ARG: Solid as a Rock......At least recently.
Although I am pleased ARG is acting so well while the market is melting down I still can't be somewhat disappointed that it isn't above $3.00.
The company's earnings are super strong. Just watch out for Q2. They already indicated that moly production had already exceeded all of Q1 by mid-quarter. In general, both copper and moly grades have been higher than normal. But though this is unusual it may continue for a while.
Still expcting Q2 to be US$0.10. Stock too cheap - should be $3.25-$3.50 now. Q2 is when they will declare their semi-annual dividend of $0.065. At $2.80 the yield is still a very juicy 4.6%. and that dividend is solid! With EPS likely to be US$0.40 this year (assuming no Colihues), the payout ratio is only 30%, which means not only are you getting a great yield, but over 2X more in cash is being retained by the company that enhances the share price.
P/E multiples for mining cmpanies have exploded recentlyt AUR...stock up from $18 and when copper was much higher late last year its shares were only around $25. Its not $30. The P/E is 10X.
If ARG had a 10X multiple it would be C$4.40 today. You may say that ARG deserves a smaller multiple. But...its multiple excludes Colihues. At some point it will be developed. So this is a company that can double production and earnings without much additional CAPEX. And that could be in 2008 - just a year from now. AUR doesn't have that capability.
Strongly believe shares will be above $3.00 when Q2 is announced.