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TVI Pacific (TVI.TO/TVIPF.PK) gives update
I know that TVI is not much followed on this board anymore, but I still have a speculative position in this one (2% of my portfolio). They provided a somewhat cheery update today on their progress in a number of areas:
-- Canatuan - good progress with the Zinc Circuit commissioning
-- Siennalynn - exploration drill program proceeding
-- Balabag - scoping study on track, resource definition drilling continues
For details see: http://finance.yahoo.com/news/TVI-Pacific-Provides-iw-3278280245.html?x=0&.v=1
If copper prices stays high (as many predict), and if they can realize these extra sources of income (added zinc circuit, more base mineral resources, and a future gold mine), then I believe that TVI is attractively undervalued. Of course, management has disappointed a few times over the last year, and so it probably pays to maintain a healthy skepticism. But I'm encouraged enough by today's PR to maintain my position.
JWB
SPM.TO/SMNPF.PK takes a beating.
It's Scorpio's turn to get clubbed like a baby seal this morning. Perhaps someone knows something? In any case, my "stink bids" hit this morning, and so I am now the proud owner of some discounted scorpio shares.
MMT.V: I'm buying
I'm not Bobwins. But, I'm holding my MMT.V (my 3rd largest position, which means my portfolio is taking a beating today), and have been buying quite a bit on this drop (I personally have accounted for 30% of today's volume so far). My buys range from 0.4585 (US$) to 0.475. Perhaps someone knows that upcoming drill results are bad, or perhaps we'll soon hear in the news about some disastrous event in Nigeria. Or, perhaps someone got in trouble and needed to sell.
JBII is a pig whose lipstick is wearing off.
> JBII.. A snake without a head..??
I'm not sure this pig could fly even in a CAT 5 hurricane. The market cap on this stock still needs to drop by a factor of 10 or 20 to get to fair value. It will get there in due time because the fundamentals will always win out in the long run. All you've got here is (1) a niche magnetic tape reading business that has minimal to zero value, (2) an "archive" of dusty old MIT and NASA documents whose contents are freely or cheaply available from other sources in more convenient form, (3) a "green" cleanser which has no obvious advantages over other products produced by large national consumer product powerhouses, (4) a small fiber optic equipment reseller in Mexico (which operates in the most competitive and low margin end of the telecommunications business); (5) a blue-sky plastic-to-oil conversion pipe dream that will suck up investor money until the CEO can no longer find fools to invest. Of course, the biggest asset is a CEO with little business savvy, no clear business focus, and dubious technical credentials in most of his company's product lines.
Blech.
> For me, the chief deficit of Metanor, and what prompted me to sell out some time ago, is the management.
I have the same opinion of MTO.V management. I owned the stock nearly continuously from 2005-2009. My experience as a shareholder was one of continued and repeated mild disappointment in management. Management is not flagrantly bad. They just never seem to shine. I have no regrets selling MTO, as the stock has done nothing for years, and my money was better invested elsewhere (I put all of my MTO funds into OGC.TO, which was a good move). You might get lucky and catch an MTO pop on some good news. But I think they upside is very limited in this stock until new management arrives.
CAVO interest
I've owned this stock off-and-on over the last 4 years (I'm currently out). It seems to have so much promise: an infrastructure play in one of the world's most rapidly developing countries. But the company has never lived up to the promise. Hopefully some kind of catalyst will come along to jump-start this stock. However, until that catalyst becomes visible, I think the share price will slowing grind lower.
MILL et. al. decline
Wall street is currently in "sell your winners" mode. High flying stocks like MILL are being sold off to raise cash, and highly shorted crappy stocks are up as the shorts buy back their shorts to lock in a profit. Often, such topsy-turvy events are a sign of short term or intermediate bottoms.
My JBII guess: 08/15/10
I think JBII will pump out a few more PRs that will help keep the stock inflated a bit longer. They were able to con enough investors to take this POS over $5. It will take a little bit longer until the JBII faithful give up hope.
> Pick the day JBII trades below $1.00
>
> Lets have a contest. Privately I had been saying 6/17 but I was obviously off. I'll start it off with 6/28/2010
Big sale today
Some quality juniors (IAE.V, ARN.V) and some speculative plays (MMT.V, ATPG) are really getting whacked today. I added a little to IAE (my largest holding), and will probably be adding quite a bit if the share price starts stabilizing around here.
Smackdown of CFX-UN.TO today
Canfor is really get pushed down today. I've been buying in small lots all the way down. Alas, my early buys are already way under water. I think today's prices offer an attractive entry point for Canfor. Of course, it could always go lower. At some point the dividend (even if it gets cut somewhat) should support the share price.
2nd Thanks to Lone Clone
I too really appreciate your tremendous and selfless efforts to provide an effective and efficient site for keeping up with the Uranium business.
Thank you, Thank you, Thank you.
