is...probably trying to buy a stock
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My father n law (who knows absolutely nothing about investing), asked me yesterday if I know anything about crypto currencies. If people like this are getting interested in bitcoin, etc. it means the end is near, IMO.
CMMC (my favorite small copper producer) makes a pretty big deal and acquires Altona Mining for EV of $43.5 MM (USD). Feasibility study was just completed in September so this really seems like a shovel ready project.
Presentation...
https://www.cumtn.com/wp-content/uploads/2017/11/Altona-2017-November-20-2017-Conference-Call-Slides.pdf
Copper Mountain to acquire Altona in $93m deal
November 20, 2017News Ben Creagh
The undeveloped Cloncurry prospect, which has a measured and indicated mineral resource containing over 950,000 tonnes of copper and an inferred resource of around 720,000 tonnes, is 100 per cent owned by Altona.
According to the two companies, the deal will create a multi-jurisdictional, mid-tier copper producer with annual production of around 73,000 tonnes of copper by 2020.
The companies plan to combine through a scheme of arrangement where Copper Mountain acquires Altona’s entire share capital in a deal that values the Australian target at $93 million.
The acquisition will be executed through a merger implementation deed, with Altona to propose the scheme that will lead to Copper Mountain acquiring its shares.
Each Altona share will be exchanged for 0.0974 of either a CHESS depositary interest of Copper Mountain, which will trade on the Australian Securities Exchange (ASX), or, if elected, a Copper Mountain share that will be traded on the Toronto Stock Exchange (TSX).
Altona’s shares would be acquired for 17 cents each, a 42 per cent premium on the company’s closing price on November 17.
Copper Mountain chief executive Jim O’Rourke said the company had been patiently evaluating cost competitive opportunities to achieve a step-change in copper production.
“Cloncurry exemplifies the criteria of low-risk, near-term and high quality for which we have been seeking,” O’Rourke said.
“We intend to progress Cloncurry into production with the aim of doubling Copper Mountain’s copper production profile to the range of 170 million pounds (73,000 tonnes) of copper per annum with significant precious metals credits.
“This additional copper production is timely to capitalise on the projected strong copper cycle.”
Copper Mountain’s flagship assets is the 75 per cent owned Copper Mountain open pit mine in British Columbia, Canada.
Altona managing director Alistair Cowden said the company was delighted to join Copper Mountain to a form a high growth copper producer.
“We are excited to bring Copper Mountain’s depth of experience in constructing and operating a large scale open pit copper mine to bear upon the Cloncurry copper project,” Cowden said.
“Altona’s shareholders will receive a premium and will also gain immediate exposure to copper production just as copper prices have recovered and market shortfalls are predicted over the near term.”
The deal is scheduled for completion in the first quarter of 2018.
CMMC (the PSL stock that carried me to the top 5) makes a pretty big deal and acquires Altona Mining for EV of $43.5 MM (USD). Feasibility study was just completed in September so this really seems like a shovel ready project.
Presentation...
https://www.cumtn.com/wp-content/uploads/2017/11/Altona-2017-November-20-2017-Conference-Call-Slides.pdf
Copper Mountain to acquire Altona in $93m deal
November 20, 2017News Ben Creagh
The undeveloped Cloncurry prospect, which has a measured and indicated mineral resource containing over 950,000 tonnes of copper and an inferred resource of around 720,000 tonnes, is 100 per cent owned by Altona.
According to the two companies, the deal will create a multi-jurisdictional, mid-tier copper producer with annual production of around 73,000 tonnes of copper by 2020.
The companies plan to combine through a scheme of arrangement where Copper Mountain acquires Altona’s entire share capital in a deal that values the Australian target at $93 million.
The acquisition will be executed through a merger implementation deed, with Altona to propose the scheme that will lead to Copper Mountain acquiring its shares.
Each Altona share will be exchanged for 0.0974 of either a CHESS depositary interest of Copper Mountain, which will trade on the Australian Securities Exchange (ASX), or, if elected, a Copper Mountain share that will be traded on the Toronto Stock Exchange (TSX).
Altona’s shares would be acquired for 17 cents each, a 42 per cent premium on the company’s closing price on November 17.
Copper Mountain chief executive Jim O’Rourke said the company had been patiently evaluating cost competitive opportunities to achieve a step-change in copper production.
“Cloncurry exemplifies the criteria of low-risk, near-term and high quality for which we have been seeking,” O’Rourke said.
“We intend to progress Cloncurry into production with the aim of doubling Copper Mountain’s copper production profile to the range of 170 million pounds (73,000 tonnes) of copper per annum with significant precious metals credits.
“This additional copper production is timely to capitalise on the projected strong copper cycle.”
Copper Mountain’s flagship assets is the 75 per cent owned Copper Mountain open pit mine in British Columbia, Canada.
Altona managing director Alistair Cowden said the company was delighted to join Copper Mountain to a form a high growth copper producer.
“We are excited to bring Copper Mountain’s depth of experience in constructing and operating a large scale open pit copper mine to bear upon the Cloncurry copper project,” Cowden said.
“Altona’s shareholders will receive a premium and will also gain immediate exposure to copper production just as copper prices have recovered and market shortfalls are predicted over the near term.”
The deal is scheduled for completion in the first quarter of 2018.
Are you saying clean it and then use silicone or just caulk it? I'd like to get rid of the fog too if possible.
Sliding glass doors...
We have a set of sliding glass doors at one of our vacation rental properties that is fogging up (not condensation that I know of, but getting "foggy"). We have already replaced two sets of these sliders for a total cost $6500. That's a lot of money!
