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Yahoo, The only sane reason that I can think of for them to come up with all the changes that 99% of the users hate is that they are planning to turn their finance area into a premium service. I can hear them now: "If you want your old message board format back along with other features, it's gonna cost ya"
Metals, LME Inventories dropped yet again and base metal prices are up, pretty much across the board. The market should be focusing on upcoming earnings reports which are generally expected to be excellent-should be a nice day in the "metal patch".
LME COPPER STOCKS FELL 900 TONNES TO 97,450 TONNES
31 July 2006 09:00
LME TIN STOCKS FELL 30 TONNES TO 11,065 TONNES
31 July 2006 09:00
LME LEAD STOCKS FELL 1,925 TONNES TO 101,725 TONNES
31 July 2006 09:00
LME ZINC STOCKS FELL 1,525 TONNES TO 185,175 TONNES
31 July 2006 09:00
LME ALUMINIUM STOCKS FELL 725 TONNES TO 713,500 TONNES
31 July 2006 09:00
LME NICKEL STOCKS FELL 144 TONNES TO 4,128 TONNES
31 July 2006 09:00
Great analysis, research59. I have sometimes wondered about that myself. My guess is that your results may demonstrate the emotional aspect of investors in the market. There is often an emotional urge to sell something that isn't working out. So that creates more selling, which drops the stock price further and that makes even more people want to "dump it" and forget about it. And so the cycle goes until the stock has been beaten down well below fair value. Your analysis also seems to suggest that the old maxim "Cut your losses and let your profits run" may not be such good advice after all.
One other comment..By definition there are going to be many more stocks hitting 52 week lows in bear markets than in bull markets. So if I read your analysis correctly, one would have much more money invested in bear than bull markets which is probably another reason that your buy at 52 week lows system is working. One is buying more stocks when the general market is at "low tide" and fewer stocks when the market is at "high tide".
Again, thanks for sharing.
ngas drawdown, And if one can believe the longer term forecasts, higher than normal temperatures across 90% of the nation are forecasted over the next 30 days.
http://wwwa.accuweather.com/maps-temperature.asp?partner=accuweather&myadc=0&traveler=0&...
CFK, Drop in analyst estimate could be a result of WFT comments in their conference call that canadian operations were below estimates due to adverse weather. Still, I see that the number of rigs operating in Canada during the quarter averaged over 18% higher than the year ago period. Perhaps, CFK is continuing to gain market share.
UNT- Reported Q earnings of $1.61, right in line with estimates. CEO commented that their drilling rigs have never been busier and rates continue to rise:
Contract drilling rig rates jumped 65 percent, averaging $18,588 per day, from the same quarter last year. Contract drilling revenue grew 66 percent to $175.9 million, due to increases in dayrates and the number of working drilling rigs.
"As we enter the third quarter, dayrates continue to increase," said President and Chief Executive Larry Pinkston. "As these dayrates increase, we are keeping our rigs at near 100% utilization."
Len, The current housing market in FL is apparently not much more than a shadow of what happened there back in the 1920s. Here's a link (includes other crashes and bubbles):
http://www.investopedia.com/features/crashes/crashes4.asp
BRUI- It can always go lower but it sure seems cheap here to me. The last time it was this low was early October when it it was trading off earnings of 11c. It guided lower by a couple of pennies for next quarter expecting earnings of 30-33c. In the meantime it has dropped all the way from $22 in may to $9.2something now. One problem is they apparently have only one major analyst following them who downgraded them based on their guidance. Apparently the firm has lots of lemmings...excuse me, followers. I'm buying.
Nat gas stocks- Here's a contrarian outlook from an analyst at Raymond James. He mirrors my sentiments and I have been buying BRNC, GW, PTEN and CHK. Also looking at UDRL.
.....
As we have visited clients over the past month, we have been surprised by the overwhelming negative consensus that has emerged regarding the gassy North American energy stocks. The main impetus behind this near-term bearishness has been the stock market’s belief that bloated natural gas inventories are going
to force a sharp downward move in natural gas prices in the September/October timeframe. This summer ending “gas-on-gas” fear is even beginning to mutate into an increasing perception that 2007 gas prices are at risk and the overall drilling cycle is at risk. Some have even begun to lower earnings estimates.
