I think the point was that this company has had potential for years but just hasn't lived up to its expectations. Is that PTQ's fault or just the gold industry? I would submit it's a bit of both. I have made good money on PTQ twice in the last three years but have had to jump in and out nimbly because the share price is so difficult to judge. Just when you think everything is going in the right direction something else happens.
Some folks promote potential as if it is profit in the hand. Unfortunately, that is not how it works. Until they see the profits from selling their PTQ shares much higher, I think they will only see it as potential.
I see the potential of this loan over the midterm (get out of PM deal so more upside potential if PM prices do take off, get Spain going sooner, etc) so I re-entered as a shareholder but no where near a full position. I need to see the actual closing of the loan and see how the markets are going to react to fiscal cliff proceedings and what impact that has on POG.
They are committing to a large loan (relative to their market cap) but they have 18 months grace for payments on principal so they can probably absorb some decrease in POG over that term if that were to happen (there is no way it should but you still need to weigh the risk).
As for those that are counting the additional profits from the elimination of PM deals, don't you also have to account for the interest you need to pay for the loan you used to pay off the PM deals? I don't see anywhere in the NR that says they are not paying interest over that first 18 month period where they are not required to payback any principal. Won't those interest payments bite into that additional profit you are already counting on?
People are still touting PDI spinout as a great thing that is unaffected by Inmet giving their aggregate contract to someone else. I assume that they will still have good margins on the aggregate that they sell but they still need a customer. Who will they be selling to? Someone much further away? Will additional transportation costs cut into the margins? How much? I don't know but I am not going to assume it is as good as it was before. Instead of great margins they might be only very good or good.
JFF7
It's better to be out wishing you were in than in wishing you were out.
"Markets can remain irrational longer than you can remain solvent". - John Maynard Keynes