We have someone that believes that he can disassemble the door clean it well and put it back together with new seals/gaskets and make it look as good as new. Has anyone else heard of this and had any experience doing it? I think the cost to do this would be somewhere in the $500-$600 range vs. ~$3500 to replace the door with the same contractor we used before.
abh3vt...SQBG
You know what...I'm an idiot. I was only using the last 3 quarters...not TTM. Stupid mistake by me. You're right, it's about 6.5x, but that's still a lot and means they are paying interest rate penalties for such a big debt load?
If the PE guys run this like a PE acquisition and use cash flow to pay down debt, I think this could be an interesting story. If the EV stays the same and they pay down $30-$40 MM per year, then that's a 40% return CAGR with no improvement in the multiple or earnings. Those are always risky plays, but there is always a spot for them (just not sure if there is a spot in my account for SQBG yet though).
With all of the talk about SQBG the last few days, I finally took a quick look.
I do really like the insider buying that is going on. The stock has gotten crushed, and I do like that there is a new CEO (it looks like 3Q was a clearing of the decks for the new CEO...this happens so often for new CEOs and now removes a lot of risk.) I also like *most* of the board because there are several guys that come from private equity (including Carlyle!!).
But, how do you guys get comfortable with the debt? They are 8.6x levered (net debt/adjusted EBITDA). As a result of this huge leverage, they are paying loan shark type rates on some of their debt (LIBOR + 10%).
And there is no mention of online sales in the K or Q. Is that a concern for you guys?
Also, is anyone able to access prior presentations (before 3Q presentation)? Why list presentations if you can't view them (but maybe it's just me).
I don't get what you're saying.
I just walk around with yellow hands for 2 weeks! The stuff is terrible!
Value...I'm kind of intrigued by INIT. However, how do you get comfortable with the 6x Net Debt/EBITDA? Do you have any peers that I can compare to?
I agree R59. I was looking at the seasonality angle as well. It seems a little early, but higher lows on the BDI through February would definitely be a positive.
I would disagree. I'm a big fan of distressed investing and am one of those crazy people that actually likes investing in deep cyclicals. I've been reading a lot of books on distressed assets, etc. (links to some of my favorites below). Being a "grave dancer" as Sam Zell calls it doesn't cause problems for the industry. I would be buying secondhand (i.e. used) vessels anyway (and thus would not impact the supply of the industry).
Issues come about in an industry (like what happened in 2014 when people start to extrapolate a small move in the BDI to a far bigger move) and start to build new supply. I would be merely buying existing assets on the cheap, similar to what I did in housing in 2011.
(Currently reading) https://www.amazon.com/Am-Being-Too-Subtle-Straight/dp/1591848237/ref=sr_1_1?ie=UTF8&qid=1510685412&sr=8-1&keywords=am+i+being+too+subtle&dpID=51274YsmwvL&preST=_SY291_BO1,204,203,200_QL40_&dpSrc=srch
(My favorite) https://www.amazon.com/King-Capital-Remarkable-Schwarzman-Blackstone/dp/0307886026/ref=sr_1_1?s=books&ie=UTF8&qid=1510685611&sr=1-1&keywords=king+of+capital&dpID=516K61X26nL&preST=_SY291_BO1,204,203,200_QL40_&dpSrc=srch
(A close 2nd) https://www.amazon.com/Masters-Private-Equity-Venture-Capital/dp/0071624600/ref=sr_1_1?s=books&ie=UTF8&qid=1510685577&sr=1-1&keywords=masters+of+private+equity+and+venture+capital
(Not necessarily about distressed investing, but good, timely buying from CEOs) https://www.amazon.com/Outsiders-Unconventional-Radically-Rational-Blueprint/dp/1422162672/ref=sr_1_3?s=books&ie=UTF8&qid=1510685746&sr=1-3&keywords=outsiders&dpID=41wcImIrILL&preST=_SY291_BO1,204,203,200_QL40_&dpSrc=srch
(Other) https://www.amazon.com/Vulture-Investors-Revised-Updated/dp/0471361895/ref=sr_1_1?s=books&ie=UTF8&qid=1510685646&sr=1-1&keywords=vulture+investors&dpID=41HVK5nxP1L&preST=_SY291_BO1,204,203,200_QL40_&dpSrc=srch
So it sounds like you agree with me then?
With that said, who wants to go out and buy some dry bulk vessels with me? It appears that vessel values have bottomed and the supply that was ordered in 2007 and again in 2013 is pretty much past us. If dry bulk demand continues to grow 2%-4% for the next few years, asset values are going to go significantly higher.
You can buy a 12 year old panamax for ~$2.5 MM. If we could put 5 of those together with 50% leverage, I think they could be worth a total of $25 MM in three years (a return of 44% CAGR on our equity). This doesn't even consider the cash flow that we'd generate during this time (which I think could be 10%-15%). It is this kind of environment that I bought my three distressed properties in FL. They are all generating double-digit cash flows and the market values are up 50% or more. It was the best financial decision I ever made.
Contact me if interested.
I assume you mean SBLK. The BDI was down 1.3% last night...not a big move in the volatile index, so that's probably not it.
I think it's a pretty ugly chart. Any TA guys out there want to back that up? I think it really needs to hold on to 9.50 or it risks falling to ~$8.
I still own my DSX (which is also down ~4% today).
These reverse split arb opportunities used to be my thing, I'd have to agree with you. I would like to see different language around the street holders.
I don't have any chart to back this up but I'm pretty sure there is no correlation between lumber and timberland prices.
