in anticipation of lots of good news in December on operations and reserves.

[cleverrox]

Added small positions in gold, silver and oil companies.

NEP, JAG, CGAFF

[cleverrox]

PWEB bought and sold and took a loss. I thought they were getting out of their less than noble eBay training service. It turns out that their web services division is a crooked scam. I thought it was legit... Google's news that they were suing PacificWeb caused the stock to tank hard.

[cleverrox]

CALI ($4.73) Bought a tiny position in this one. I feel automobiles will be a growing market as the size of China's middle class continues to explode. I read recently that car sales in China are up 80% this year for at least one type of car. Also I like that much of CALI's growth is in high margin web site advertising and services.

[cleverrox]

Added more TELT to 2.5% of portfolio. Added more IACAF to 6.5% of portfolio. Pity I didn't put get some better deals today with the market down 3% at open. Sadly I have a lot of cash waiting to settle...

[cleverrox]

TELT ($1.40) Bought a bit in anticipation they can post another quarter of growth. Stock is ridiculously cheap. I wasn't impressed with their website though. It seemed weak on details and I think their product range is too wide. They would do well to focus more on what they excel at.

[cleverrox]

NZYM ($0.98) Picked up an initial position because a slight upturn in business could do terrific things for their gross margins. I calculate a 25% increase in revenue could drive earnings to double current levels.

[cleverrox]

IACAF ($0.88) Bought more anticipating an increase in reserves will drive the stock price up. Earnings will obviously improve when they don't suffer so much depreciation each quarter. Trades at 1.5 cash flow which is cheap. I'm thinking the continued dollar weakness should hold oil prices steady regardless of the glut of oil being stored.

[cleverrox]

BGZ. Closed position. I'm expecting a 20% pullback in the stock market. However I don't know when. I don't want to hang onto this hedge for years waiting for it to finally hedge me... With the Fed holding interest rates at 0% people are going to chase risk. If inflation takes off and the Fed continues to sit at 0% - people are REALLY going to chase risk. This game could continue a while.

[cleverrox]

VZ ($31.69). Closed my position. There has to be a better return elsewhere. Droid isn't selling enough units to break AT&T's stranglehold on the wireless industry.

[cleverrox]

ERRCF ($0.17) Bought and roundtripping most of it for a loss. I bought too fast on too little information. I didn't take time to find all shares issued since the last 10-Q which in this case made a huge difference. Then I made an assumption that the gold grade for the entire mine was going to be close to the 1.4 ounces in the PR.

I don't like how the company hasn't released their drilling data that I can see. Their "plan" is fuzzy as well.

[cleverrox]

IACAF ($0.87) - Picked up initial position today. Have decided that I want to keep at least a minimum amount of energy stocks at all times. This one seems to be the favorite based on balance sheet and valuation.

[cleverrox]

ZAGG ($6.50) - Took another 12.5% off the table on risk of poor Q report.

[cleverrox]

PWEB.OB. Sold for $0.276. Could go higher on 10-Q but I'm fearful they will have another break even quarter or earn at best $0.01. Plus I'm not real impressed by the transparency of the business model. They don't break down revenue by business sector.

Paid $0.221 Sep 21.

[cleverrox]

ZAGG ($6.83) Sold 12.5% of position today to reload my cash coffers and to take some profit. I fear a backlash if EPS doesn't exceed $0.05 this Q.

BGZ. The markets rallied today because the G20 said there would be easy money to combat the horrid economic environment. That doesn't wipe away the horrid economic environment. I bought a swing trade position because I feel the market is overvalued based on a jobless recovery and current high P/E ratio.

[cleverrox]

ZAGG ($5.40) - bought today on expected strength of upcoming 10-Q, low entry price and Nasdaq listing. I especially expect the Nasdaq listing to add some visibility.

[cleverrox]

Another great news day - retail sales up 2.7% - with muted response by the market. Sentiment has at least turned neutral now.

