WHAT GOES AROUND ..COMES AROUNDPatricia Mining - a Sound Business Strategy:
ROLL UP THE SIDEWALK AND TURN OUT THE LIGHTS?
What Goes Around Comes Around
With every due respect to the numerous informed and sizeable investors here, this is my opinion of management's business strategy.
This is the third time around that I have owned PAT, recently acquiring shares again. Following PAT for two years now, the other two share purchases were correctly sold with the threat of lower prices. HOWEVER, THIS TIME THERE IS NO STOP LOSS AND ONLY A VISION OF VERY LARGE GAINS.
Investor Tickle1st brought PAT to my attention 2 years ago, and my analysis concluded that PAT with 60,000 ozs. annual production (45%) would be worth perhaps $4.00 per share in a properly valued Gold market. But that has been the problem.... this has been a dismal market for all but the GCR's, NOT's & ARU's of the exploration sector. Most exploration issues turned down in January 2006 and it's been a long ride down. To compound the problem, Uranium Exploration issues stole front and center stage drawing vast amounts of Capital away from the Gold sector.
What goes around comes around and now Gold takes Center stage and it will be a run persisting for perhaps a two year up cycle. For my interest, buying shares in the low 50 Cents range, I cannot criticize the fact that PAT management 'Rolled Up The Sidewalk And Turned Out The lights'. There's a manageable number of shares, and the company is well positioned to meet obligations and generate cash. Mission accomplished, gentlemen, at the start of new cycle for Junior Gold exploration issues.
It's a conservative strategy and considering the price of other Junior exploration issues, Millions of Dollars could have been spent with little different outcome in the share price at the bottom of the cycle for juniors.
PAT has a $1,500,000 obligation for the current portion of Long Term Debt in 2008, and undoubtedly this fostered the conservatism. Here's my breakdown based upon 60,000 ozs. production in 2008 (45%) PAT, assuming a production cost of $350.00 Oz. and an average Gold price of $700 oz. with 36 Million shares outstanding (40 Million Fully Diluted).
60 Thous. ozs. X's 45% = 27,000 Ozs. = $18,900,000
$18,000,000 X's 50% ='s $9,450,000
$9,450,000 divided by 40 Million shares = .24 cents per share
Use a price earnings multiple of ten for the proven / probable life of the resource (Ten Years) and we have a potential share price of $2.40. There's a lot more potential at depth and a price multiple of ten for a producing mine is conservative.
After corporate income taxes and payment of the current portion of long term debt, PAT should have about 4 1/2 Million free cash. If they want to float shares or use the cash, the time is coming for PAT management to unveil a strategy.
Drill at depth, explore other properties, pay for promotion are all possibilities and small explorers always expend cash. Very soon, the sidewalk rolls out, the lights come on and we should see what management intends to increase share holder value.
Any kind of drilling success at depth and PAT should be a $5.00 stock. Look out a couple of years and when the Gold market goes toward full valuation relative to past cycles, PAT could be a $10.00 issue with some more resource expansion.
Either way that you look at it, good luck to a very sound and professional posting forum.