GREY:MLKKF - Post by User
Comment by
bjorn3d2bon Oct 03, 2008 12:18pm
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Post# 15502785
RE: Comparative Analysis
RE: Comparative Analysis1.5 forward PE makes no sense and yet here we are.
Why? Just because we broke $5? maybe but it still makes no sense knowing that the company has an exceptional balance sheet and strong earnings despite lower commodity prices. Yes we have the hundred million or so in notes but those notes look very sweet at 11% vs, the kind of debt terms one would be facing in today's market place. Even if you were fortunate enough to find willing lenders. Also we know that debt will be retired within a year or so out of cash flow. Of course the $60+ million in cash isn't too shabby either. At the same time we have an environment were no new financings for junior or even intermediate miners is going to happen any time soon. That puts most new projects on an indefinite hold while at the same time ML continues its expansion unabated and will soon have oodles of cash flow to continue to grow the company. Supply of copper and moly will decline setting up for the next wave up in many commodities.
I have been wrong trying to determine were value is on this stock given it is now at $3.65 and I thought it was a screaming buy under $8. But, if this doesn't represent a fair value I may have to rethink my position and raise my cash level from 40% to 100% believing that there is no value in stocks anymore. I really don't believe that would be right. Seems to me we have blood on the street here and that it is time to buy but it hurts to pull that trigger, I want to sell NOT buy.
ML probably has suffered from its own success as many investors still have substantial profits in this name making it easier to keep selling but I know that will end and then hopefully 24~karat will be right and we will see the stock virtually gap back to a reasonable PE.
Right now this is tough to see knowing how sound this operation is.