Bonds at 94 and a 6.4% yield are hardly that big of a concern. You don't even get the high yield people interested until 85!
I think that's the right way to thinking about WY. It should be considered a safer income play.
CPTMatt...
How did you create the chart for SBLK stock price divided by BDI? I'd like to create a chart like that to compare two similar stocks.
Thanks
It happens quite often in the deep cyclicals. Divvy cut is often sell the rumor buy the news event and people like it because it removes (some) balance sheet risk.
Big news in uranium today. Cameco is idling McArther River (10% of global uranium supply). Despite this, CCJ is up 5% today (I put it an order to buy pre-market, but it never filled and has had a 10% swing already this morning). I think it's good for CCJ and the whole industry (I bought URG last week).
Cameco to suspend production from McArthur River and Key Lake operations and reduce its dividend
Saskatoon, Saskatchewan, Canada, November 8, 2017
Cameco (TSX: CCO; NYSE: CCJ) announced today that due to continued uranium price weakness, production from the McArthur River mining and Key Lake milling operations in northern Saskatchewan will be temporarily suspended by the end of January 2018 and that the company’s annual dividend will be reduced to $0.08 per common share in 2018.
“With the continued state of oversupply in the uranium market and no expectation of change on the immediate horizon, it does not make economic sense for us to continue producing at McArthur River and Key Lake when we are holding a large inventory, or paying dividends out of proportion with our earnings,” said Tim Gitzel, Cameco’s president and CEO. “We regret the impact these actions will have on our workforce and other stakeholders and are doing what we can to cushion it while ensuring the long-term sustainability of the company. We believe these actions will help shield the company from the nearer term risks we face and will benefit all our stakeholders for their continued patience and support of our strategy to build long-term value.”
As a result of the suspension, the workforce at the operations will be reduced temporarily by about 845 workers (560 employees and 285 contractors). About 210 workers (160 employees and 50 contractors) will be retained to maintain the facilities in safe shutdown state.
We expect our share of the costs to maintain both operations during the suspension to range between $6.5 and $7.5 million per month. However, some of the items affecting these costs won’t be known until the operations are actually shutdown. More details will be provided in our fourth quarter results which will be released in February 2018.
Cameco plans to meet its commitments to customers from inventory and other supply sources during the suspension, which will be reviewed on an ongoing basis until inventory is sufficiently drawn down or market conditions improve. The duration of the suspension and temporary layoff is expected to last 10 months.
As we have previously indicated, we will continue to evaluate the optimal mix of our sources of uranium supply to feed into our contract portfolio, which could see us make further changes to our inventory position, production profile or purchasing activity.
Cameco will also review its corporate support activities for McArthur River and Key Lake operations, which may result in temporary workforce reductions at corporate office.
Uranium prices have fallen by more than 70% since the Fukushima accident in March 2011 and remain at unsustainably low levels. Cameco has been partially sheltered from the full impact of weak prices by its portfolio of long-term contracts, but those contracts are running out and it is necessary to position the company today to generate cash flow if prices do not improve.
Cameco has committed sales volumes of 28 to 30 million pounds in 2018. Using inventory to help meet contract commitments now allows Cameco to draw down its inventory without suffering a loss by selling at low market prices. It also avoids the risk of holding excess inventory valued above market prices on its balance sheet if prices remain low.
This measure is consistent with other actions Cameco has implemented over the past five years as part of a deliberate and disciplined strategy to strengthen the company in the long term. We have reduced supply, avoided selling into a weak spot market, resisted locking-in long-term sales commitments at low prices, and significantly reduced costs.
To decrease costs, we suspended production at the Rabbit Lake operation, stopped development and curtailed production at our US operations, reduced workforce across all our sites including head office, changed air commuter services for operations in Saskatchewan, changed shift schedules at two Saskatchewan sites, and downsized corporate office functions including a consolidation of our global marketing activities.
As discussed in our third quarter 2017 MD&A, year over year, average unit cost of sales (including depreciation and amortization) is down 13%, our cash production costs are down 10%, and direct administration costs are down 20%. Planned capital expenditures for 2017 are expected to be 26% lower than in 2016.
“To date, we have made good progress in reducing costs but unfortunately given the continued market weakness, more needs to be done”, said Gitzel. “We can’t control the market so our focus is on positioning the company to weather the continued low uranium prices and have uncommitted, low-cost supply to deliver into a strengthening market.”
In addition, Cameco’s board of directors has determined that the company’s annual dividend in 2018 will be $0.08 per common share, a reduction of $0.32 per common share on an annual basis. Further, the board has approved a change in the dividend payment schedule to an annual payment instead of quarterly. This change does not impact the quarterly dividend, announced on October 27, 2017, of $0.10 per common share payable on January 15, 2018, to shareholders of record at the close of business on December 29, 2017.
Cameco is the operator of both McArthur River mine and the Key Lake mill that processes all of the ore from McArthur River to uranium concentrate. Cameco owns 70% of McArthur River and 83% of Key Lake. AREVA Resources Canada Inc. owns the remainder. Together, the operations produced 11.1 million pounds of uranium in the first nine months of 2017 (Cameco’s share 7.8 million pounds).
I personally think that KSS and DKS are probably the only two retailers that anyone should own.
I bought DKS a few weeks ago, but I'm down on it now.
I saw a study once that said the bottom in tax loss selling candidates typically happened around December 10th.
