RE:RE:3rd Q results, Remember to breath
asforecasts wrote
It looks like mgnt is not planning to develop Ana Paula, impairement from $112mil to $37mil and the process plant down to near scrap (destined for sale?).
Florida Canyon is a ho-hum deposit, any number of companies out there scratching the earth for 1 gram/ton deposits. Scaled back initial buy but it is so cheap and in no danger of bankruptcy so I will hang onto a small position.
Damn! This stock probably has yet another low in it!
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Things are not going that well at least financially at the moment for this company but they do have some positives. Firstly if they can get Florida Canyon up to speed with all the new equipment they now have on site and produce at the AISC cost of around $1050 per ounce they would be making aprox. $450 US per ounce on 70 000 ounces or around $31 million US dollars which is around $40 million Canadian dollars per year.
Not bad for a company with a market cap. of around $65 million. With a couple of years of those profits they could have around $100 million Canadian dollars cash in the bank while still generating $40 million Canadian dollars per year going forward. If this were to happen they could start construction of Ana Paula up again and would have an easier time raising more capital as a loan or private placement. Or they could sell Ana Paula if the right offer came along and use that money to buy another small operating mine and have a two mine operation without all the time required to get a mine built from scratch. There is also the San Francisco mine which they can hopefully get up and running with these higher gold prices and get some cashflow from there also.
The good thing is that they have some $60 million in cash and working capital and are still making a little cashflow even with this low amount of gold production. So buying at these shareprices and hopefully even lower in the next few weeks of tax loss could result in a nice profit if things turn around but even more important there should not be a huge loss unless some huge calamity strikes this company.
Timmins gold was very good to me in the last gold stock run up of 2010. Made a lot of money with it then along with several other gold miners. Unfortuntely rode many of them down and lost all that money and more in the next couple of years.
This stock has not participated in the last years runup of many gold miners as it has not been making much money. They have struggled with both mines but i have a feeling that Relief Canyon will turn around next year. If they can and the gold price holds and with the very low market cap it currently holds this company could easily be a 4 or 5 bagger by this time next year.
With hopefully limited downside at this shareprice and possible large upside next year this gold stock which was so good to me in the past is starting to look really good again to me.
Some, especially longer term holders who have lost a lot of money here may think it cant happen but i remember just a few years ago this stock was trading in the $3 range. That would be a 4 bagger from todays price.
Before the end of the year i will be loading up on ALIO shares at these and hopefully lower prices.
The risk reward here is just to good to ignore.