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I expected another offer for LIM to come earlier and finally threw in the towel last week after all the financials were out on it. Those Russians did it to me again. Now I wonder if RNO will see another offer...the SP says it will. Still...woo..hoo, it is a fun ride with the Nickel juniors today.
Digitech, I also chatted with the IR lady last at BWR last week about the friday PM news release. She said that she and the CEO would be at a conference in Montreal today and friday was the first day they would be back and could get the board together. I have been wondering since though about whether a board meeting is required before a quarterly news report is released? It doesn't seem like it would be and I wonder if maybe there is some other significant news to report as well. If so, based on the stock action it should be good news.
Does anyone know if public companies need to have a board meeting before they can release quarterly results?
Re: Canroys....Ones I like include AAV and PWI. Both have long life reserves and are selling below NAV. I was looking at buying more with the recent upswing in energy prices until I saw the proposed new tax that Kerry introduced in the Senate (S 1006 for anyone who would like to look it up). A representative from Kerry's state of Taxachusetts also introduced a bill like it in the house. I doubt it will pass while Bush is president but anything is fair game after that.
Interesting that it is the finance minister from the ruling conservative party that proposed the 31.5% tax in Canada. It caused a huge selloff of Canroys when it was announced at the end of last October. That was after the prime minister promised that he would not change the tax rules for trusts before he was elected. The liberals are suggesting a 10% tax as a compromise but we shall see. As a sidenote, a buyout of a beaten down OG trust (Thunder-THY.un) was announced just last week at $4/unit which is a small fraction of what it had been selling for a year ago. The buyer is a Canadian government pension fund and they sure won't be paying any taxes regardless of how the tax situation plays out. Stockholders (actually unitholders) are hopping mad at both the finance minister and management there who sold them out on the cheap.
Canada withholds 15% of the dividends on canadian trust distributions paid to US holders. Those are lost to USA stockholders if held in an IRA account but I believe they can be recouped if they are held in a taxable account by filing Form 1116 (foreign tax credit) with the IRS.
I have been looking at Canadian OG trusts which were trashed when the Canadian finance minister proposed last October that they be taxed at 31.2%. Existing trusts would not be affected until 2011. Huge uproar in Canada over this and I would not be surprised to see it dropped or at least reduced. But now, Sen John Kerry has filed a bill in the Senate (a companion bill has also been filed in the House) which would tax distributions to US stockholders from foreign trusts at 35%. Grrrrr....
Beigle, Pink sheet equivalent prices should be updated on a daily basis after the close of the markets, so there should be changes from day to day unless the underlying canadian stock is not moving. Best place I have found for converting from canadian to US stock prices and vice versa is this site:
http://www.xe.com/ucc/
Picked up some ADA today. Their zinc and lead mine became operational last weekend according to an article from a paper in the area of the mine they purchased from HBM. Hopefully their transition from development to producer will get the SP back in forward gear again.
http://www.herald.ns.ca/Search/743214.html
QUA- Wade, don't worry about it. QUA has had a big runup recently and is simply consolidating its gains. You are right, QUA has a forward PE of around 3 and there is not much downside risk here.
Re: copperhead vs nickelhead..... Both Kipp and I have slowed down since the jump out of the gate. Can anyone recommend a good metal polish?
pink sheet symbols- cl001 provides many of the pink sheet symbols for individual stocks in the board info area above the messages (unless you have it turned off-then click "show board info" in the header area). For others, I can go to my brokerage site, yahoo, or similar and look up the symbol for the company name. It shows all the canadian, USA, and sometimes world listings for that name including pink sheet equivalents. A few canadian stocks such as BMC, don't have pink sheet symbols.
It amazes me how copper stocks have been declining so persistently since about the first of Feb with the US housing industry in such a slump. Apparently it has become little more than a light snacker of the red metal compared to the voracious appetite of the Chinese.
http://www.kitcometals.com/charts/copper_historical_large.html#lmestocks_6months
BWLRF- I noticed a post on Stockhouse that said Breakwater will release earnings after the market close on May 4. That is a friday and since companies will sometimes release a bad report on a friday afternoon as they are walking out the door and let investors stew over the weekend, I called Breakwater to see if that was true. I talked to their investor relations person and she said yes that earnings were coming out on Friday afternoon, May 4. When I commented that sometimes bad reports are issued then, she indicated frustration over that (I wasn't the only one to call about it). She said the reason for it is that she and the CEO were going to a conference in Montreal on Wednesday and that the earliest the CEO would be back and have a BOD meeting was Friday morning on the 4th. So earnings would be out by the end of the day with a conf call the following monday.