JWB
Catalyst Paper (CTL.TO/CTLUF.PK) OUCH!
Ms. Market is angry with Catalyst today. I had some "stink bids" for Catalyst which were all hit today with the downdraft. I was hoping for a better report.
SOMX: be careful.
SOMX soared today because their low dosage version of doxepin has been approved for use in treating insomnia (using the name Silenor in the case of insomnia). I'm not that impressed by this announcement. Doxepin is a 60-year old drug (see http://en.wikipedia.org/wiki/Doxepin ) that is already prescribed off-label for insomnia. Because it went off patent decades ago, it is very cheaply available by generic prescription. As compared to Ambien or other current generation sleeping aids, it is not so habit forming. But its anticholinergic side-effects (constipation, dry mouth, excessive sweating, increased appetite, increased heart rate) can be a problem for some people. At the low doses that are being allowed by the FDA, this unlikely to be a problem except in very rare cases.
Doxepin can be a very effective sleep aid. But I just don't see much of a profitable line of business for SOMX since the same drug in the same doses can already by prescribed by any physician at a very low generic price. I can't see too many HMOs stepping up to buy Silenor at a high price.
From a technical perspective, SOMX may be a good trade for flippers, but this is not a company-making announcement. In fact, I'll be looking to short this stock if it trends much higher.
Iridium Miner
Marifil Mines (MFM.V) has also hit some very high grade iridium ore in S. America. I bailed out of MFM.V over a year ago, as they seem to be perpetual explorers, and not so much producers. If I recall correctly, they hit grades of up to 14,000 grams/ton iridium.
JWB
SunOpta (STKL) on the move. Why?
Does anyone know why STKL is moving +30% today?
JWB
Crosshair at $0.12
I have 1% of my portfolio in CXZ--as much as I'm willing to put in a very speculative stock. Since my cost basis is $0.14, I wish I had bought at $0.12. In any case, I think this is a patented Bobwins "buy-and-mold" type investment. When the world eventually gets out of this economic dark ages, I think Uranium will do well.
A recent interview with Peter Grandich has a few paragraphs near the end on the Crosshair merger with Target Exploration, and Grandich's views on CXZ match my own:
http://seekingalpha.com/article/119338-peter-grandich-bullish-on-oil-uranium-and-canadian-banks?source=yahoo
GBG: opportunity or trap?
GBG share price has been cut in half the last two weeks. Is this a buying opportunity, or will this falling knife continue to plummet? So far the falling knife has slice off several of my fingers. Any opinions are welcome.
Metanor's Report
You can get the report at www.sedar.com. The direct link to all Metanor reports is:
http://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00019972
The direct link to the report is:
http://www.sedar.com/CheckCode.do;jsessionid=0000HwxV6d26d_0_XknMLz9gbgb:-1
I'm not sure the direct link will work, as it leads you first to a crazy login page.
JWB
Guanajuato:
I spent a week in Guanajuato in December. The locals said there were no problems with the drug cartels there.
I really enjoyed my stay in Guanajuato--I would like to go back there, and I recommend it as a possible tourist destination to others. Guanajuato is a lovely town of 70,000 people--many colonial era buildings remain. The central "old" part of town looks more European than anything else. Guanajuato appears reasonably prosperous, and seemed very safe. Due to its colonial history and also its prominent role in the Mexican revolution, Guanajuato is frequently visited by Mexicans, but it appears to be off the main path of international visitors. Not much English is spoken there. They have a reasonably well known annual art/music/theater festival.
All-in-all, I think you can rest easy about Guanajuato. It's not on any route that would be useful for drug smugglers, it is too small to be a large drug market, and it doesn't seem to have the slums that breed drug use.
JWB
My zinc stock buys?
I'm not in any rush to buy zinc miners yet, since I think their stocks will still be dragged down further by what I predict are greater market lows ahead. I would start off with some of the most liquid stocks, like HBM.TO or LMC, because that is where the institutional money will flow, which is needed to support any lift in stock price.. As for juniors (which will offer the greatest potential for stunning gains), I don't have any good suggestions right now. I need to resume some due diligence on the current status of the juniors' production capabilities.
In the longer term, I definitely plan to "think zinc." But for now I'm just patiently waiting for the confluence of market lows and future visibility of economic rebound.
have zinc prices bottomed?
It's good to see some life again on this zinc board. Obviously, the future is very difficult to predict right now. My WAG is that we have a short term bottom in the $0.50/pound range for the next few months. After that, the market will try to sniff out the probability of a near term global economic rebound. My own guess is that the market's springtime hopes for a second half rebound will be crushed by summer time, sending zinc back down into the $.40's. Then the rebound will occur late in 2009, or early 2010 as the end of the downturn becomes visible.
But anyone who believes in iron-clad predictions at this time is a fool. We have to listen carefully to the market and follow its subtle hints.. Unfortunately, I'm not good at reading the subtleties of markets, and so hopefully others here on this board can provide more enlightened guidance than I can provide.