Big news in uranium today. Cameco is idling McArther River (10% of global uranium supply)
Cameco to suspend production from McArthur River and Key Lake operations and reduce its dividend
Saskatoon, Saskatchewan, Canada, November 8, 2017
Cameco (TSX: CCO; NYSE: CCJ) announced today that due to continued uranium price weakness, production from the McArthur River mining and Key Lake milling operations in northern Saskatchewan will be temporarily suspended by the end of January 2018 and that the company’s annual dividend will be reduced to $0.08 per common share in 2018.
“With the continued state of oversupply in the uranium market and no expectation of change on the immediate horizon, it does not make economic sense for us to continue producing at McArthur River and Key Lake when we are holding a large inventory, or paying dividends out of proportion with our earnings,” said Tim Gitzel, Cameco’s president and CEO. “We regret the impact these actions will have on our workforce and other stakeholders and are doing what we can to cushion it while ensuring the long-term sustainability of the company. We believe these actions will help shield the company from the nearer term risks we face and will benefit all our stakeholders for their continued patience and support of our strategy to build long-term value.”
As a result of the suspension, the workforce at the operations will be reduced temporarily by about 845 workers (560 employees and 285 contractors). About 210 workers (160 employees and 50 contractors) will be retained to maintain the facilities in safe shutdown state.
We expect our share of the costs to maintain both operations during the suspension to range between $6.5 and $7.5 million per month. However, some of the items affecting these costs won’t be known until the operations are actually shutdown. More details will be provided in our fourth quarter results which will be released in February 2018.
Cameco plans to meet its commitments to customers from inventory and other supply sources during the suspension, which will be reviewed on an ongoing basis until inventory is sufficiently drawn down or market conditions improve. The duration of the suspension and temporary layoff is expected to last 10 months.
As we have previously indicated, we will continue to evaluate the optimal mix of our sources of uranium supply to feed into our contract portfolio, which could see us make further changes to our inventory position, production profile or purchasing activity.
Cameco will also review its corporate support activities for McArthur River and Key Lake operations, which may result in temporary workforce reductions at corporate office.
Uranium prices have fallen by more than 70% since the Fukushima accident in March 2011 and remain at unsustainably low levels. Cameco has been partially sheltered from the full impact of weak prices by its portfolio of long-term contracts, but those contracts are running out and it is necessary to position the company today to generate cash flow if prices do not improve.
Cameco has committed sales volumes of 28 to 30 million pounds in 2018. Using inventory to help meet contract commitments now allows Cameco to draw down its inventory without suffering a loss by selling at low market prices. It also avoids the risk of holding excess inventory valued above market prices on its balance sheet if prices remain low.
This measure is consistent with other actions Cameco has implemented over the past five years as part of a deliberate and disciplined strategy to strengthen the company in the long term. We have reduced supply, avoided selling into a weak spot market, resisted locking-in long-term sales commitments at low prices, and significantly reduced costs.
To decrease costs, we suspended production at the Rabbit Lake operation, stopped development and curtailed production at our US operations, reduced workforce across all our sites including head office, changed air commuter services for operations in Saskatchewan, changed shift schedules at two Saskatchewan sites, and downsized corporate office functions including a consolidation of our global marketing activities.
As discussed in our third quarter 2017 MD&A, year over year, average unit cost of sales (including depreciation and amortization) is down 13%, our cash production costs are down 10%, and direct administration costs are down 20%. Planned capital expenditures for 2017 are expected to be 26% lower than in 2016.
“To date, we have made good progress in reducing costs but unfortunately given the continued market weakness, more needs to be done”, said Gitzel. “We can’t control the market so our focus is on positioning the company to weather the continued low uranium prices and have uncommitted, low-cost supply to deliver into a strengthening market.”
In addition, Cameco’s board of directors has determined that the company’s annual dividend in 2018 will be $0.08 per common share, a reduction of $0.32 per common share on an annual basis. Further, the board has approved a change in the dividend payment schedule to an annual payment instead of quarterly. This change does not impact the quarterly dividend, announced on October 27, 2017, of $0.10 per common share payable on January 15, 2018, to shareholders of record at the close of business on December 29, 2017.
Cameco is the operator of both McArthur River mine and the Key Lake mill that processes all of the ore from McArthur River to uranium concentrate. Cameco owns 70% of McArthur River and 83% of Key Lake. AREVA Resources Canada Inc. owns the remainder. Together, the operations produced 11.1 million pounds of uranium in the first nine months of 2017 (Cameco’s share 7.8 million pounds).
I agree...DSX (which I think is at least in the top 2 in terms of quality) is down 4.5% today.
Centerra buying AuRico...
I bought AuRico in December 2015, but I sold it for 50%+ gain about 6 months later...I should have held onto it!
Centerra Gold to buy AuRico Metals in C$310 million deal
Reuters Staff
2 MIN READ
(Reuters) - Canadian miner Centerra Gold Inc (CG.TO) said on Tuesday it would buy smaller rival AuRico Metals Inc (AMI.TO) in a deal valued at C$310 million ($243 million).
Centerra offered C$1.80 per share in cash, a 38.5 percent premium to AuRico last close on Monday.
Canadian miners have been boosting acquisitions at home as they come under pressure from foreign governments over profit-sharing at crucial mines.
Toronto-based Centerra reached an agreement with Kyrgyzstan in September to settle all outstanding disputes over the Kumtor gold mine, the company’s biggest.
Earlier this year, miner Alamos Gold Inc (AGI.TO) (AGI.N), agreed to buy Richmont Mines Inc (RIC.TO) (RIC.N) in a deal valued at about C$905 million, creating a top-10 gold producer in North America.
Centerra’s deal will be funded through cash in hand and debt and is expected to close in January 2018, the companies said in a joint statement.