Of course, she didn't say what earnings would be but the company sure seems anxious to get earnings out asap. So hopefully good news on a friday is coming.
I called Scottrade to buy BMC. Scottrade requires a phone call to buy any canadian company including those on the pink sheets. Of course, that means a $25 commish instead of $7. Guess I'll eat beans tonight but I think it may be steak and lobster soon.
cl001, I'm not clear as to what your point is. QUA hedged 91 million lbs of copper production which is less than the 121 mil lbs they produced in 2006. The hedge that carried over into 2007 is for material that was mined last year but has not yet been final settled as it takes several months to ship and refine the product and the final price is not settled until that happens. QUA said that the hedge would only apply to material that was mined in 2006 and that is what happened. QUA has always said that production can be higher or lower than the estimates depending on what they run into. Every miner deals with that. I'm thinking they are being conservative with their production estimate for this year.
Production may well be down some in Q2 vs Q107 but the price of copper will be much higher which means still higher profits. Maybe we are splitting hairs here but glad you decided to jump back in. Btw, I also bought BMC today which is one of your favorites. Thanks for your info on that one.
cl001, Alright, it looks like you were right about QUA doing the hedge program of their own volition rather than being forced to by the evil banker. But then again they announced an increase in their LOC and a bridge loan for $35 million total so maybe the banker did exert some influence. It also appears that they never expected to wrap up the hedge until the end of 2006, with carryover financial effects into 2007. Here is an old PR from them:
Vancouver, Canada - November 29, 2005. Quadra Mining Ltd. (QUA.TSX) announces that it has implemented a comprehensive copper hedging program that will secure significant cash flow from the 2006 copper sales from its 100% owned Robinson Mine in Nevada.
The Company has established a hedge program that delivers an average price of $1.70 per pound of copper for the estimated 135 million pounds of copper that Quadra expects to receive final settlement for in 2006. As a result of the lag time between mine production and final sales, the hedge prices apply to approximately 44 million pounds of copper produced in 2005 and 91 million pounds of 2006 production. The remaining estimated 2006 production of approximately 57 million pounds is unhedged. Although final settlement of this remaining copper production will occur in 2007, Quadra expects to receive provisional payment in 2006 generally in line with the spot LME price upon shipping. The hedge program requires no cash margin from the Company.
In addition the Company has entered into a commitment letter with its existing bank for:
* A corporate line of credit for up to $20M until June 30, 2006 after which the facility will convert back to the Company's current concentrate facility arrangements.
* A bridge loan of $15M for the acquisition of the Carlota project to replace a previously negotiated facility, to be repaid by March 31, 2006.
As security for the repayment of these loans, Robinson Holdings (USA) Ltd. will grant a security interest in all of its assets including Robinson Nevada Mining Company, the companies which own the Carlota project, together with the assets of these companies.
QUA..cloo1,I checked and production was actually up 16% from the previous quarter in Q32006. They did have two problems:
1. Sales were down as there were delays in shipping their inventory. The company said they had taken steps to make sure that problem did not re-occur.
2. Biggest factor were all the hedges their lender required them to take out to get the Robinson mine in NV financed. Those were all at low prices and their earnings took a huge hit on derivative losses as copper prices soared that quarter. Important to note that all of their hedges will be gone after the current quarter and they were not required to hedge any of the production for their new mine in Arizona that will start production next year. They learned their lesson well.
R59, QUA is currently operating the Robinson mine located in Nevada. Output is 125 mil lbs of Copper per year and it has an estimated 10 year mine life. Btw, they purchased the mine from BHP for $15 million in 2004. BHP had spent $480 million to develop it but closed it when copper was 64c.
They also are developing the Carlota mine in Arizona. Production is expected to begin in late 2008. Mine life is projected at 9 years and production is estimated at 66 mil lbs of Copper annually.
Valuemind... and that's why I don't and won't own any of those mutual funds
QUA, r59, per QUA's annual report, their statutory tax rate is 34.1%. However they also should continue to recieve a credit for mining depletion allowance. I think that Q1's tax rate of 28% is in line with what we will see in the future.
QUA- The $1.12 they reported in Q1 earnings are in US$, not Can$. Also their reported earnings were already reduced 28% by income taxes and future income tax expenses. Also Q1 revenue #s were based on an average sale price of $2.66. Q2 copper prices will be much higher (today Cu is at $3.60 and rising). The last of their hedges will be gone after the current quarter (Q2). Still very cheap, IMO. Sold my remaining LIM to buy more QUA.