RAME: just entered GTC at $4.08
I think the market still wants to punish the energy stocks at least another 5%. So, I'm putting in GTC bids on RAME, TGA, PRC, CNEH about 5-10% below today's levels.
Re: YHGG Earnings
This stock is puzzling. The earnings keep going up, but the stock continues to grind lower. It seems that the market considers this stock to be a scam? I used to own this, but sold out in the $0.80's. Got tired of the market not recognizing this company.
Anyone have any insight or direct knowledge of this company? Is it just unloved, or does it smell of scam?
Bunky: my favorite Chinese pollution control company is BQE.TO (BTQNF.PK on the pinks). It's a Canadian company working mainly on mine waste water remediation. They have contracts in N. America, Mexico, and China, and seem to be growing. The chart has been real good to me.
JWB
EZM Merging with Lundin Mining
IMO, this looks like a takeover of EZM by Lundin, but spun as a merger of equals. If I understand the the press release correctly, EZM shareholders will get 0.0952 shares of Lundin for each EZM share. As of Friday's close, that values EZM shares at $2.86/share--well below Friday's closing price. I would expect Lundin to be heavily shorted, further driving down EZM's price.
I don't know anything about Lundin other than what I can read on Yahoo. Does anyone have an opinion on this merger?
EZM is one of my largest holdings. My initial impression is not to vote in favor of this merger, as I think EZM can do fine on their own, and should snag a much better buyout price at a future date once their zinc mine is really up and running.
JWB
==============================================================
Press Release Source: EuroZinc Mining Corporation and Lundin Mining Corporation
EuroZinc Mining and Lundin Mining to Merge to Create Premier Copper and Zinc Producer
Monday August 21, 2:00 am ET
VANCOUVER, BRITISH COLUMBIA--(MARKET WIRE)--Aug 21, 2006 -- EuroZinc Mining Corporation (TSX:EZM.TO - News)(AMEX:EZM - News) and Lundin Mining Corporation (TSX:LUN.TO - News)(OMX: LUMI) -
- The merger creates a premier, diversified copper and zinc producer
- Four profitable mines operating in Portugal, Sweden and Ireland; with a fifth mine, Aljustrel, to commence production in the second half of 2007
- Annual production of approximately 450 million pounds (205,000 tonnes) of contained zinc and 200 million pounds (90,000 tonnes) of contained copper
- Strong balance sheet with US$270 million in cash and short-term investments, minimal long-term debt, and significant operating cash flow to facilitate an aggressive growth strategy
- Management team to reflect the collective strengths of both companies
- Existing EuroZinc and Lundin Mining shareholders will own approximately 56.7% and 43.3%, respectively, of the combined company
EuroZinc Mining Corporation ("EuroZinc") and Lundin Mining Corporation ("Lundin Mining") today announced that they have entered into a definitive agreement to merge the two companies to create a new global mining company. The combined company will be called Lundin Mining Corporation and will have a market capitalization of approximately US$3.0 billion (CDN$3.3 billion), creating one of the North American and European markets' premier, diversified copper and zinc producers. The combined company, upon closing, will remain listed on the Toronto, OMX (Stockholm) and AMEX (application required) stock exchanges.
Colin K. Benner, Vice-Chairman and Chief Executive Officer of EuroZinc, stated: "This merger adds significantly to both EuroZinc and Lundin Mining's operating bases. By combining the two companies, our collective strengths will allow us to further improve the significant operating cash flow from each of the operations. The combined financial strength and collective expertise of our talented personnel will allow the new company to pursue global growth opportunities and fill the market void in the mid-tier mining sector. This combination of companies will increase shareholder value and provide greater sustainability for the future. We are very pleased and excited about the possibilities this merger affords our collective shareholders and see this as a major step in building a world-class mining house."
Karl-Axel Waplan, President and Chief Executive Officer of Lundin Mining, added: "The combined strengths of Lundin Mining and EuroZinc will allow an acceleration of both companies' aggressive growth strategies. The combined company will have a world-class portfolio of mining projects, the support of extensive shareholder bases in both North America and Europe, a very strong financial position with excellent cash flow, and a highly motivated management team - creating an exciting, powerful platform for rapid growth. We have a clear vision of where we want the combined company to go and we intend to both maximize our existing assets and also continue to pursue other world-class opportunities globally with the clear objective of creating value for our shareholders in both the short and the long term."
Diversified Copper and Zinc Production
Upon completion of the transaction, the combined company, Lundin Mining Corporation, will own and operate a portfolio of four profitable operating mines plus a fifth mine, Aljustrel, to be reopened for production in the second half of 2007. All of the combined company's mines are located in stable European jurisdictions: Portugal, Sweden, and Ireland. The combined company will directly employ approximately 1,500 people.