As we laid out six weeks ago, we do not think the natural gas fundamentals are as dire as consensus stock market expectations are suggesting. Data over the past six weeks confirms this bullish view relative to consensus expectations. Even though we are very contrarian in this view, the gas storage numbers over the past six weeks suggest that gas supply/demand is getting tighter. As demand has returned, the year-overyear gas inventory surplus is beginning to shrink. We expect these year-over-year gas storage numbers to gradually shrink further over the next several months and then really turn bullish through the winter. Givenmn the tight inverse correlation between inverted year-over-year gas storage inventories and gas prices, we believe that U.S. natural gas prices have already seen the lows for the year. In fact, this week’s gas storage number could be a turning point in this bearish sentiment. Again, the stock market strongly disagrees with this view.
Therefore, with the majority of this negative sentiment already having been reflected in both Oilservice and Exploration & Production stocks, we believe that some of the most glaring opportunities may be right under investors’ noses: the natural gas levered names that have had the most dramatic multiple compression.
Specifically, the Oilservice names with the most leverage to natural gas related activity on which we would
focus include the land drillers [Bronco Drilling (BRNC/$16.83/Strong Buy), Grey Wolf (GW/$6.59/Strong
Buy), Nabors Industries (NBR/$23.39/Strong Buy), Patterson-UTI (PTEN/$22.55/Strong Buy), Pioneer
Drilling (PDC/$12.50/Strong Buy), and Unit Corporation (UNT/$49.23/Strong Buy)], offshore drillers with
more jackup weighting [ENSCO (ESV/$37.57/Outperform), Rowan (RDC/$30.88/Outperform),
GlobalSantaFe (GSF/$49.83/Outperform), Noble (NE/$67.54/Outperform)], and natural gas levered wellservice
providers [BJ Services (BJS/$30.06/Strong Buy), Warrior Energy (WARR/$18.08/Strong Buy), and
Baker Hughes (BHI/$75.75/Strong Buy)]. With the Exploration and Production arena, we believe investors
should also focus on the natural gas weighted producers, such as Ultra Petroleum (UPL/$50.01/Strong Buy),
Chesapeake Energy (CHK/$28.54/Strong Buy), Comstock Resources (CRK/$25.93/Strong Buy), CNX Gas
(CXG/$24.61/Strong Buy), and Goodrich Petroleum (GDP/$29.64/Strong Buy).
What if we are wrong? Of course there are risks to our more-bullish-than-consensus outlook for gas (such
as cooler-than-normal summer weather and/or limited gas storage capacity), but we would argue that the
stock market is already pricing in a meltdown in gas and the North American gas drilling market. In other
words, the stock market is already assuming that we will be wrong. The question we have for investors is,
“What happens if we are right?” If we are right, the gassy, North American energy stocks have never been
cheaper. If we are right, then there are a lot of investors sitting on the sidelines that will try to buy back into
the group at the same time. If we are right, you will want to be ahead of the crowd, not following the crowd!
I'm surprised that so many pick 3 portfolios were down in spite of a huge up day for the market. The average P3 portfolio here did not do nearly as well as the market averages in spite of our much higher betas.
On the bright side, maybe this is the beginning of a new rally for the market. Large and risk adverse stocks usually lead the way and then our little micros play catch up plus much more. Are the bears finally ready to go into hibernation?
From my vantage point (90% invested) it is nice to think that will be the case anyway.
My sincere appreciation to all who keep us informed and updated, particularly skillz and len.
I see nat gas is up more than just about any other commodity today (about 6%) including oil which is down. No hurricanes in sight either. I think many ng stocks and drillers are good buys here.