Speaking of LIM, I recently received the circular on the buyout by Xtrata and had the time to look it over last weekend. I see the bums in senior management and on the BOD sure spared no greed when it came to helping themselves at the big money trough in the xstrata buyout. For example, the CEO of LIM was given 200,000 free bonus shares two weeks before the buyout was announced AND will get 3 years worth of base salary AND will get 3X the average amount of his bonuses for the last 3 years once the buyout occurs... Grrrr..
QUA reported very strong numbers for Q1 and the SP is heading north. They earned $1.13. That is based on average $2.66 for copper in the quarter as copper prices were soft then. So far in Q2, copper has averaged 3.30 and heading higher. Despite its recent runup, this one is probably only at a very cheap PE of around 2 for 2007.
It is remarkable how similar the 1987 and 2006 charts of the dow are. However, the 2007 chart shown is nearly 4 weeks old and since then the charts are totally different as the DOW is blasting to new highs.
And the first nickel stock buyout offer at a decent premium, 29% over yesterday's closing price of DY. Lundin and Xstrata only offered peanuts over the last closing price for RNO and LIM (less than 5%). Still, as you remarked, there aren't many nickel miners left anymore which makes the nickel juniors all that more attractive.
Kipp, I see you have that golden CMM speedster which gives you the lead right out of the gate. Loaded up that one in my real portfolio last week, but replaced RNO with HBM instead of CMM, darn. I guess I need to kick that zinc HBM nag....Now giddy-up horsie...
Vegas in early November sounds great. Weather is warm but not hot (typically in the 70s), not to mention the sights and eye candy are great down there. Between the VMC get-together and the trader's expo, one should easily be able to deduct the costs of the trip next year on taxes too (as I struggle to finish my tax return for 2006). As Bob mentioned, flights are usually cheap when booked in advance and there must be over 101 different hotels to choose from in all categories.
TAM, One thing I haven't been able to pin down is what the construction costs are expected to be in reopening their pilot project mine. I recall seeing where one analyst threw out something like $90 million which seems high considering that the site already has road access and power available. Still the mine has been closed for 20 years and the town has been removed. I have never seen any company estimates on the project cost. Maybe they are waiting for the engineering which is happening now to issue them but they must have a ballpark number.
MSGI and wade, I mis-spoke when I said that valuemicrocaps will go up in a down market. What I meant to say is that value stocks on a risk adjusted basis should outperform the market as a whole in both bull and bear markets. Some of us seem to believe that the market is due for a big fall. Perhaps, but then again several pundits were saying the same thing a year ago and today the dow is about 15% higher than it was then. They may turn out to be right this time but my point is that I feel it is very difficult if not futile to try and guess the future direction of the general market other than in the longer term it will be up.
PS: msgi..I'm glad I wasn't in the market during the 70s. I think two things have occurred that have massively lifted the tide of all microcap boats since then:
Now as then, there is little or no analyst coverage of micros but now there is the internet. The individual investor has virtual simultaneous access to information that the professionals do. And we can all share that information over mediums such as this one. It is difficult to even imagine researching more than a few unknown companies without the internet and also back then, one's confidence factor of having all pertinent info would be much lower. Another factor is that transaction costs are only a miniscule fraction of what they were before the internet era. I recall paying $200 plus commissions before I established my online brokerage account. Lower transaction costs improves liquidity which also helps to lift the boats of all stocks.
CMM..Holy shit batman! Someone was certainly willing to suck up shares regardless of the cost and they got very anxious towards the end of the day. The box will soon be opened and I'm thinking that we will like the deal!
Wade, I think I recall that you said you had 70% of your investment assets in QID about a month ago. QID is down much more than 2.8% since then. If I had negative vibes about the market I would go to mostly money market funds but I would never ever short the market as a whole. As a group we excel at finding undervalued and undiscovered microcaps on this board but there is no way that I believe that any of us are smarter than the market as a whole when it comes to interpolating and extrapolating the gazillions of dollars that move the market in general. Our advantage is that even in a down market the undervalued microcap will still rise as it is discovered and in an up market it will rise even faster.
Buying QID is like betting against the house and that usually never works out, excepting if one gets lucky in the short run. Definitely, not worth the risk, IMO.