It was a pretty great day for me. DSX up 16% and CPPMF up 10% after great earnings. These are two of my top positions, so I think I had my best day ever (in terms of dollar gains).
Oh good...well at least I'm not starting off with a big crash on my first full day of owning it!
Not going to get anyone excited about this, but I doubled down on K today. They report tomorrow and the stock is down ~20% from my initial buy. I think they're starting to show some signs of a turnaround. It's a boring stock, and I'm honestly worried I made a mistake, but I'm going with it and I'll see what happens. At least I get a 3.5% dividend yield.
They presented at Mines and Money in Toronto (I was there). It was the 3rd or 4th time I've seen Ivan present and he is a smart dude. He has been consistently saying that they will do another financing in the spring (not now) so people are pretty early if that's what they are thinking.
I did hear a guy ask Ivan 1x1 about their drilling costs/foot and supposedly it was very high especially in Canada. Because I'm not typically a junior investor I don't know what is high and what is low. Do you have any thoughts?
Washing machine
We bought our washing machine soon after we got married (i.e. 12 years old). The thing is making some crazy noise now when it is spinning. I'm not sure if the tub is out of balance or something or what. Any thoughts from anyone (it's a Maytag Model # MAV208DAWW)?
I can't figure out what the problem is. Should I call a repairman or just buy a new one? The matching dryer hasn't been drying that well either. So we might just get both if I need a new one. I typically think if you get 10 years out of appliances you're doing pretty good.
Edge,
Any thoughts on the way that AUG has been getting crushed over the last couple of weeks?
Dr.
Any thoughts on ASND.to? It's a producer (Bought a mine from Nyrstar) at the bottom). They have had some problems getting things up and running, but they turned EBITDA positive a few months ago.
Palladium recycling makes up close 30%-40% of the supply of the metal. The palladium (or platinum) in the car is the most valuable thing in the car, so yes it is recycled. I don't believe Harvey will have much if any impact on the palladium market.
I know there are some FMGFF fans on this board. Just thought I'd pass this along from Sprott...
Patrick Donnelly
President, First Mining Finance Corp.
First Mining Finance President Patrick Donnelly joins Sprott's Steve Todoruk to discuss some exciting new developments at his company and the potential opportunity provided by the GDXJ rebalance.
Transcript (edited)
Steve Todoruk: Today, I’m speaking with Patrick Donnelly, the President of First Mining Finance. I’m going to ask him a few questions here leading up to our Sprott Natural Resource Symposium in Vancouver in late July. Hope you can join us there.
Patrick, since we spoke a year ago, has your business strategy changed at all?
Patrick Donnelly: Steve, thanks for having me on. Absolutely as you’re well aware, a lot has happened in the past year. Right around the conference last year, we had a significant change in the sentiment for gold. In the aftermath of Brexit, we saw gold prices go up and we saw a change in the market, there was a lot more capital coming in, liquidity came back, and valuations came up.
We had planned to do a couple more deals last year. However, the targets that we were going after either got way more expensive and beyond what we were willing to pay or simply were able to raise capital and weren’t in as bad condition as they were before. We also were able to raise $27 million last summer.
So given all these things, we felt, maybe at this point, it’s time to take a step back. We had done 8 deals in just over a year and we thought it was a good point to take a step back and show the market what we have. It was getting harder to do deals, and we knew we had to do something, so we decided to take some of the money we raised and put it back into the ground.
Last November, we announced a $20 million exploration program for a number of our assets to show the market that these assets are viable. And also, to create some news flow because I think we are back into a market that responds to positive news flow. So, we’ve been drilling at our Goldlund Project. We just finished the first stage of that. We drilled around 24,000 meters. We’ll go back in a few weeks to drill some more holes. And we’ve been issuing press releases. We’ve had three press releases come out regarding drilling at Goldlund in the last couple of months and we’ll have some more news soon.
We’re moving ahead with the preliminary economic assessment on our Springpole Project which has five and a half million ounces. And hopefully in the next couple of months we’ll have news on that.
So that being said, we’re still looking for opportunities but they have to meet our criteria.
Steve Todoruk: What is your current overall gold resource and what’s the value of that per ounce?
Patrick Donnelly: We have seven million ounces of measured and indicated gold and five million ounces of inferred. Our current market capitalization is about $360 million plus we have about $23 million in cash. So all in, I would say we are trading at about CA$30 an ounce.
And just for comparison, our peers are trading CA$40, CA$50 an ounce. So, we’re considerably undervalued. These are Canadian dollars. In US dollars, we’re probably trading somewhere are US$22, US$23 an ounce. And our peers are probably US$30, US$40. So again, we’re very undervalued.
Steve Todoruk: The VanEck GDXJ fund is creating quite a bit of havoc lately. They’re rebalancing. How is that affecting your current share price and how did the announcement of the rebalance in April affect your stock?
Patrick Donnelly: That’s a pretty good question. And obviously, we were admitted to the VanEck ETF last December. And last April, they announced they’re going to rebalance the fund and change the upper threshold to allow some more mid-cap producers into the ETF which has resulted in them having to trim the underlying holdings in the ETF.
And I think currently, we have something like 70 million shares on the VanEck. And they’ll need to get down to about half of the value by the end of this week. So, it has put pressure on our share price. We are trading at well over 80 cents to a buck before this happened. We think we closed today at around 67 cents or 66 cents.
Since that time, there has been a lot of pressure. That being said, I think there were a lot of phone calls, a lot of interests from potential shareholders. This has changed our business plan and we’re well-cashed up. We don’t need to raise any money. And for us, it’s business as usual. So in this way, it’s a compelling opportunity for investors to get into First Mining Finance.