[cleverrox]

QID - bought QID today to short the market. I feel this rally is overdone and the economy remains fundamentally very bad with falling home prices and poor retail sales combined with rising unemployment. Liquidity in banks isn't going to magically fix that. $600B in home equity loans and mortgage refinancing per year won't be pumped into the economy as it has the past 3-4 years.

[cleverrox]

ZAGG.OB - table pounder at $1.10. Make clear, military grade scratch proof covers for 2500 phones, laptops, cameras, etc.

Highlights: IMO you will see over $5M revenue from ZAGG this quarter and possibly as high as $7.5M. EPS of $0.03 to $0.07 for 3Q reporting mid-November.

As indicated in link #1 iPhone 3G sales in the U.S. are estimated to be 3M this quarter. ZAGG sold 100,000 iShields for the first 1,000,000 iPhones. If the penetration rate drops from 10% to 8% on 3M that will be 240,000 iShields. At $20 a pop that is $4.8M revenue on the iPhone 3G alone. Best Buy according to anecdotes is selling about 5 a day iShields at each of their 300 stores carrying it. That is another 135,000 iShields a quarter for $10 a piece for another $1.1M revenue. Add in another $2M revenue for the rest of their product line and you could hit around $7M. I won't even figure in sales from the mall kiosks - but I think those could be even bigger than Best Buy. I especially like them because they solve a big product problem - ease of application. I would gladly pay someone $10 to apply the thing professionally.

I roughly estimate they could earn $0.03 to $0.07 EPS fully taxed on $5M to $7.5M revenue this quarter. Give it a FW P/E of 20 like ZYNX and you get maybe $2.40 to $5.60 a share. I would argue this company is "sexy" and could get a P/E premium.

I have studied the products of competitors and the biggest competitor is Clearshield. Their product is glossier for smoother finger movements across the iPhone. However it tends to come off easier than the iShield which is probably why they ship 3 packs. Some people have said Clearshield's newer shields are not of the quality they were a year ago - like the formulation has changed.

The criticisms of iShield are that it is hard to apply properly and can leave enough space at the edges for lint to accumulate on the edges. It is also pricey - though I think compared to replacement cost of say an iPhone it is a no-brainer.

To me what is very exciting is the next two quarters are almost certainly going to be huge. The CEO predicts between $8M - $10M revenue the next two quarters with a good possibility of upside. I've heard they have been very conservative on projections so I'm going to say they will almost certainly hit $5M revenue each of the next two quarters.

My big concern is whether they can lower SG&A percentage as revenue ramps up. I expect they can. If they can't control costs - EPS will be abysmal even with higher revenue.

The CEO owns 38% of outstanding shares. They are now cash flow positive so I expect few additional shares to be issued. I couldn't find any unconverted outstanding debt - though I haven't been thorough. I have an enquiry with the CFO outstanding. They seem to file on time with the SEC.

An AMEX listing should boost visibility and fund ownership. I think it will happen as soon as they meet the qualifications. Probably would need $2.50 share to make it happen.

Link #1: http://money.cnn.com/news/newsfeeds/articles/apwire/148fa85a98767e861feceda1164a231c.htm

[cleverrox]

A good write-up on GORO.

http://www.investorvoices.com/goro/2008-0717

[cleverrox]

SRRY is a good buy here. For Q2 they will post $0.02 EPS. That is with a lot of expense and problems caused by the earthquakes. I expect they can hit $0.04 EPS again easily. The stock is cheap at $0.50.

[cleverrox]

GORO - more great exploration results. What is really nice is most of the metal in these holes is gold - not silver or other metals.