Mike, does this one give you real time quotes on Canadian exchange stocks?? Thanks, Cliff
HBM owns 50% of CMM, as in Considar Metal Marketing...there is no relation to CMM.v- as in Century mining.
OT- kik, The symbol was ACCO. Here is a link to the SEC announcement of the suspension:
http://www.sec.gov/litigation/suspensions/34-46820.htm
I still have 2000 worthless shares of 1800america.com after the SEC stopped trading in it 5 years ago when they discovered that the CEO was fabricating sales and profits that didn't really exist while selling boatloads of stock to the public. The CEO went to prison but I lost 100% of my investment there. I am not saying that CPNE is such a fraud or is not a good investment and I haven't researched it. But when I looked it up and noticed that it is in a similar field, I was reminded of that dark day 5 years ago.
TAM is having an incredible run this week. Picked up some on Monday but not enough. Tempted to add more but I can always hear skillz in the background saying wait for the gap to fill. Maybe this will be the one that breaks that rule. Thanks for pointing this one out.
http://finance.yahoo.com/q/bc?s=TAM.V&t=5d
CMM.v, re: new shareholder rights plan..I wonder who was poking around and interested in taking them out? CC isn't till 4 days after earnings...unusually long wait.
I'm also very happy with how TD handles my orders for Pinkies on canadian exchanges. Say a stock is trading at bid $1.00 and ask $1.01 canadian. Converting to US dollars for the pinks on xe.com gives me bid .882US and ask .8908 US. TD requires that I place a limit order in even cents, so if am willing to pay the ask I cannot place my order at .8908
My experience has been that placing a limit order at .90 will give me a fill at .8908 which is the ask. TD only charges me $9.99 for that trade, just like US listed companies.
The only drawback is that I do not have access to realtime quotes on the canadian pinkies.
QUA, Cl,Thanks for sharing the info. I figured that Sarbanes Oxley was the reason for the split over whether to list on the AMEX. Many companies seem to forego the hassle and expense but at least they are available on the pink sheets. (I wish BMC was). Copper prices hit a low in Q1 but have already recovered nicely, I am mostly looking forward to earnings in Q2 and beyond. Bought a bunch of HBM today. I suspect their turn to shine is coming soon.
CMM.v...That was a good interview. The ceo did indicate that Q3 and Q4 (soon to be announced) were profitable qrtrs. She also made another interesting comment "We will have cashflowed over $10 million for our Stockholders this year."
Assuming she is talking about operational cf, $10 mil doesn't sound like nearly enough for 2007 with the projected large production increase. In Q3 2006, CMM cashflowed $2.4 mil, which is roughly a $10 mil rate annually. Assuming she was talking about 2006, CMM cashflowed $3.8 mil for the first nine months so they would have had to cf $6.2 mil plus in Q4 to make $10 mil. If they did that, it will be a very strong report. I added some more shares this morning.
Cl001, re QUA, Ask them if they have applied for an AMEX listing yet. How long it might take and if and when they plan to do so if they haven't yet. An Amex listing would be great...the sooner the better. Thanks.
BWR, the zinc miner, is hitting new highs. BWLRF has hit $2 today. I wonder who is looking to buy them out? I hope Lundin keeps its paws off. This is from Canaccord:
Breakwater Resources* (BWR : TSX : $2.19)
Net Change: 0.15, % Change: 7.35%, Volume: 15,250,211
The bigger they are, the better the bargain appears. We expect the feverish
pitch of M&A activity in the base metal sector to continue for the
foreseeable future, at least until equity prices more closely reflect the
cash flow power generation of the assets. Canaccord Adams Base Metal
Analyst Orest Wowkodaw anticipates the zinc market to remain extremely
tight until at least H2/07, with a strong possibility of an inventory
squeeze in the nearterm. For the year, we anticipate a modest deficit. In
2008, Wowkodaw anticipates a market surplus. However, if Chinese zinc
production slows, the market is likely to remain in deficit for longer.
Given Breakwater's significant near to medium-term zinc production growth
profile, growing net cash position, and very attractive relative valuation,
combined with the current industry theme of "bigger is better," we would
not be surprised to see a take-out bid emerge for the company, despite our
belief that Breakwater's asset base would likely dilute that of any buyer.
FNI...Cl, Thanks for pointing out FNI's technical breakout and all your other insights as well. For anyone interested, here is a link to a presentation by FNI providing more details as to where their nickel production is coming from.
http://www.firstnickel.com/investors/presentation_2007.pdf