OG service stocks, Wade...OG drilling should only slow if prices crater. Ngas is the markets big concern at this time. Gas storage remains high compared to averages but if hot weather continues as forecasted, the storage #s will be back within normal ranges. I think the market is overly negative on the future of ngas prices (and OG service stocks) right now. Here is the energy information administrations forecast for ngas...Their site can be linked at:
http://www.eia.doe.gov/emeu/steo/pub/contents.html#Overview
In 2006, total U.S. natural gas consumption is projected to fall below 2005 levels by 1.7 percent then increase by 4.2 percent in 2007 (Figure 10. Total U.S. Natural Gas Consumption Growth). Because of the exceptionally warm January this year, residential natural gas consumption is projected to fall in 2006 by 7.4 percent from 2005 levels and then increase by 8.8 percent in 2007. Following recovery from the 2005 hurricane season, the output of natural-gas-intensive industries will likely contribute to some growth in industrial natural gas consumption this year (1.4 percent) and more in 2007 (4.7 percent).
In 2005, domestic dry natural gas production declined by 2.7 percent, largely because hurricanes damaged the infrastructure in the Gulf of Mexico. Dry natural gas production is projected to increase by 0.6 percent in 2006 and 1.1 percent in 2007. Total liquefied natural gas (LNG) net imports are expected to increase from their 2005 level of 630 billion cubic feet (bcf) to 760 bcf in 2006 and to 1,000 bcf in 2007.
On June 30, 2006, working natural gas in storage stood at an estimated 2,615 bcf. Stocks are 425 bcf above 1 year ago and 591 bcf above the previous 5-year average (Figure 11. U.S. Working Natural Gas in Storage). The relatively warm winter weather and the large difference by which prices for future delivery contracts for the 2006-2007 winter months exceeded spot prices account for much of the current high storage level. Spot Henry Hub natural gas prices, which averaged $8.86 per mcf in 2005, are expected to average under $7.00 per mcf over the next few months. Thus, barring extreme weather for the rest of the year, we expect a decline in the annual average Henry Hub spot price to about $7.61 per mcf for 2006. However, the respite is expected to be short-lived, as concerns about potential future supply tightness and continuing pressure from high oil market prices could drive spot natural gas prices to just over $9.00 per mcf this coming December and January. The Henry Hub price is expected to average $8.13 per mcf in 2007.
Metal Stocks...EZM, BWLRF, HBM, etc...Good article that provides reasons why high metal prices will likely continue for years and why we will likely see more acquisitions and buyouts. I expect that earnings and forward guidance next month will kick these stocks out of their summer duldrums.
The following is extracted from the June 2006-1 Issue of Resource Opportunities
As commodities became the flavor of the month for many investors, it was no surprise that the new money coming into the sector simply followed the momentum. After rising to unsustainable levels, metals corrected to more realistic price levels. To say that the bull market in metals is now over is to be as naïve as those who, only weeks ago, thought prices would climb forever.
The neophyte commodity players have added a level of volatility that has masked the underlying strength in the metal markets. The fundamentals have not changed a bit.
Is it more meaningful to say that the copper price is down 8.5% over the past three weeks, as opposed to saying that the copper price is now six times higher than its level of five years ago?
Investors who focus on the copper’s climb from $.60 a pound in 2001 to the present $3.57 will be able to see investment opportunities that can provide returns measured not in percent, but in multiples.
The simple reality is that copper, zinc, nickel, tungsten, molybdenum, uranium – all the base metals – have soared in value because the mining industry can not meet the steadily growing demand for metals. We are now five years into a rising market for metals, yet metal production remains flat.
New mines have come into production and existing mines have been tweaked in order to squeeze out every pound of metal. At the same time, older mines that have produced for years or even decades are running out of ore and are closing. The net result is that the best efforts of the mining industry have merely maintained the existing level of production.
The mining industry is still not committed to new mine development. Rather, the focus for the moment remains on paper shuffles: Will Inco or Xstrata be the successful bidder for Falconbridge? (That company in turn recently acquired Noranda). Teck Cominco (itself a recent merger) has added to the intrigue by bidding for Inco, evoking the image of the line of fish simultaneously swallowing the smaller fish.
The share price premiums involved in the takeovers are being justified to shareholders of the acquiring companies on the basis of the synergies that will result from combining the companies. Those synergies are focused on reducing production costs (and more often than not, on also reducing exploration costs). Expanding production is, at best, a minor side effect.