Including the planned production at Aljustrel, production from the combined company's operating mines is expected to be approximately 450 million pounds (205,000 tonnes) of contained zinc, 200 million pounds (90,000 tonnes) of contained copper, 175 million pounds (80,000 tonnes) of contained lead and 6 million ounces of contained silver on an annualized basis.
In addition to its breadth of operations, the combined company will have an extensive exploration and development portfolio. Each of the existing mines is located within large land packages in prolific base metal belts. Furthermore, through the proposed addition of the Metropol joint venture in Russia, the combined company will own or have an ownership interest in four of the world's fifteen largest zinc deposits. The combined management team is highly confident in the combined company's ability to grow from its present portfolio through both acquisitions and organic opportunities.
Financial Strength to Facilitate Aggressive Growth Strategy
As at June 30, 2006, the combined company's pro forma financial highlights include:
- cash and short-term investments of US$270 million
- total assets of US$2.4 billion
- long-term debt of US$43 million
- total revenue for the first six months of 2006 of US$462 million
- operating cash flow for the first six months of 2006 of US$203 million
This strong financial position will allow the combined company to pursue an aggressive international growth strategy in global base metals.
Management and Board Reflecting Collective Strength of Both Companies
Colin K. Benner will become Vice Chairman and Chief Executive Officer of the combined company and remain based in Vancouver. Karl-Axel Waplan will become President and Chief Operating Officer of the combined company and remain based in Stockholm.
Both EuroZinc and Lundin Mining will be equally represented on the board of the combined company which, along with Colin K. Benner, will include Lukas Lundin as Chairman.
Transaction Details
The transaction will be executed through a plan of arrangement. At closing, all EuroZinc common shares will be automatically exchanged at a ratio of 0.0952 Lundin Mining common shares for each EuroZinc common share. Lundin Mining shareholders will continue to hold their existing common shares. The combined company, Lundin Mining Corporation, will trade on the Toronto Stock Exchange, the OMX (Stockholm Stock Exchange) and will immediately make an application to be listed on the American Stock Exchange.
Existing EuroZinc and Lundin Mining shareholders will own approximately 56.7% and 43.3% (56.9% and 43.1%, fully diluted), respectively, of the combined company. The combined company will have approximately 94.3 million basic common shares (96.1 million fully diluted common shares) outstanding at the completion of the merger.
The board of directors of each company have each received a fairness opinion with respect to the transaction consideration and are recommending approval of the transaction by their respective shareholders. The transaction is conditional upon the EuroZinc and Lundin Mining shareholders approving the transaction by 66.7% and 50.1%, respectively, as well as other customary conditions and regulatory approvals. Special shareholder meetings for each company to vote on the transaction are expected to be held in October, 2006. The transaction is expected to close by late October, 2006.
The definitive agreement includes a commitment by each of EuroZinc and Lundin Mining not to solicit alternative transactions to the merger. Each company has agreed to pay a break fee to the other party of US$40 million under certain circumstances. In addition, each company has granted the other party a right to match a competing offer. Lundin family interests, holders of approximately 19.9% of Lundin Mining, and Resource Capital Funds, holder of approximately 9.9% of EuroZinc, have each pledged their support of the transaction.
Advisors and Counsel
EuroZinc's financial advisor is National Bank Financial Inc. Its counsel is Gowling Lafleur Henderson LLP, Burns & Levinson LLP, Advokatfirman Vinge KB, Arthur Cox and Coelho Ribeiro & Associados.
Lundin Mining's financial advisor is Macquarie North America Ltd. Its counsel is Cassels Brock & Blackwell LLP, McCullough O'Connor Irwin LLP, Linklaters Advokatbyra, Shearman & Sterling LLP and Goncalves Pereira, Castelo Branco & Associados.
Conference Call and Webcast Information
The two companies will hold a joint telephone conference call with an interactive presentation at 11:00 AM EST (17:00 PM CET and 08:00 AM PST) on August 21, 2006, where Colin K. Benner, Karl-Axel Waplan and Lukas Lundin will be discussing the transaction. Please call in 5 minutes before the conference starts and stay on the line. An operator will be available to assist you.
Call-in number for the conference call
(North America - Toll Free) +1 866 239 0750
Call-in number for the conference call
(North America) +1 718 354 1158
Call-in number for the conference call
(Europe) +46 (0)8 5876 9445
To take part in the interactive presentation, please log on using this direct link:
https://www.livemeeting.com/cc/premconfeurope/join?id=9406606&role=attend&pw=Lundin
or visit the website www.euvisioncast.com and login using the following information:
Meeting ID: 9406606#
Meeting Password: Lundin
The presentation slideshow will be available in PDF format for download from the EuroZinc and Lundin Mining websites (www.eurozinc.com and www.lundinmining.com) in advance of the conference call.