FOR IMMEDIATE RELEASE
July 1, 2008
OTCBB: GORO
FRANKFURT: GIH


GOLD RESOURCE CORPORATION INTERCEPTS 5M OF 45.24 G/T (1.45 OZ/T) GOLD AT EL REY


DENVER – July 1, 2008 – Gold Resource Corporation (GRC) (OTCBB: GORO, FRANKFURT: GIH) is pleased to report 5 meters of 45.24 g/t (1.45 oz/t) gold at El Rey. El Rey is one of 4 properties in the state of Oaxaca, Mexico in which GRC has 100% interest. El Rey is being evaluated for accelerated development where high-grade gold ore could potentially be trucked 95 kilometers to GRC’s El Aguila mill, currently under construction. The Aguila mill is targeting gold production at the company’s flagship project, its El Aguila Project, by the end of 2008 subject to timely obtaining the remaining required permits, regulatory approvals and equipment delivery schedules.
El Rey drill highlights include:
Hole # 208024

• 3.0 meters of 64.87 g/t gold, 118.67 g/t silver within,
• 5.0 meters of 45.24 g/t gold, 122.80 g/t silver

 
 Drill Hole # 208024 highlights include: 
 Hole	Angle	From	Interval Au	Ag	AuEq*	AuEq* 
 #	(deg)	Meters	Meters	 g/t	g/t	g/t	oz/tonne 
 208024	-60	59	1	 63.20	44	64.15	2.06 
 	-60	60	2	 65.70	156	69.09	2.22 
 	-60	62	1	 19.75	94	21.79	0.70 
 	-60	63	1	 11.85	164	15.42	0.50 
 Average			5	 45.24	123	47.91	1.54 
 

*Gold Equivalent=Au@$650, Ag@$14. Assays by ALS Chemex, Vancouver, BC Canada

Mr. William W. Reid, President of Gold Resource Corporation stated, “El Rey continues to impress us with 5 meters of 1.45 ounces of gold. Though our main focus has been and will continue to be bringing the Company’s flagship El Aguila Project into production, we are evaluating the possibility of blending El Rey’s high-grade gold mineralization into our first year’s production schedule.”

About GRC
Gold Resource Corporation is a mining company focused on production and pursuing development of gold and silver projects that feature low operating costs and produce high returns on capital. The Company has 100% interest in four potential high-grade gold and silver properties in Mexico’s southern state of Oaxaca. The company has 34,206,952 shares outstanding and no warrants. For more information, please visit GRC’s website, located at www.Goldresourcecorp.com and read the Company’s 10-K for an understanding of the risk factors involved.

This press release contains forward-looking statements that involve risks and uncertainties. The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. When used in this press release, the words “plan”, “target”, "anticipate," "believe," "estimate," "intend" and "expect" and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements include, without limitation, the statements regarding Gold Resource Corporation’s strategy, future plans for production, future expenses and costs, future liquidity and capital resources, and estimates of mineralized material. All forward-looking statements in this press release are based upon information available to Gold Resource Corporation on the date of this press release, and the company assumes no obligation to update any such forward-looking stateme
nts. Forward looking statements involve a number of risks and uncertainties, and there can be no assurance that such statements will prove to be accurate. The Company's actual results could differ materially from those discussed in this press release. In particular, there can be no assurance that commercial production at the El Aguila Project will be achieved in the time frames estimated, at the rates and costs estimated, or even at all. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the company’s 10-K and Form SB-2 filed with the Securities and Exchange Commission
Contact: Jason Reid – VP / Corporate Development 303-320-7708

[cleverrox]

I sold my CSSV. I couldn't remember why I bought it other than I liked the potential of the exploration arm of the company. It probably remains a reasonable investment and I might try and swing trade it in the 2.00 - 2.40 range. I've been swing trading GORO a bit. In a bear market you do what you can... I'm still up 50% in a year where the market has been anything but kind so far.

 
  DOW -21.46%  
  NAZ -21.32%  
  R2K -21.09%  
  SP5 -19.96% (Yesterday's intraday low was -20.01%)  
  W5K -19.43% 
 

[cleverrox]

Selling CNOA a managed account because they announced they are going into the winery business. There is a huge difference between selling rice and selling wine. One is a commodity and the other is a premium product. I don't like companies that deviate from their core focus. Find a company that is a small player in a big market and does what they do very well - like AYSI or ZYNX.