At some time, the mining industry must finally turn its attention to developing new mines, which is the only way to increase production. In fact, new mines are required even to maintain production, as all mines are being steadily depleted.
The mining industry does not need higher prices than at present to develop new mines. However, at the moment, it is far more expedient to simply buy existing mines. After all, that approach will translate into profit gains (and higher bonuses) in the next quarter.
Some companies, although mostly at the mid-tier level, have begun to take a longer term look at their businesses. Shareholders of at least six small companies have so far benefited from takeovers by larger companies, with a total value of $4 billion.
Over the past couple of years, the soaring metal prices created a rising tide that lifted many of the metal companies, at least to some extent. Many commentators and investors enjoyed some success by simply being a part of the sector as the tide rose.
In the next leg of this bull market, metal prices will not rise the way they have over the past two years. Simply betting on whether or not the metal prices will go higher is hardly the basis for a sound investment approach. It will be more important to seek companies that offer a growth strategy.
Those investors who take a big-picture look at the metal markets will see metal prices that are several times higher than the long term averages. The prices have risen so dramatically for the simple reason that the mining industry is not able to deliver enough metal to meet the growing demand.
It will require many years, likely the better part of a decade or even longer, before metal prices come down anywhere near the historic long term averages. The reasons are clear:
1. Demand for metals will remain strong. Regardless of what happens in the West, 3 billion people in Asia are going through a process of modernization the likes of which has never been seen before. It is like Japan after World War II, but multiplied by 20. (See the separate article on China.)
2. It takes many years to develop new mines. The process of engineering, permitting, financing and construction is getting longer and longer as regulations get tougher.
3. The dollar, which still is used as the measuring stick for metal prices, is shrinking in value. Even when metal prices ultimately return to their long-term trends in real terms, the nominal value, as expressed in US dollars, will be much higher than the historic long-term trends.
That final point is extremely important and has not yet quite registered with the bean counters in the mining companies and with the banks that would like to loan money for new mine development projects. There is still a tendency to base long term cash flow projections on historic average metal prices, but to incorporate today's higher values for costs such as energy.
Only after the decision-makers in the mining companies figure out the logical inconsistency in that approach will new mines get developed at a faster pace. As time passes without new production, existing mines are being further depleted and the situation is growing ever more acute.
In summary, the bull market for metals remains firmly in place, new mines are needed and the exploration companies will continue to soar in value as projects continue to advance toward production. The current dip in share prices provides an opportunity to fatten ones investment portfolio with shares of small companies that are exploring and developing metal deposits.
***
Wade, What are you complaining about???? You say that you made 700% in the 20 month period ending last May. If that isn't better than anyone else on this board has done, I'll eat my shoe..and we both know that there are some very smart players on this board to boot. The nature of the market is that it will not always go in your favor.
Relax, man....you are doing great!!!
Oil services...I listened to Weatherford's (WFT) cc today. This huge oil services co. reported 53c vs 32c, which came in at estimates. What was interesting is that they said they have not seen any weakness in natural gas drilling. They also expect ng drilling to continue in equilibrium for at least the next 12 months while oil drilling continues at maximum possible growth. They expect the og service industry to remain strong to 2010. They said their biggest challenge is finding and keeping qualified labor.
That is in contrast this with the doom and gloom coming from some analysts, and while OG service stocks including drillers continue falling as if many of their rigs are being shut down.. I'll continue to add on weakness until my plate is full.
WFT did comment that canadian drilling operations were weaker than expected due to spring thaws/adverse weather which may well have accounted for some of the weakness in CFK today.
I do like the new "Bull"nanke much better than old "Bear"nanke.
Gas vs oil drilling rigs...Someone please correct me if I am wrong but my understanding is that ngas drilling rigs can also be used to drill for oil. The rigs that are being used to drill for ngas do tend to be larger since the gas tends to be deeper than oil but with oil prices sky high, more of a drillers rigs can be switched to drill for oil. And if that's true, it seems to me that there are some good buys in the gas drillers which have been beaten up lately due to concerns over declining ngas prices.
Comments??