A replay of the telephone conference will be available approximately one hour after the completion of the conference and until August 27, 2006. The replay number in Europe is: +46 (0)8 5876 9441 and in North America: +1 718 354 1112. To access the recording, please enter access code: 9406606#.
Kipp: Forbes view on Commodities
I can't add too much to the fundamental view that Bobwins already expressed. It is for exactly these reasons that I invest heavily in commodities.
It is very likely that commodities will head lower from here: (1) they've had a big run these last 2-3 years; (2) central banks throughout the world seem to have a coordinated effort to push down commodities, and to heighten investors' appreciation for risk; (3) the hedge funds are going through another round of "looks like a global slowdown ahead, so lets sell our holdings to lock in our bonuses."
Steve Forbes has been calling for $35 oil for several years now. I just don't think he gets commodities. I see this article in Forbes as the perfect contrarian indicator that the "commodities selloff" is closer to the bottom, than just beginning. Where was Forbes back in May when he should have called the top in commodities?
JMO
JWB
PARL going nuts
Up 26% and volume exploding.
?????
DNO: detail of their legal viewpoint
<<
there has to be some concern about the validity of Kurdish vs national claims, unless it is just a ploy to share the wealth. Anyone comfortable adding at this point? Uncertainty creates opportunity
>>
On DNO's web site, they posted today a "Relevant Questions and Answers" page dealing with the Iraq issue.
http://hugin.info/36/R/1029488/164949.pdf
My own gut feeling is that if Iraq were a country with a sound legal and contract system, then they would definitely be in the right. However, since it still is a country dominated by chaos and uncertainty, it is difficult to predict if DNO's interpretation of the law will hold.
DNO is ~7% of my portfolio (it was 8.5% just a few days ago .... ), so this concerns me. But, I've got set some low bids to snag more shares. As for today, I see this as an opportunity. We shall see what tomorrow brings.
Good luck to all of the DNO faithful.
JWB
Croc/Koz: HAO.v
Thanks to you both for the words of caution. In choosing this stock, I had my doubts about its legitimacy. However, oil sands are hot right now, and so I'm trying to capitalize on the momentum. I don't see this as a long term play for my portfolio. I've only committed a total of 0.2% of my portfolio to this, and so even if it is a total bust, it won't seriously hurt me (just a little bruised ego!). But, based on your inputs, I'll be keeping my eyes on the exit.
Thanks!
JWB
Hao.v: Yeah, I'm in....
<<
Has anybody else taken a position in HAO.v ???
>>
Bought some on 12/18 at US$0.29, and got carried away and bought some more on Friday at US$0.51. Who knows where this rocket ship is headed.
JWB
DEZ Breakout
<<
DEZ breaking out big time ($3.19). Rumors are flying. Not sure what is happening, could just be it catching up with the other gold stocks.
>>
DEZ got a brokerage house upgrade yesterday (see below). The CEO is also on ROBTV today.
I do believe that DEZ is catching up too....
JWB
=============================================================
INITIATING COVERAGE
Desert Sun Mining (DSM : TSX : $2.98) - Buy - Target: $6.20 Steven Butler
Comment: The rising sun; initiating coverage on Desert Sun with BUY and top
pick
Desert Sun is a junior gold producer/explorer with a focus on Brazil. The
company's key project is the Jacobina property along the Bahia Gold Belt in
Brazil. Past production at Jacobina was 670,000 oz at an average grade of
2.62 g/t between 1983 and 1998; low gold prices, strong local currency, and
poor operating performance forced the mine to close. However, Desert Sun's
efforts have resulted in a restart of commercial production on July 1,
2005, and a substantial increase in resources which currently total 5.3
million oz. Our 2006 EPS and CFPS estimates are C$0.05 and C$0.15
respectively. Our earnings and cash flow estimates increase to C$0.33 and
C$0.64 in 2009 which reflects a full year at the maximum mill capacity of
10,000 tpd when production is derived from three main areas - Joao Belo,
Morro do Vento/Morro do Vento extension and Canavieiras. We are initiating
coverage of Desert Sun Mining with a BUY (and top pick) rating given the
company's deeply discounted share valuation, excellent production growth
profile, and re-rating potential from explorer to producer. Desert Sun's
shares are trading at a very low multiple, 0.58 times our 5%/$534 spot gold
NAVPS of C$5.18. Our C$6.20 target price reflects a 1.2 times multiple of
our 5%/$525 peak gold NAVPS of C$5.12.
Sleestack: Delta Woodside?
<<
Buying this week. This is no a sexy industry but this is a deep value turnaround story. Should earn at minimum a $1.00eps in next fiscal year and the company is almost finished with restructuring charges. Only 5.9 million shares but three great institutions own quite a bit of shares. at .60cents this is a steal. Minimal downside risk for now.