To put this in perspective, we’re just financing about 80 cents and here we are at 66 cents and we got plenty of cash and lots of news flow coming out. So overall, it has put pressure on the share price and we still have a pretty good liquidity. And I think it’s a short-term distortion. I think we’ll get through it pretty quickly. I think in the next few weeks after this is all said and done, we’ll be back to where we were.
So, it is a bit annoying and certainly it creates a little stress for our shareholders but that being said, it is business as usual over here.
Steve Todoruk: You had said earlier that you’ve changed your business strategy somewhat. Are you still being offered any assets or anything to buy? Are you looking at all or has it totally changed?
Patrick Donnelly: That’s a great question, Steve. I got that question all the time. And absolutely, it’s interesting. I still get phone calls and it’s still very difficult for the small cap explorers to raise money. While liquidity has come back, it’s a lot more selective. Certainly the developers—the explorers and developers—have been doing better. And there is still compelling value out there.
So yes, absolutely, we are looking. We’ve done a couple of small bolt-on acquisitions in the last few months. I am working on a few other potential opportunities. There are companies out there that have interesting assets and are run by really poor management teams. I get phone calls from shareholders of some of these companies saying, “Listen, our share price should have been doing much better right now. But this management team is killing us. And we need someone to come in there and clean house and deliver shareholder value.”
So yes, absolutely, we are still looking for deals and I am still getting phone calls. And there are still opportunities out there. You just got to look a little bit harder. But if you’re patient, disciplined, and you do your homework there is compelling value to be had still.
Steve Todoruk: Regarding the share price, I’m going to assume getting through the GDXJ rebalancing is probably your nearest and quickest catalyst. Rebalancing and the on-going drilling, would be the likely catalyst for the foreseeable future?
Patrick Donnelly: I think so. The GDXJ is a great opportunity for people to get in the first money because, like I said, I don’t know when this window of opportunity is going to be opened again in terms of pricing. And that being said, at Goldlund we drilled 104 holes and we’ve only released something like 33 or 34 holes so far. We still have another 65 or 70 holes to release. That would represent 5 or 6 press releases with drilling. And so there will be lots of news coming out on that.
And just to put into context, out of the 33 or 34 holes we’ve drilled, 30 of them had compelling intersections of gold mineralization. It’s looking pretty good. So yeah, lots of more news on Goldlund.
Then on Springpole, which is our flagship asset (five and a half million ounces), we’re currently redoing the Preliminary Economic Assessment. We’ve been able to add additional value by working on the metallurgy there and we redid the mine plan and a few other areas. We’re somewhat optimistic, positively optimistic, that the new [Springpole] PEA is very positive. And we think Springpole has the potential to be very similar to the Cote Project that IAMGOLD holds which they just entered into a partnership with Sumitomo to move that project forward. And it’s very, very similar to Springpole.
We’re also going to start drilling at the Cameron Project in the next week or so with 9,000 meters. Give us a couple of months and we’ll have news flow on that. We’re also going to go over to Newfoundland to our Hope Brook Project and drill another 9,000 meters.
So, we’re going to have a tremendous amount of news flow coming out over the weeks or months and probably well into the fall and maybe even into early next year.
Steve Todoruk: Is First Mining Finance focused solely on gold or would you consider looking at any other metal type of deposits?
Patrick Donnelly: That’s a good question, Steve. I’ll be honest with you. It’s primarily gold. I’ve always said we look at London Metal Exchange metals. In other words, metals that are liquid. So, we looked at copper, zinc, silver, sulfide, nickel, platinum, and palladium. Those are the metals we look at.
I’m fairly bullish on copper. My background, I was a base metal analyst for a while and I’ve always remained very bullish on copper. But it’s very difficult to find decent copper assets. I think everybody is looking for copper. I do like platinum a lot. But again, it’s very difficult.
So, the focus will be on gold but that being said, if there’s something really compelling then yes, we would look at it. But like I said, it’s very difficult.
Steve Todoruk: You’re pretty well solely focused on North American gold. What would it take for you to make an acquisition outside of North America?
Patrick Donnelly: We’ve been looking at North America. We like Ontario and Quebec a lot. We’re very picky about jurisdiction. Would we go outside of North America? Sure we would. We have looked at some projects in Latin America. We’ve been looking at Mexico. We do like Chile, Peru, and Argentina. I’ve looked at some stuff in Brazil, Colombia, and Ecuador.
But there hasn’t been anything that stood out in terms of doing a deal. So, we do have the experience to work in Latin America. As I mentioned before in the past, we worked at the First Majestic office. That’s our sister company and they are focused solely on Mexico. We certainly have the infrastructure to manage Latin American projects. And if there’s something compelling at the right price and it’s economic at $1,200 gold then certainly we would take a good hard look at it.
Steve Todoruk: Is there anything else you’d like to mention?
Patrick Donnelly: We’ve grown considerably in the last year. So, we have a very strong technical team and we're going to have lots of news flow going forward. I think since last year, people said, “OK, you’re doing a good job of getting assets.” And the sponsors said, “What do you have and how do we know they’re compelling?” And so, I can talk until I’m blue in the face but I think ultimately you have to get the drills out there, the geologists on the ground, the engineers on the computers, and demonstrate to the market that these assets we’ve acquired are compelling. That’s what we’re doing.
We’re putting our money where our mouth is. And as you mentioned before, this GDXJ is a bit of an overhang but we have two and a half years of cash and lots of news flow. It’s business as usual for us. I think it’s a great opportunity for shareholders or investors to come in and get stock of a company that’s well-run. It’s led by Keith Neumeyer who founded First Quantum Minerals and First Majestic Silver.