Yahoo..Congratulations to anyone who became so pissed at Yahoo's new tortured message boards and what it says about the mgmt who did it in spite of overwhelming objections that they shorted the stock. Today YHOO is down 20% despite a very strong market day. Btw, Bernanke sure has changed his tune. IMO, the markets overreact to his comments pro and con, but I'll sure take it today.
New Yahoo boards... Len, from what I see, the finance message boards are the only ones to convert to the new format. the political, and other boards have been left under the old venue from what I see.
Which makes me wonder if Yahoo is planning to offer premium boards at additional cost. It seems to me that the stock and finance board participants would be more willing than others to pay a fee for their service since they have money invested. Bottom line, if we want to get the old boards back it would be a premium service that would not be free. Basically that is what Ihub is offering us here, additional options for a fee.
Just a thought. ..
Frankly, I don't see any way that small banks can be expected to grow at 30%. Sure there will always be the exception but bigger banks continue to gobble up the successful small bankers.
I do agree that oil service stocks are undervalued although I don't think we will see another 20% drop. They are already priced as if oil was in the low 50s. I especially like the domestic onland drillers. Besides GW, I am buying PTEN and BRNC. ENT is another one I am looking at that is currently paying a 16% dividend.
As for the market in general. This week is likely to be difficult if the mideast fighting increases. But I also expect that it will wind down once Israel has pummelled the targets it feels it needs to. Then we will likely see a strong relief rally.
MSGI, re Yahoo message poking fun at their goofy new m-board format. I enjoyed it as well. I also read that Yahoo did not see the humor in it though. Apparently, Yahoo even terminated the original author's account and deleted all of his posts from their archives as well. He had been posting on yahoo for 7 years. Rather thin-skinned of them, heh..
Yahoo message boards. Whoever said Yahoo would never make their goofy new beta format the only way to view messages was wrong. This morning Yahoo has removed the option to look at messages in the old format. The new system is crap. I wrote and complained (harder to read, good messages are buried in responses etc) but not one of my concerns was addressed. Some idiots must be running Yahoo now. Grrrrr
RNO- Here's a profitable small cap nickel stock. Have a new nickel-copper mine in Spain and will also open a new low cost gold mine in Mauritania early next year. Posted a small profit of $2.9mil last quarter after $9.7 mil in derivative losses due to copper hedges that they were required to get for financing of the mine.
Production cost for nickel is about $3.50/lb after copper credits. They expect to produce 17 mil lbs of nickel this year. At current prices, that mine would produce a cash flow of 17 mil lbs x $9.50= $160 mil. That is over 80c p/s in cashflow. Not too shabby for a $2 stock.
Please trade DYNT for RNO.
Ameritrade- I had no problems earlier today but now I can't logon now either. Crap!
Nickel is going crazy as it looks like the world is about to run out of it. Something odd that I noticed is that nickel stocks were actually lower than they are now at one point last year and then they shot back up again. Does anyone know why nickel had such a roller coaster ride last year?
Here's a link to a chart showing nickel inventories. Notice the 5 year chart of inventories.
http://www.kitcometals.com/charts/nickel_historical_large.html#lmestocks_5years
EZM...Cramer talked about it last night too after a caller asked for his opinion. Last week he also had EZM's CEO on his show. EZM is getting to be a regular topic there.
Booyah... I mean Buymoorh, speculative, but still cheap.
metal prices...Kipp, it's hard to imagine metal prices dropping as long as inventories keep dropping:
http://www.kitcometals.com/charts/lmewarehouse.html
LTFD...Nice bounce back today on good volume. Did anyone chat with the CEO about expanding on why the CFO is leaving?
Naked shortselling- This link is a real eye opener as to what the problem is, how big it really is and why regulators are dragging their feet to do anything about it. The size and scope of this problem makes me real nervous.
http://www.businessjive.com/nss/darkside.html
LTFD... Well if Jeff Minch didn't realize that he created a PR debacle, he certainly will once he sees what has happened to the S/P. Hopefully, we will see some clarification. I was only able to sell a few shares before the bottom fell out.
Len...General market direction..This is from your post:Taking the 1900/21 and 1966/82 periods, the average duration, based on month-end closes, was 27-months for an average gain of 51%. The longest bull market began in 1903 and lasted for 35-months. And the biggest rally, which began in 1907, was followed by a gain of 65%.