>>
If true, it's really amazing that a $0.62/share stock could earn $1.00/share next year. What is your basis for this estimate? Delta is in the textile business. The American textile businees might possibly be obliterated by a new wave of Chinese imports that are enabled by recent changes in import quotas. What makes you so sure that this company is going to reverse its declining sales in the face of the Chinese onslaught?
Thanks in advance for any insight that you can give.
JWB
RRainman: Odd DNO.OL PR paragraph?
Thanks for the heads-up on DNO's news today. I bought a little bit (0.7% of my portfolio) a few months ago based on your DD.
While reading the news link that you provided, I came across this very odd paragraph near the end of the PR:
---------------------
"DNO regrets to note that Dagens Næringsliv in its article of 9. April 2005 is making several misrepresentations about the DNO. The sources of such misrepresentations appear to be individuals that have been previously connected to the company, including the former chairman who was not re-elected in 2002 as well as former consultants. The misrepresentation made by Dagens Næringsliv and its sources can only be seen as an attempt to damage the reputation of DNO, it’s Board if Directors and Corporate Management."
---------------------
Do you know what's going on here? It doesn't really worry me, but it does seem curious.
THanks in advance for any light that you can shed on this.
JWB
<< arnie70 re Vherf?
I can't pull up anything on this symbol. Where is it traded??
What is the name of trust??
>>
I'm guessing he got a small typo on Viking Energy Royalty Trust:
VKERF.PK
VKR-UN.TO
Dividend right now is 13.5%.
As for me, I'd rather own Paramount (PMGYF.PK, or PMT-UN.TO) for a high yield CanRoy (and I do own it).
JWB
Another homage to Small Cap Value Stocks
Everyone on this board already knows the advantages of investing in small cap value. CBS MarketWatch has a new article on this end of the investing spectrum:
http://cbs.marketwatch.com/news/story.asp?dist=¶m=archive&siteid=mktw&guid=%7B9C8A9A...
Apologies if this has already been posted. There is probably not too much new to the members of this board, except for the table on page 2 of the article which summarizes the returns of small cap stocks over the last few decades as compared to the S&P 500, etc. Pretty impressive.
JWB
EGY and HQSM are stupid cheap now
I bought a little EGY today. My only hesitation to buy more is that: 1) it is now close to my largest position already; 2) I think the moron sellers will push it down some more. If it drops below $3.8 I will back up the truck.
I tried adding to my small HQSM position, but I couldn't get any fills to my limit orders. I'll try again tomorrow.
I hope my patient outlook on these stocks will be rewarded. Of course, I'd prefer my reward sooner rather than later....
JWB
Bobwins: all is not lost with moly.
<<
Well reasoned and unemotional description of the market and the prospects. Looks like my gpxm.ob may have missed the boat. They took too long and may just miss the big payoff
>>
I think the most neutral way to interpret the article is to realize that moly prices won't stay in the sky forever. GPXM.OB may still be quite profitable with lower moly prices. However, in planning entrance/exit points for the moly stocks, one should conservatively expect lower moly prices when calculating future stock values.
I own TGB and rok.v. I haven't DD'd GPXM, and so I have no idea how lower moly prices will affect it. This article gives me an itchy trigger finger on my ROK.V. I'll still hold onto TGB, since moly is just a side show to the main copper event.
Good luck with your moly! I'm glad the article was useful to you. I've greatly benefitted from the collective wisdom of these boards.
JWB
A Moly Article:
I came across this on another board. It seems like a fairly well researched article on the forces that drive the molybdenum market. It seems that there is some interest in some of the moly producers here and on the VM board (e.g., tgb, gpxm.ob, rok.v, sky.v pom.v).
JWB
===============================================================
Molybdenum's Perfect Storm
Dave Forest
Casey Research
March 08, 2005
Until 2004, there had been little to get excited about in molybdenum mining for nearly a quarter-century. After a price spike in 1979 that saw "moly"-a soft, gray metal used largely in steel-making-go as high as $35/lb, the price quickly fell to near $5/lb and stayed there, for the most part, for the next two decades.
The picture changed dramatically at the beginning of 2004, when moly began a sudden recovery. The metal jumped to $15/lb by April and then more than doubled between October and December, to just below $35/lb by the Christmas holidays-a 1,300% run-up from the $2/lb price range prevailing in 2002.
Understandably, the rapid rise has the market buzzing and a number of juniors touting their new mission to find and/or develop moly deposits. But before putting money into moly ventures, it's important to ask: will moly's 2004 gains continue, or at least hold, during 2005?
To answer this, we need to understand what caused the price spike of 2004. The standard explanation is that ravenous steel demand from China created an exceptional need for moly-the logical extension being that as long as the Chinese economy stays strong, so too will steel demand and thus the moly price. But a look at the numbers shows that this explanation is probably an oversimplification.
Contrary to Popular Belief...