I met one large fan in New York last week. He was just rubbing his hands because he sees the GDXJ situation a great opportunity to get some shares and some really quality names at a good price.
Steve Todoruk: I appreciate your time and look forward to seeing you guys at our conference in July in Vancouver.
Patrick Donnelly: Absolutely, Steve. I look forward to seeing you again and all the Sprott clients and I’ll be there myself and it will be great to see everybody.
I think you need have serious concerns about the balance sheet at Imperial. I'm pretty sure that they have already breached covenants.
I played golf with the CEO a few years ago (when things were going much better for the company!). He is a great guy. I feel bad for him and everything that has happened recently.
I'm very surprised you would put HBM in the same category as the others. In my opinion HBM and LUN are probably the I'm highest quality copper miners in the world!
I know there are some FMGFF fans on this board. Just thought I'd pass this along from Sprott...
Patrick Donnelly
President, First Mining Finance Corp.
First Mining Finance President Patrick Donnelly joins Sprott's Steve Todoruk to discuss some exciting new developments at his company and the potential opportunity provided by the GDXJ rebalance.
Transcript (edited)
Steve Todoruk: Today, I’m speaking with Patrick Donnelly, the President of First Mining Finance. I’m going to ask him a few questions here leading up to our Sprott Natural Resource Symposium in Vancouver in late July. Hope you can join us there.
Patrick, since we spoke a year ago, has your business strategy changed at all?
Patrick Donnelly: Steve, thanks for having me on. Absolutely as you’re well aware, a lot has happened in the past year. Right around the conference last year, we had a significant change in the sentiment for gold. In the aftermath of Brexit, we saw gold prices go up and we saw a change in the market, there was a lot more capital coming in, liquidity came back, and valuations came up.
We had planned to do a couple more deals last year. However, the targets that we were going after either got way more expensive and beyond what we were willing to pay or simply were able to raise capital and weren’t in as bad condition as they were before. We also were able to raise $27 million last summer.
So given all these things, we felt, maybe at this point, it’s time to take a step back. We had done 8 deals in just over a year and we thought it was a good point to take a step back and show the market what we have. It was getting harder to do deals, and we knew we had to do something, so we decided to take some of the money we raised and put it back into the ground.
Last November, we announced a $20 million exploration program for a number of our assets to show the market that these assets are viable. And also, to create some news flow because I think we are back into a market that responds to positive news flow. So, we’ve been drilling at our Goldlund Project. We just finished the first stage of that. We drilled around 24,000 meters. We’ll go back in a few weeks to drill some more holes. And we’ve been issuing press releases. We’ve had three press releases come out regarding drilling at Goldlund in the last couple of months and we’ll have some more news soon.
We’re moving ahead with the preliminary economic assessment on our Springpole Project which has five and a half million ounces. And hopefully in the next couple of months we’ll have news on that.
So that being said, we’re still looking for opportunities but they have to meet our criteria.
Steve Todoruk: What is your current overall gold resource and what’s the value of that per ounce?
Patrick Donnelly: We have seven million ounces of measured and indicated gold and five million ounces of inferred. Our current market capitalization is about $360 million plus we have about $23 million in cash. So all in, I would say we are trading at about CA$30 an ounce.
And just for comparison, our peers are trading CA$40, CA$50 an ounce. So, we’re considerably undervalued. These are Canadian dollars. In US dollars, we’re probably trading somewhere are US$22, US$23 an ounce. And our peers are probably US$30, US$40. So again, we’re very undervalued.
Steve Todoruk: The VanEck GDXJ fund is creating quite a bit of havoc lately. They’re rebalancing. How is that affecting your current share price and how did the announcement of the rebalance in April affect your stock?
Patrick Donnelly: That’s a pretty good question. And obviously, we were admitted to the VanEck ETF last December. And last April, they announced they’re going to rebalance the fund and change the upper threshold to allow some more mid-cap producers into the ETF which has resulted in them having to trim the underlying holdings in the ETF.
And I think currently, we have something like 70 million shares on the VanEck. And they’ll need to get down to about half of the value by the end of this week. So, it has put pressure on our share price. We are trading at well over 80 cents to a buck before this happened. We think we closed today at around 67 cents or 66 cents.
Since that time, there has been a lot of pressure. That being said, I think there were a lot of phone calls, a lot of interests from potential shareholders. This has changed our business plan and we’re well-cashed up. We don’t need to raise any money. And for us, it’s business as usual. So in this way, it’s a compelling opportunity for investors to get into First Mining Finance.
To put this in perspective, we’re just financing about 80 cents and here we are at 66 cents and we got plenty of cash and lots of news flow coming out. So overall, it has put pressure on the share price and we still have a pretty good liquidity. And I think it’s a short-term distortion. I think we’ll get through it pretty quickly. I think in the next few weeks after this is all said and done, we’ll be back to where we were.
So, it is a bit annoying and certainly it creates a little stress for our shareholders but that being said, it is business as usual over here.
Steve Todoruk: You had said earlier that you’ve changed your business strategy somewhat. Are you still being offered any assets or anything to buy? Are you looking at all or has it totally changed?
Patrick Donnelly: That’s a great question, Steve. I got that question all the time. And absolutely, it’s interesting. I still get phone calls and it’s still very difficult for the small cap explorers to raise money. While liquidity has come back, it’s a lot more selective. Certainly the developers—the explorers and developers—have been doing better. And there is still compelling value out there.
