Ivanhoe Mines Ltd (IVPAF)

[JB3729]

Great post by ursusbrumae -

Y'all talk about manipulation...

I don't know about such conspiracy theories.  For the novice speculator, however, I would caution against buying shares on margin, because mining exploration stocks are the most volatile class of securities on the market, and a rapid downswing which is not only possible but inevitable from time to time, can easily trigger a margin call which may pry your shares away from you at just the moment you ought to be buying them.  I also suggest that using stop losses is antithetical to value investing, because it says that you will buy at a certain price, but sell at a predetermined price below that price, with no change in the fundamentals, and that you are willing to do so on the sole basis of the marginal opinion as expressed in the marketplace.  It's like saying you will buy a house for 500k, and happily hold it, but if your neighbour with an identical house ever sells his/hers for 400k, you will immediately sell yours at a 100k loss.  It makes no sense.  So shares bought with call money or "protected" by stops are quite vulnerable, especially in a stock like this one which is so riotously volatile, as evidenced by its recent twelve month surge like a bat out of hell.

And yes, there are games that professional traders play against the novice, including harvesting stops and prying shares out of weak hands which are leveraged, easily discouraged, or playing playing momentum like a moth to the flame and always buying high and selling low.  However, most of these conspiracies are imagined.  Market makers are in the market to provide a service, which is warehousing shares so that buyers and sellers may immediately trade and need not wait until the other shows up; for this, and their assumed risk of adverse selection (having to hold a possibly overvalued share) they are compensated by earning a (bid-ask) spread.  For the most part, they are not out to destroy you.

In reality, a market is not some mysterious oracle, but a facility for trade, in which a large number of random unrelated transactions are occurring at any given time, each with their own reasons and motivations, whether well conceived or otherwise, and to which there is no special significance or intelligent information.  So the truth is that the conspiracy is really undertaken by the unskilled trader against himself or herself, by being attracted to momentum and excitement, being easily swayed by others' poorly constructed arguments which appeal to emotion rather than logic, having a short attention span and therefore investment time horizon, not learning about a company, its industry, or business valuation, and therefore always buying high and selling low.

My suggestion would be to stop frantically glancing at the ticker every three seconds and cursing the nefarious daemons of finance, and in lieu of this endlessly amusing activity, study the company, its business and assets, compare it to others in the industry, and try to figure out how to value a mining company.  If you do this, you may realise that everybody at this firm is working overtime to make you, themselves, and the African people rich.  And if you give it a little time it might just happen.

Coming back to the matter at hand, after the recent minor pullback we are essentially back to a USD 2 billion enterprise value, give or take.  I remind you Ivanhoe's share of Kipushi, by far its smallest asset, is worth well over a billion dollars in net present value.  The Platreef is worth billions, considering all its expansion phases of development not reflected in the PFS.  And K&K, without a doubt the greatest mineral discovery of your lifetime, is worth many many billions of dollars, and that is just for the 40% net to Ivanhoe.  And as has been appositely observed, the firm is drilling up billions of dollars of fresh high-grade mineral resources every month.  Or is it every week?  Let's see, from late November to late January, Kakula apparently expanded by 40%, from 20 billion lbs Cu MI&I, which means 8 billion lbs Cu at USD 3/lb, amounting to roughly 24 billion dollars in 8 weeks, which is a rate of increase of 3 billion dollars worth of in-situ copper per week, or half a billion dollars a day.  This was ramping up from five rigs, and now there are twelve drills turning at Kakula.  So what is that, a billion dollars of metal discovered per day???  In any case, I think it a sound assumption that value is increasing at a pretty good clip.

Suffice to say, all things considered, that this stock today is massively undervalued.  So to all the dastardly stock market manipulators who are conspiring to drive the price of this stock down, I think we all owe a debt of gratitude for helping us to buy more shares on the cheap.  Because if my forecast is correct, in a few years' time these shares are going to be worth a whole lot more.  And when you come to market Sotheby's will be carefully examining the authenticity of your share certificates, much as a Rembrandt or a fine Cezanne, before putting them on the block.

Read more at http://www.stockhouse.com/companies/bullboard?symbol=ivn&postid=25894670#2xjUIKWrlYqkxAKI.99