Steel-makers did not use exorbitant amounts of moly in 2004, according to statistics from Adams Metals, presented at the International Molybdenum Association's general meeting late last year. Moly demand for stainless steel products did likely grow by a healthy 6 percent on the year, but this is about the same annual demand growth the industry has seen since 1999. Demand growth for moly used in making other types of steel, such as low alloy and high-strength low alloy (HSLA), has flattened over the last 3 years to about 2 percent annually. In fact, even when other uses of moly-such as for catalysts and lubricants-are considered, demand has been increasing at a relatively constant rate for the past 20 years, around 4 percent annually.
So, if it wasn't a sudden jump in Chinese steel demand that sent the moly price soaring, what was it? In fact, the gains probably can't be attributed to any one major cause. Instead, the run-up was likely the result of a confluence of smaller factors.
One important development came not from China, but from America. The U.S. is the world's largest user of moly, but had seen its demand for the metal peak in 2000 at 81 million lbs and then decline to 66.1 million lbs by 2002, as the economy sagged. This demand reduction caused moly to sink to near $2/lb, which in turn drove global moly producers to mothball a lot of mine capacity. Consequently, production hit a four-year low in the second quarter of 2002, with about 43 million pounds of moly available to buyers, down nearly 25 percent from 2000.
In late 2003, however, the U.S. economy came back to life, and so did overall western demand for moly, rising to 85 million lbs in the second quarter of 2004, up nearly 13 percent from the third quarter of 2003. This in itself, however, doesn't appear to have been the primary cause of moly prices going through the roof. That's because producers-mainly the U.S... and Chile-ramped up production in response to the sudden need. When combined with exports from China and the CIS, supplies met demand through the last half of 2003. But then, at the beginning of 2004, something unexpected happened. China abruptly cut its exports by about 6 million lbs.
The suddenly reduced supply, combined with increasing demand from the U.S., created a kind of "perfect storm" for moly, resulting in a 5-million-pound supply deficit in the first quarter of 2004, at which point prices really began to move.
"Immediate and Rapid Fall in Price"
It thus appears that the gains moly made in 2004 may have been more of a blip than a long-term trend in the market. For one thing, the rampant growth in U.S. moly demand during the first half of 2004 seems to have been an isolated occurrence. American demand shot up 12.5 percent in the first two quarters of the year as compared to the same period in 2003, but then leveled off enough that the overall increase for the year was only 8.5 percent. In other words, the supply crunch came only because U.S. demand wasn't evenly distributed throughout the year, but bulged during the exact period when China cut its exports. After the second quarter of 2004, western moly demand actually fell slightly, and has since remained flat.
The export cut from China also appears to have been an anomaly. There was some speculation amongst moly bulls that the decrease might signal that China was planning to use more of its moly domestically, spelling long-term trouble for global supply. But this quickly proved not to be the case when, in the very next quarter, Chinese moly exports shot back up 5 million lbs, close to levels seen in 2003, and held near that volume for the rest of the year.
As a result, the supply deficit narrowed to only about 2 million pounds in the second quarter of 2004. And since then, overall global moly supply has jumped in response to the price gains, increasing by an estimated 10 million pounds, or 12.5 percent, during the last year. In fact, estimates from Adams Metals are that by the second half of 2004, supply once again exceeded demand, with the surplus likely now standing at about 5 million pounds-the biggest excess in 5 years.
This pattern of increasing demand (and prices) quickly bringing new supplies out of the woodwork is the historical norm for the moly market. The highest level of output from primary western moly mines came in 1980, the year after the last great price spike, with production reaching over 130 million lbs... When the price crashed soon afterward, production fell to less than 10 million pounds by 1983. A similar situation occurred during a short-lived price run-up in the early nineties. In 1993, with the price languishing near $3/lb, primary production had dropped to the lowest level in the last 20 years, at about 40 million lbs. But when the price moved up through 1994, reaching $16.50/lb by January 1995, primary production immediately doubled to 80 million pounds, causing the price to subside once again.
This suggests that today's high prices will soon entice significant supply into the market and drive the price of moly down sharply. In fact, Phelps Dodge, owners of Colorado's Climax mine, perhaps the world's largest primary moly deposit (which currently sits idle), said of the market in a recent report, "There is a cautious approach in this sector of the industry as historical moves to suddenly increase production by primary miners have often led to an immediate and rapid fall in price to levels below economic operating requirements." True to this prophecy, the moly price has already fallen in 2005, so far shedding nearly $10, or 29 percent, to around $25/lb.
More Risk
And today there is an additional factor that makes it risky to invest in primary moly producers. Namely, secondary production. Moly is commonly associated with copper porphyry deposits, especially in the U.S., Chile, and Peru, and copper miners often produce moly as a byproduct. Because moly and copper are both processed by flotation, it's easy for copper miners to turn the moly taps on or off. Thus, such operations generally fare better throughout the ups and downs of the moly market.