So yes, absolutely, we are looking. We’ve done a couple of small bolt-on acquisitions in the last few months. I am working on a few other potential opportunities. There are companies out there that have interesting assets and are run by really poor management teams. I get phone calls from shareholders of some of these companies saying, “Listen, our share price should have been doing much better right now. But this management team is killing us. And we need someone to come in there and clean house and deliver shareholder value.”
So yes, absolutely, we are still looking for deals and I am still getting phone calls. And there are still opportunities out there. You just got to look a little bit harder. But if you’re patient, disciplined, and you do your homework there is compelling value to be had still.
Steve Todoruk: Regarding the share price, I’m going to assume getting through the GDXJ rebalancing is probably your nearest and quickest catalyst. Rebalancing and the on-going drilling, would be the likely catalyst for the foreseeable future?
Patrick Donnelly: I think so. The GDXJ is a great opportunity for people to get in the first money because, like I said, I don’t know when this window of opportunity is going to be opened again in terms of pricing. And that being said, at Goldlund we drilled 104 holes and we’ve only released something like 33 or 34 holes so far. We still have another 65 or 70 holes to release. That would represent 5 or 6 press releases with drilling. And so there will be lots of news coming out on that.
And just to put into context, out of the 33 or 34 holes we’ve drilled, 30 of them had compelling intersections of gold mineralization. It’s looking pretty good. So yeah, lots of more news on Goldlund.
Then on Springpole, which is our flagship asset (five and a half million ounces), we’re currently redoing the Preliminary Economic Assessment. We’ve been able to add additional value by working on the metallurgy there and we redid the mine plan and a few other areas. We’re somewhat optimistic, positively optimistic, that the new [Springpole] PEA is very positive. And we think Springpole has the potential to be very similar to the Cote Project that IAMGOLD holds which they just entered into a partnership with Sumitomo to move that project forward. And it’s very, very similar to Springpole.
We’re also going to start drilling at the Cameron Project in the next week or so with 9,000 meters. Give us a couple of months and we’ll have news flow on that. We’re also going to go over to Newfoundland to our Hope Brook Project and drill another 9,000 meters.
So, we’re going to have a tremendous amount of news flow coming out over the weeks or months and probably well into the fall and maybe even into early next year.
Steve Todoruk: Is First Mining Finance focused solely on gold or would you consider looking at any other metal type of deposits?
Patrick Donnelly: That’s a good question, Steve. I’ll be honest with you. It’s primarily gold. I’ve always said we look at London Metal Exchange metals. In other words, metals that are liquid. So, we looked at copper, zinc, silver, sulfide, nickel, platinum, and palladium. Those are the metals we look at.
I’m fairly bullish on copper. My background, I was a base metal analyst for a while and I’ve always remained very bullish on copper. But it’s very difficult to find decent copper assets. I think everybody is looking for copper. I do like platinum a lot. But again, it’s very difficult.
So, the focus will be on gold but that being said, if there’s something really compelling then yes, we would look at it. But like I said, it’s very difficult.
Steve Todoruk: You’re pretty well solely focused on North American gold. What would it take for you to make an acquisition outside of North America?
Patrick Donnelly: We’ve been looking at North America. We like Ontario and Quebec a lot. We’re very picky about jurisdiction. Would we go outside of North America? Sure we would. We have looked at some projects in Latin America. We’ve been looking at Mexico. We do like Chile, Peru, and Argentina. I’ve looked at some stuff in Brazil, Colombia, and Ecuador.
But there hasn’t been anything that stood out in terms of doing a deal. So, we do have the experience to work in Latin America. As I mentioned before in the past, we worked at the First Majestic office. That’s our sister company and they are focused solely on Mexico. We certainly have the infrastructure to manage Latin American projects. And if there’s something compelling at the right price and it’s economic at $1,200 gold then certainly we would take a good hard look at it.
Steve Todoruk: Is there anything else you’d like to mention?
Patrick Donnelly: We’ve grown considerably in the last year. So, we have a very strong technical team and we're going to have lots of news flow going forward. I think since last year, people said, “OK, you’re doing a good job of getting assets.” And the sponsors said, “What do you have and how do we know they’re compelling?” And so, I can talk until I’m blue in the face but I think ultimately you have to get the drills out there, the geologists on the ground, the engineers on the computers, and demonstrate to the market that these assets we’ve acquired are compelling. That’s what we’re doing.
We’re putting our money where our mouth is. And as you mentioned before, this GDXJ is a bit of an overhang but we have two and a half years of cash and lots of news flow. It’s business as usual for us. I think it’s a great opportunity for shareholders or investors to come in and get stock of a company that’s well-run. It’s led by Keith Neumeyer who founded First Quantum Minerals and First Majestic Silver.
I met one large fan in New York last week. He was just rubbing his hands because he sees the GDXJ situation a great opportunity to get some shares and some really quality names at a good price.
Steve Todoruk: I appreciate your time and look forward to seeing you guys at our conference in July in Vancouver.
Patrick Donnelly: Absolutely, Steve. I look forward to seeing you again and all the Sprott clients and I’ll be there myself and it will be great to see everybody.
TREVF doing really well today (+7%). Zinc prices have started to bounce back (from $1.10 to $1.26) and inventories continue to fall. This is setting up for a great 2nd half stock in my opinion. TREVF is the best way that I've found to play the improvement in zinc prices.
TREVF doing really well today (+7%). Zinc prices have started to bounce back (from $1.10 to $1.26) and inventories continue to fall. This is setting up for a great 2nd half stock in my opinion. TREVF is the best way that I've found to play the improvement in zinc prices.