[cleverrox]

Must read article on inflation by one of the world's premier money managers.

http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2008/IO+June+2008.htm

[cleverrox]

Why overweight? Why don't diversify? This is why! Look at all the stocks in this list. If you are trying to make 50% a year only about the top 10 stocks here will help you do it. Unless you are 55 and this is your retirement on the line - you need to pick a couple of stocks you think will be in the top 10 and overweight them. I chose to overweight AYSI and ZYNX this year. That strategy worked well because I made out big on AYSI and made some money on ZYNX before I exited it. There are a lot of loser stocks out there. You need to find a way to avoid them. I'll be giving out some tips on how to do that.

Value Microcap Index (Sorted by % Return)


Stock Symbol % Up/Down
OFI 153.17%
SGZH.OB 128.73%
BSIC.OB 110.00%
AYSI.OB 94.24%
DYII 89.19%
CNEH.OB 80.93%
SUTR 52.62%
ZYNX.OB 36.72%
SNX 34.44%
NGA 33.11%
SCX 28.56%
DFNS.OB 26.39%
EBIX 24.95%
AFAM 24.03%
NSYS 24.03%
RADN 21.85%
AMOT 20.22%
EGMI.OB 18.03%
ALY 16.95%
AIRT 16.35%
UPG 16.34%
SHPI.OB 14.96%
SODI.OB 14.29%
CSKI.OB 9.71%
SWIR 6.60%
AGX 4.12%
AFSI 3.92%
BITS 3.90%
AMSF 3.61%
VSNT 3.27%
SPAN 2.92%
KPPC 0.86%
FMMH.OB 0.26%
AVEE.OB 0.00%
SGTI.OB -3.48%
SYNL -3.90%
KEQU -6.04%
SCND.OB -7.69%
CDS -7.95%
JCTCF -8.98%
DAIO -10.53%
KRSL -11.40%
FKWL.OB -12.24%
PBSV.OB -12.31%
SENEA -12.38%
ELSE -13.58%
KTCC -13.64%
ZNCM.OB -13.64%
TBTC.OB -14.44%
ETLT.OB -14.49%
CYNO -14.51%
SEYE.OB -15.38%
CSPI -15.55%
CAGC.OB -15.85%
RBCL.OB -17.20%
CXPO.OB -17.66%
CSGS -18.41%
ASI -18.58%
BSHI.OB -20.09%
FVE -20.48%
CIMT -21.35%
GFRE.OB -21.43%
NADX -21.73%
ALHC.OB -21.88%
LTUS.OB -22.11%
BOLT -22.26%
USOO.OB -22.86%
GVSS.OB -23.91%
SLI -24.00%
PRLS -25.10%
CHME.OB -25.61%
CKGT.OB -26.67%
WPCS -26.96%
FBOD.OB -28.07%
CPHI.OB -28.20%
DIRI.OB -28.57%
ARTW -29.49%
KSW -30.27%
TBYH.OB -30.77%
BAMM -31.21%
SMID.OB -31.98%
SIF -35.67%
QEPC -37.33%
MLOBF.OB -38.79%
TSTC -39.42%
SPRO -40.43%
APT -40.48%
CEUA.OB -41.37%
VII -44.61%
ATRM -45.24%
SVLF -48.56%
AEY -49.43%
CCGY.OB -52.43%
UTVG.OB -52.76%
UVE -54.79%
DWCH -55.24%
CHCG.OB -57.54%
CNOA.OB -61.64%
ACY -63.92%
JEN -67.37%
Average Return -6.93%

[cleverrox]

Portfolio week ending Jun 14, 2008

 
 Ticker	Name	                    Percentage 
 ALJJ	ALJ REGIONAL HLDGS INC	     1.53% 
 AYSI	ALLOY STEEL INTL INC	    70.26% 
 CSSV	CASPIAN SERVICES INC	     0.80% 
 CAGC	CHINA AGRITECH INC	     2.53% 
 GORO	GOLD RESOURCE CORP	    19.41% 
 INXSF	IN TOUCH SURVEY SYS NEWF     0.26% 
 SRRY	SANCON RES RECOVERY INC	     3.42% 
 Cash & cash equivalents	     1.78% 
 

Bought GORO and SRRY this week. Small amounts of each.