In fact, unlike the cyclical production numbers seen from primary mines, moly production from secondary mines has increased more or less steadily throughout the last 25 years, from about 100 million pounds in 1980 to a forecasted record of 195 million pounds in 2004. This means that there's a lot more secondary moly out there today-a supply that requires relatively little capital cost to bring to production-competing with supplies from primary mines that either have to be developed from scratch or restarted after months or years on standby. Last year brought numerous announcements from secondary producers of plans for new copper-moly mines or expansions of existing operations. Chilean national miner Codelco upped its moly production 59 percent in the first 9 months of 2004.
Of course, this makes it all the more attractive to invest in a copper-moly producer (if anyone needed another reason to do so, given the recent strength of the copper market). To that end, in the January International Speculator, we reminded you about Amerigo Resources' plan to add a moly extraction plant at their Colihues copper tailings project at Codelco's El Teniente mine in Chile. The plant, which is expected to be commissioned this month, will produce 500,000 pounds of moly in 2005, ramping up to 800,000 or 1 million pounds in 2006. The cost for production will be about $2/lb., which will add significantly to Amerigo's bottom line even if the moly price goes to half, or even a quarter, of its current value. (ed. Note: for more on a 30 day no-cost trial to Doug Casey's International Speculator to learn the latest on Amerigo and all Doug's favorite stocks, click here.
The bottom line: 'buyer beware' when investing in a primary moly producer who will live and die by the historically volatile moly price. Perfect storms, such as the one we saw last year, don't happen that often.
Dave Forest
email: info@caseyresearch.com
DAVE FOREST is a geologist, researcher and writer for CASEY RESEARCH, publishers of the Casey Investment Alert and Doug Casey's International Speculator, one of the world's leading monthly research letters with specific recommendations on gold, silver, energy and other natural resource companies.
This article originally appeared on www.caseyresearch.com, the official website of Casey Research, LLC, and is used here with permission. Casey Research is publisher of the Casey Investment Alert and the International Speculator - one of the nation's most established and highly respected publications on gold, silver and other natural resource investments now in its 26th year.
AASR.OB: one more important thing
Note that CSFB owns a lot of AASR.OB. In the company's filings, it appears that CSFB has the option to take the company private at a fair market value. This may cap the upside to the shares (assuming they offer a price near book value, which may be beefed up a little in the near future as they retain earnings). My guess is that if they really plan to take this private, it will happen in 2005. If it doesn't happen this year, it's because CSFB sees more upside to be gained from the large stock ownership than from harvesting the cash flows. I would expect the company to remain public, with CSFB slowly unwinding their stake.
JWB
AASR.OB Turnaround?
Ascent Assurance (very recently renamed USHeatlth Group) peddles various forms of health insurance to small companies. I've been watching this small cap for about a year, waiting for signs of a turnaround. They reported a profit two days ago for the first time in quite some time:
http://biz.yahoo.com/prnews/050303/dath043_1.html
I think they are turning the corner.
It's hard to get info on this company, but this is what I have pieced together by casual observation over the last few months. AASR.OB has been a nothing special insurance company. At some time in the past, they issued some preferred stock to raise capital. As their business went south (most likely due to mediocre management) the payout of the preferred dividend started to bleed them dry. Somehow, CS First Boston ended up with all of the preferred. They converted it to common, which stopped most of the bleeding. At that point, they owned so much of the company, they could call the shots. From what I gather, they pushed the old CEO out, and brought in a new CEO who was the chairman of a $4 billion cap insurance company. CSFB also seems to be backing them in a way which isn't completely transparent. I don't think the chairman of a $4B market cap company is going to switch to a $25 million market cap backwater unless he plans to be richly rewarded. It appears that the new CEO has roughly 10% of the entire stock awarded to him as an option pool. His base salary of $250,000/year (for a $100,000,000/year sales company) is low, and so he is clearly in this for the stock gain. Put simply, he gets rich if the stock soars.
In the first full quarterly reporting period after he took the helm, they reported a profit of $0.01/share (on a $0.40 stock).
The stock has since run up 50% in the last two days (to $0.61) since the earnings announcement. If we use the patented VMZCC anualize-the-quarterly-earnings method, the forward P/E is still a reasonable 12. It's also selling at a substantial discount to book value, and at only about 0.25 price/sales.
I'm guessing the stock will pull back sometime in this quarter, as these guys still have a lot to prove. However, if the new chairman can keep racking up the profits, clearly this stock will benefit. Unlike a commodity play (where you can estimate production, sales price, and production costs to yield a profit estimate), it is difficult for me to predict the profit potential of this company. However, with a major league CEO and the backing of CS First Boston, this one is worth watching.
Beware, this stocks trades very thinly.
JWB
DISCLOSURE: a dinky 0.07% of my portfolio is in AASR.OB. I'm likely to triple my stake in the near future.