It seems to me that what the author is doing is "cherry picking" periods of time to make his point that the current bull market is worn out. It appears to me that he is only covering the periods from 1900-1921 and 1966-1982. That is only 37 years from 105 years of market history. If one looks at an average of all bull and bear cycles for the entire 105 years, I would venture to say that the current bull market is still relatively young. I looked at an SP500 chart and it looks to me that we had a 12 year bull market from 1988 to 2000. That was 12 years. Compared to that one, the current 42 month bull is barely an adult.
Another reason that I remain optimistic about the current market are baby boomers and technology. The baby boomer generation is now 46-60 years old. As a group, they are at the peak of their earnings and income. That means more money available to invest in the market than ever before. And yes, they finally realize that old age is coming so they better save now while they can. With the real estate market fading, that leaves the stock market as the best place to invest. I will worry when the baby boomers are into retirement age and are drawing those funds out of the market.
As for technology, I am talking about how much easier it is to invest in the market today than ever before. We don't even need to visit a broker to set up an account, or call the broker to make a trade. All is easily done over the internet. And the cost of doing trades has dropped dramatically as well. I remember when it would cost me $200 or so to do a typical trade. Yesterday, I and others were posting about firms that offer $5 trades. Simpler and easier means more people are investing and that means a rising tide that lifts all stocks. At least until we get to be old retired farts.
In my opinion, it is probably a waste of time to try and time the market anyway. The best time to invest is whenever one finds undervalued stocks particularly those that are unfollowed by funds and analysts. Those are also generally the ones that this board is all about. I actually went to a good percentage of cash earlier this year. Not because I thought the market was falling, but simply because I couldn't find new "values" to replace the stocks I sold. Now I am finding places to put the money again. To me, that means it is time to buy.
http://finance.yahoo.com/q/bc?s=%5EGSPC&t=my
Marsco brokers... Bones, I never heard of them before this morning either when I noticed their ad on CNBC and checked out their website.
c1001 and chelsea, With AMTD's izone, do they sweep your cash balances into an account that pays some interest? That is one area that Scottrade is better than TDA. On a $20,000 average cash balance, Scottrade pays 2 3/4% while TDA pays only 1/2%. TDA requires a $200K cash balance before they pay 2 3/4%, while ST pays more at that level. Doesn't sound like alot, but it all adds up. 2 1/4% difference on that $20,000 average is $450/ year. Rather put it in my pocket than the broker's.
Online stock commissions. I noticed that Marsco (marsco.com) is offering commissions for a flat $5 on any size of online trade. Plus they offer a phone # to contact them if there are problems and they pay some interest on cash balances (not sure what that is, I have an email into them). Does anyone have experience with this firm? I currently have Scottrade which has given good service with $7 commissions. Only problem is they charge more for stocks under $1. I also have TD Ameritrade at $10 per trade. I still am pissed at the recent problems I had being from TDW and thinking about putting some funds elsewhere.
Any others that you guys also like?
New Yahoo beta message board format...Those new message boards that Yahoo is trying out are really a pain. I would encourage anyone who agrees to give them your opinion of the new boards before they replace the current style. Currently one can switch back and forth between the styles but that will likely change soon. They provide a place for feedback at the top of the new format.
Here is what I said:
I hope you do not change to the new message board format. Here are problems that I see:
The Font is harder to read. It looks like something that is geared to small children.
Fewer messages appear on the screen. Old format has about twice as many messages per page.
There is nowhere to click the stock ticker symbol on the new message board layout. Are we supposed to BACK PAGE through all the messages that were just read to get back to the SUMMARY PAGE? Otherwise we have to re-type the Ticker Symbol.
I guess NEXT TOPIC is supposed to mean NEXT MESSAGE. I thought that THAT was confusing until I realized that NEXT TOPIC is not the next message but the PREVIOUS MESSAGE! This is very distracting.
Unless your goal is to reduce usage of your boards, I strongly urge you not to go to the new format.