[cleverrox]

Bought more GORO today. I don't feel like this dollar rally will hold up as the U.S. government continues to print money like water. Gold will rally. Though GORO will do just fine even with $800 an ounce gold compared to today's $868 an ounce.

[cleverrox]

I'm going to say this Mongolian venture for AYSI is a very good thing.

1) They probably have guarantee of business from some of their clients in Australia - a bunch of them are in Mongolia too
2) Logistics being handled by a joint venture is a smart thing - it isn't their area of expertise
3) The mills haven't been very capital intensive so far - so I don't think there will be much capital at stake here

[cleverrox]

Form 8-K for ALLOY STEEL INTERNATIONAL INC

11-Jun-2008

Other Events


ITEM 8.01 OTHER EVENTS.

INVESTIGATION OF MINING ACTIVITIES AND PROPOSED JOINT VENTURE OPPORTUNITY IN MONGOLIA

Mr Gene Kostecki, CEO of Alloy Steel International Inc. (AYSI) out of Australia, has recently returned from a fact finding visit to Mongolia where he was the guest of a large scale engineering conglomerate and mineral mining companies. The visit took Mr. Kostecki to both the city and mining areas so as to get a real "hands-on" appreciation of operating in a country like Mongolia with its harsh and challenging climate.

Located in Central Asia, Mongolia is positioned between Russia to the north and the People's Republic of China to the east, west and south.

The main focus of the visit was to evaluate and to prepare an operational plan to support the mining industry in Mongolia as it relates to plant and equipment maintenance so as to promote longer life wear and hang-up solutions to the industry as a whole.

At present, the majority of the maintenance and wear product replacement has to be undertaken off site, and in fact out of Mongolia, resulting in long logistical delays, and costly inefficient practices.


Alloy Steel was asked to make the site inspections as a result of their world wide reputation as experts in solving wear and hang-up problems together with their expertise in material selections and wear related engineering solutions to the industry.

Alloy Steel is fully committed to establishing a presence in Mongolia and is in the last stages of finalizing a joint venture negotiation with Geomandal. Geomandel is a recognized and organized conglomerate having headquarters in Mongolia and specializes in construction, engineering design, and mining support services. It is anticipated that Alloy Steel will have a holding of 60% in the joint venture and nominate 3 of the 5 members of the Board of Directors.

The new entity will be responsible for the supply of ArcoplateTM in the area and also support service centers in strategic areas which will established or upgraded to maintain both fixed plant and mobile equipment at each major mine site.

Strong interest has been forthcoming from major companies already operating in Mongolia as they can realize a real tangible benefit in the Alloy Steel product and what it offers to both them and their customers.

Companies mining in Mongolia include organizations such as BHP Billiton, Rio Tinto, Ivanhoe Mines and Centerra Gold amongst others.

Mongolia holds great promise and is strategically placed between Russia and China for future dynamic development and will become one of the largest mineral producers of this century.

Mr Kostecki has been asked to carry out an audit on the condition of the in-situ and mobile mining equipment on certain mine sites, and make technical and commercial recommendations / solutions as to ongoing maintenance and hang-up solutions for these sites.

It is proposed this audit will commence in July 2008.

It is anticipated the joint venture will commence commercial operations in early 2009. This will allow time to comply with Government regulations and obtain the necessary licenses, and will be after the severe Mongolian winter season.

[cleverrox]

AYSI in a nutshell.

AYSI sells wear plate for heavy mining equipment in Australia. The iron ore mining business in particular is their customer. Iron ore prices and mining are skyrocketing due to demand from China.

Alloy Steel has a patented product that is reportedly the best wear plate out there. They have problems keeping up with demand for their product in most quarters. A year ago they started construction of a 2nd mill that will more than double their production capacity. It should be running test runs this month and should be fully operational in August or earlier.

