Post by
netgenx on Apr 18, 2014 2:24pm
"have you seen 11 bucks around here?" & Adrian Day
well we now have the answer to that question posted earlier... Slightly edited comments by Adrian Day in recent interview with Steve Halpern ---- "Virginia has been very successful. It’s at a very good exploration sort of program over the years, but, nine years ago now—it discovered a mine which is called the Eleonore. They sold that to Goldcorp (GG) and Goldcorp is completing construction of the mine. It starts this year, but here’s the key. When Virginia sold the mine, they retained a royalty on that production and that is why Virginia did so well last year when most of the other gold stocks fell, and not just fell a little. The average gold stock last year was down over 50%. That’s the seniors and juniors and Virginia was actually up, so it was up because of this royalty was coming on stream at the end of the year. The stock has declined. It ran all the way up over $14 and now it’s 11.70, a little under $12. It’s basically back to where it started the year, so not a disaster, but back to where it started the year. Here’s the issue; Goldcorp published a technical report on this mine called Eleonore; Goldcorp published a report. Now under the conditions of the Toronto Stock Exchange, these technical reports have to be based on what’s called the 43-101 and based essentially only on proven reserves and not on total resource. As most of your readers will know, companies often publish a resource; it can be an inferred resource; you have different categories of resources. But then to take a resource to reserve—a reserve is basically something that’s deemed economic at today’s price—you have to improve your confidence in that resource. This means you have to do a lot more drilling. Instead of say, 50 meter space drills or 100 meter space drills, you have to do 20, 25 metered spacing drills, so you have to do a lot more drilling. The point is that companies have varying degrees of confidence in their resources, and a company like Goldcorp, which is a respectable, established company, you know, they have a fairly good idea of what they’re going to get out of their resource. But for the 43-101, for the technical report, they could only use their reserves. They have 4 million ounces of reserve, they have another 4.1 million of resource, but this technical report was based on only 4 million ounces. And so, a lot of people thought, “My gosh, the mine is suddenly cut in half. This is not the mine we thought it was.” And it’s based purely on a misunderstanding of what you can include in that technical report. Under $12, I think is a good buy. We actually, I mean I actually put out something earlier in the year saying that I thought Virginia was fully valued. I would say, in all fairness, this is not a bargain basement, extremely undervalued situation right now, but there are very few gold stocks that are. What it is, is one of the top, one of the best quality companies with the best management, strong balance sheet. It’s got $44 million in cash. That’s on a market cap under $400 million and it’s expected to start generating income early next year, so it’s one of the best companies and the lowest risk gold companies out there. Under $12, I’d be a buyer."
Comment by
20/20/12 on Apr 20, 2014 3:24am
... thanks for posting this Now what was the question ? Thanks
Comment by
netgenx on Apr 21, 2014 11:09am
the question was posed by "HillsboroughMan" in reply to a post of mine after the run up awhile back when I said we'd see $11 before we saw $17. cheers
Comment by
20/20/12 on Apr 25, 2014 1:40am
Hi netgenx here's the link https://www.stockhouse.com/companies/bullboard/t.vgq/virginia-mines-inc?threadid=22229852