I'm glad they have finally specified a closing date. Another 8% return on my investment for less than two months doesn't sound bad at all...That would be 50% annualized.
UFPT- Wade I'm with you on this one. Just dropped my ask and got a fill. Curious what caused the surge in volume and price this morning but all those insider sales at lower prices cannot be a good thing.
BWLRF vs HBM...Bobwins, current production at BWR is down due to closures of 2 mines. Myrna Falls was recently opened and is operating at 75% of capacity. Will go to 100% this year with new infrastructure in place. Langlois mine will open by year's end. Zinc grades at Langlois are shown at 10.8%, virtually the same as HBM's new Balmat mine. Plus Langlois has twice the reserves as Balmat. BWR CEO recently commented that he expects 110mil lbs of zinc from that mine alone in 2007. That will increase zinc production by 45% next year. BWR commented in last CC that they are working through some low grades at Myrna Falls. They expect the grade to continue to increase through the year.
It also is very important to put a value on each company’s reserves. Basically, the stock price should reflect a discounted value of future income streams. In the case of a miner that represents ore that is still in the ground. Unfortunately, canadian mining companies do not provide a PV10 value of their future estimated net profits as American oil companies do. But lets look at BWR's and HBM's reserves based on what they reported in their year end 2005 10Ks. Prices used were the average prices that HBM received in Q1 2006.
Reserves: BWR HBM
Zinc reserves 1.29 mil tons 1.13 mil tons
Lead reserves 224 K tons -0-
Copper Reserves 132K tons 427K tons
Silver reserves 1,113 Mil Grams 450 mil grams
Gold reserves 13.5 Mil grams 38 mil grams
$$ value: BWR HBM
Zinc@ 1.08 $3,065 Mil $2,684 mil
Lead @ 56c $123 Mil -0-
Copper @ $2.33 $ 677 Mil $2,189 Mil
Silver @ 7.23 ounce (25c/gram) $ 278 Mil $ 51 Mil
Gold @ 426 ounce ($15/ gram) $ 202 Mil $ 507 Mil Total $4,345 Mil $5,431 Mil
Bottom Line:
BWR has $4,345 Mil in reserves with 544 Mil Mkt cap= $8 worth of minerals in the ground for every dollar in market cap.
HBM has $5,431 in reserves with $1,435 Mil mkt cap= $3.80 worth of minerals in the ground for every dollar in market cap.
Note: The above calcs do not consider the cost of getting those minerals out of the ground. But since the above reserves are based on how much in reserves each company has that they can profitably get out of the ground and using similar prices, I would guess that the net value of each company’s reserves are roughly in line with their value in the ground. Based on reserves, BWR is a much better value.
BWLRF..Bunky, I haven't done such an analysis for BWR in 2007 yet. TD Newcrest has a good handle on them and they are projecting Breakwater's EPS to be 57c and their cash flow at 81c in 2007. Certainly makes their $1.15 S/P look CHEAP! This assumes an average zinc price of $1.50 and an average Copper price of $2.25. Their price target is $2.50C and that is only so low because they are discounting the short expected mine life of two of their mines. I pasted their report last week on post #46882.
I also compared the reserves of BWR with another board favorite, HBM. On the basis of current market caps, I found BWR to have twice as many proven and probable reserves as HBM. BWR also has more of its reserves in zinc than the others. I believe that zinc has the best fundamentals going forward. I like BWR, HBM and EZM but of the 3, I believe that BWR is currently the most undervalued and is also my largest position. I expect the SP of all three to continue heading north over the next month as the market continues to anticipate what their earnings will be in the next reported quarter. Have a Happy 4th all!
Mining for low grade ore: Nuts,you make a good point about mining low grade areas. As I recall, EZM was questioned in their last CC whether they plan to continue mining in areas where the metal content was below their planned cutoff point but still profitable due to current high prices. They said it creates an interesting dilemma for them. On the one hand, they want to take advantage of current high prices and get as much metal onto the market as possible now. On the other hand, if they decide to leave a pit, they are required to fill it back in. Once they decide to do that, it would probably not be feasible to ever go back because then they would have to start all over again. They did not say what they actually plan to do with their low grade areas.