Right now they can potentially get $4.6M revenue out of the 1st mill. The 2nd mill should outproduce the first because it has better equipment. On top of this they are bringing in a crane to speed production.

Management owns 70%+ of outstanding shares and has not issued a share in years. They have $1M cash stockpiled and should start rapidly increasing that unless they start construction on a 3rd mill.

With both mills going full blast they should range $0.10 to $0.20 a quarter with the 43% - 58% gross margins. If SuperArcoPlate increases margins then that profit could go up.

I would conservatively give AYSI a 1 year target of $6 or 10x expected EPS of $0.15 a quarter.

[cleverrox]

Last week I bought more GORO and sold my INXSF and ZYNX. I might buy back ZYNX. I put a 1 year target of $4 on ZYNX.

[cleverrox]

Portfolio week ending May 30, 2008.

 
 ALJJ	ALJ REGIONAL HLDGS INC	        1.73% 
 AYSI	ALLOY STEEL INTL INC	       65.92% 
 CSSV	CASPIAN SERVICES INC      	1.05% 
 CAGC	CHINA AGRITECH INC	        2.89% 
 GORO	GOLD RESOURCE CORP	       20.45% 
 INXSF	IN TOUCH SURVEY SYS NEWF	0.28% 
 SRRY	SANCON RES RECOVERY INC  	3.40% 
 Cash & cash equivalents		        4.28% 
 

[cleverrox]

To buy BBWPF using Schwab you have to use their Global Desk. You can just ask for the Global Desk after you get a representative - 1.800.435.4000

[cleverrox]

BBWPF,, BABCOCK & BROWN WIND PARTNERS...

Babcock & Brown Wind Partners Group Company Profile - BBW ...

This is a really great wind farm company paying a 14.5 cent per year dividend versus a $1.64 stock price. It has assets that are worth at least double the $1.64 a share. Rising energy costs will make energy from wind worth more. A great way to play the energy sector. I will look for a link to 10bagger's complete due diligence on it.

[cleverrox]

Valuing GORO.OB.

Cost per ounce to mine: $100
Price per ounce sold: $800
Cash flow per ounce: $700
Ounces mined first year: 75,000

Cash flow per share = 75,000 ounces * $700 per ounce / 35M shares = $1.50 cash flow per share

Bobwins says gold producers are valued at 10 to 30 times cash flow.

10 * $1.50 = $15 a share
30 * $1.50 = $45 a share

I check this out today by looking up the valuation of AUY. It was 17x cash flow. I think GORO could probably command a premium multiple due to its growth possibilities and since it will be going to 125,000 ounces per year by year three (2010).

Another upside is gold over $800 an ounce. India and China having been buying lots of gold as their economies blossom. I don't expect a big downward shift in gold prices in this commodity boom era with the U.S. government racking up record deficits.

RoX

[cleverrox]

CS.to/CSFFF.pk - watching for opportunity to buy for $4.00 a share. Currently at $4.40.

Why I Like Capstone Mining - CS.TO
Written by Tyler |

http://dividendmoney.com/why-i-like-capstone-mining-csto/

Once in while a non-dividend paying stock crosses my radar and I just can’t ignore it. Such is the case with this week’s analysis of Capstone Mining (CS.TO).

Capstone Mining is a well run company that reopened and operates a single copper (with zinc, lead and silver) mine in Mexico which has recently more than doubled its production. The results of this production increase were starting to be evidenced in the financial statements last fall, but this spring and summer should produce even higher numbers because of the increased price of copper.
The Major Highlights of Capstone Mining

* Capstone continued its share buyback plan and purchased an additional 219,900 common shares on the open market at an average price of CDN$2.78.
The shares have been returned to treasury and canceled under its normal course issuer bid.
* At March 31, 2008, Capstone had working capital of $56 million and no bank debt. In addition, the fair market value of Capstone’s share ownership of Silverstone Resources Corp. is approximately $65 million, which is not included in working capital.
* Copper production during the quarter was 6.0 million lbs compared with 2.8 million lbs for the three months ended February 28, 2007.
* Record operating profit of $15.9 million or $0.20 per share.

