TAM got blasted again... Here's Why...
Tam has been hit by a sequence of bad news:
o Today it was that one of the First Nations nearby is opposed to the mine. Its the fourth most important First Nation (and the others all support it), but after what happened in BC with Kemness North (where first nations completely shutdown a mine expansion), the market is treating it like a big deal.
o Yesterday it was CMM announcing the closing of one of their mines due to it being uneconomical even with 800$+ gold. This reeks of management duplicity and incompetence as they have been promising to fix the mine for years. This is just one of many disappointments by CMM. Before CMM, Peggy Kent (CMM's founder, Chairman/CEO) captained a big mining company into bankrupcy. CMM's management (Peggy Kent) is TAM's management. So every piece of bad news about CMM affects TAM.
o Before this recently CMM announced financing and a private placement when they had just assured investors they didn't need any more cash. More management problems.
In the environment of falling zinc prices (and TAM not going into production until sometime in 2009 at the earliest), there is a lot of bailing out regardless of how undervalued the stock is if Zinc prices stay above 1$.
I've got 17% of my portfolio in TAM (used to be something like 50% and its fallen that much) and I am holding basically no matter what.
I think you should watch the chart and pick an entry point when the fall stabilizes as a speculative buy. It should be a multi-bagger and I think the management "issue" is more than baked in at this point, but its falling like a rock and there's no particular reasons for this to stop at this point. There's a head shoulder technical pattern (not that well formed) that points to $.50 stock price. There's a little bit of support in the chart at .75$.
If things go according to plan and the price of zinc doesn't change, a 40M$ market cap company is set to make something like 500M$ in cash flow in 18 months starting earlier 2009. That's real multibagger potential.
Looking ahead, here's what I see for price move catalysts:
- Next negative catalyst is CMM coming out with really stinko quarterly numbers even though gold is above 800$.
- Another negative catalyst is TAM having to reprice a $1.50 private placement they just came out with a couple of weeks ago.
I think both of these will drive the stock price lower.
Next potential positive catalysts are:
o TAM drilling results to prove up the historical reserves. This is a requirement for getting financing. They will probably
come out later than expected (before Christmas), so there could be some angst about that late this year and in Jan 2008.
o CMM getting clear control of their legally disputed, good quality gold mine in Peru (Soliden is on the other end of the legal dispute).
Any kind of good news could make this thing run.
Permitting and financing for TAM are clearly not until next year (and with permitting who really knows when). If they get permitted you probably want to dive right in even if the stock price is 50% higher than now.
That's how I see it. Did I leave anything out? Sorry for the rather long rant. Its pretty crazy to see something that looks absolutely fundamentally fabulous that is your single largest holding to have a price fall from $3 to $.8. After this I've made a vow to never buy more of a stock that either I can bail out of in one day or that I can afford to have go to zero.
You don't have to feel sorry for me as I'm up over 100% in the last year, but TAM has been my biggest elation and now disappointment. I couldn't get out because I had so many shares that bailing would depress the price significantly. I won't be in this position again.
By the way, this is the exact kind of post you are harshly criticized for on the RNO board. Saying bad things about a board favorite when it is down. By posting this, I'm trusting that this board is different.
Monty
AI