As you will see further on in this analysis, Capstone’s management have pulled out all of the stops in making this a very profitable long-term investment for shareholders. Certainly, nobody knows what the future holds for copper prices and while the immediate future looks bright, Capstone’s management is focused on keeping the mine profitable for many years to come. So, how do they make sure that their shareholders are rewarded…they tackle the future right now!
Capstone Has Hedged Their Bets

CS hedges 20% of their copper production with forward contracts … in simple language, for each year until 2011, they have already sold 20% of their copper at an average price of $3.18. They do this to cover the majority of their production costs.

This is critical to mines because it means that if copper prices dive, they will be guaranteed to generate enough cash flow to stay open. It is really just an insurance policy for shareholders.

Capstone is obligated to report the difference in value of these future contracts to the current market price (called a mark to market calculation) in their income statement as a non-cash item. So here’s how that works.

For 2008, they have forward contracts to sell 7 million pounds of copper at an average price of $3.38/lb. The math for the contract reads … 7,000,000 lbs x $3.38/lb = $23.7 mil. Now, at the end of the last quarter, on March 31/08 the price for copper that day was $3.84/lb. The value of that 7 mil pounds of copper at that price would be 7,000,000 lbs. x $3.84/lb = $26.9 mil.

Soooooo…for this year’s forward contracts alone the loss on paper is $26.9 mil - $23.7 mil = $3.2 mil. Add to that by the other 3 years that they have forward contracts for and you end up with about $12 million in recorded NON-CASH losses that they have to record in this quarter.
What We Must Understand

Capstone did not actually “lose” any of that money. They simply lost the $12 million worth of additional profit that they could have made over the next 4 years if they had not pre-sold 7 million pounds for each of the next 4 years. What the report tells us is that for those future sales, they could have made an extra $12 million over the next 4 years If, and this is big “if” Copper prices remain at or above $3.84/lb.
We must also remember that those forward contracts only represent 20% of their production … so the other 80% will be sold at market price.
You Still With me?

OK, so for those of you who are real keeners here’s how the future is calculated.

Contracts have already been brought into the income report at a value of $3.84/lb. Therefore, any future variation in price will work off of that price. So, even though the real price of the contracts average $3.18/lb, the next report will calculate a gain/loss based on the already calculated price of $3.84/lb.

Therefore, if Capstone just keeps the contracts that they already have, which on paper now reads as a value of 28 mil lbs (4 yrs x 7 mil lbs/yr) valued at $3.84/lb, and copper goes down $.10/lb by the end of next quarter on June 30. In this case, their income report would show a profit of 28,000,000 x $.10/lb = $2.8 mil. Basically, they will have gained back some of their “non-cash” loss from this quarter. If copper continues to rise, they will report another loss of potential.

So you see, the loss they have to report this quarter is not a real loss. It’s a loss of potential assuming that the price of copper is $3.84 when they actually sell those 7 million pounds each year to fulfill those contracts.

Bottom line … the real Operating Profit (which does not account for the forward contracts or future possible income tax) … is $15.9 mil … or $.20/share for the first quarter of this year.

Now for the real keener keeners…

Let’s assume for a bit, that copper prices drop in the next 3 quarters. CS sells 80% of their copper at market price so they will be generating less revenue. However, as we’ve seen from the calculations above, when the price of copper drops, those forward contracts report an increase in value from one quarter to the next. So these gains will help offset the drop in production copper sales. This is how hedging smooths the fluctuation in commodity prices for the producer.

At a quarterly profit of $.20/share, the annual earnings could easily be $.60-.80/share. That’s an EPS of 4x-6x.
Generating Their Own Cash Flow

Capstone has also made certain that they are getting the most bang for their buck with regard to their silver production. This may be the smartest move that a mining company has ever pulled off in terms of generating cash flow. You see they spun off a silver producing company, of which they still own 20% of and are selling their silver production to them. Here is an excerpt from another article that explains the situation rather well.

Silver mining companies receive much higher multiples (e.g. P/E ratios) than base metal mining companies (e.g. 20 to 1 vs 5 to 1). Capstone has leveraged this by selling its silver production to Silverstone Resources (SST.V). SST.V is a company which Capstone spun-off and IPOed and which should ultimately receive the ratios of a silver producer. Capstone has 23 million shares of SST.V. SST.V is reputed to be undervalued relative to comparable companies and to have a considerable growth coming.

A huge consideration is that cold hard cash and shares in Silverstone (SST), another undervalued company, make up 45% of their market share price!

Other Considerations

Besides their solid production, cash, profitability, and their ownership of 20% of SST, CS will benefit from higher copper prices which showed a surge testing the $4.00 level. Remember, CS has already presold 20-25% off their next four years’ production at $3.18, but the other 75-80% is going to benefit from market surges. Plus, from the volume action of late, it looks like CS is still utilizing that massive mound of cash by buying their own stocks back to further strengthen their share value.

You know you are on to something when management says this during their conference call:

[With regard to cash on hand]…”We would love to purchase another mine if we could find one as profitable as our own”.

I would venture to guess that this means they will continue to buy back their own shares until they find a profitable investment elsewhere. This is certainly not a bad decision for a mining company.

Honestly, I have not seen a company managed so intently with shareholders in mind for a long time. Capstone could have easily gone out and bought another mine that was not as lucrative because they have too much cash, but they didn’t. This is prudent management and it is refreshing to see.

Full Disclosure: The author does have a position in Capstone Mining (CS.TO).

[cleverrox]

Portfolio week ending May 30, 2008.

Changes this week:

Sold my DPDW figuring I can buy it back cheaper. Added some SRRY after finding out from CFO that profits for Crossover Solutions business segment are really part of Shanghai. In short - their $0.04 quarter may be repeatable if tax rates don't rise.

 
 ALJJ	ALJ REGIONAL HLDGS INC 	        1.75% 
 AYSI	ALLOY STEEL INTL INC	       68.01% 
 CSSV	CASPIAN SERVICES INC	        1.01% 
 CAGC	CHINA AGRITECH INC	        2.80% 
 DPDW	DEEP DOWN INC	                0.00% 
 GORO	GOLD RESOURCE CORP             14.07% 
 INXSF	IN TOUCH SURVEY SYS NEWF	0.91% 
 RNWEF	RENEWABLE ENERGY CP ORDF	0.60% 
 SRRY	SANCON RES RECOVERY INC	        3.62% 
 ZYNX	ZYNEX MEDICAL HOLDINGS	        0.87% 
 Cash & cash equivalents		        6.36% 
 Total Market Value		      100.00% 
 

[cleverrox]

PHOS.PK - interesting phosphate play. They don't produce their own phosphate though. I decided not to buy any because their supplier could squeeze their margins to nothing at any time.

http://seekingalpha.com/article/78571-phosphate-holdings-an-undiscovered-agricultural-gem?source=yahoo

[cleverrox]

Portfolio week ending May 23, 2008.

 
 ALJJ	ALJ REGIONAL HLDGS INC	         1.75% 
 AYSI	ALLOY STEEL INTL INC	        66.46% 
 CSSV	CASPIAN SERVICES INC	         0.82% 
 CAGC	CHINA AGRITECH INC	         2.65% 
 DPDW	DEEP DOWN INC	                 2.01% 
 GORO	GOLD RESOURCE CORP COLORADO	15.89% 
 INXSF	IN TOUCH SURVEY SYS NEWF	 0.93% 
 RNWEF	RENEWABLE ENERGY CP ORDF	 0.73% 
 SRRY	SANCON RES RECOVERY INC	         2.88% 
 TGC	TENGASCO INC NEW	         0.00% 
 ZYNXE	ZYNEX MEDICAL HOLDINGS	         0.91% 
 Cash & cash equivalents	         4.96%