Current statusTime to summarize the current status of Tamerlane Ventures (TAM). TAM released their report for Q1 yesterday (on time as usual) - see www.sedar.com - showing a drastic cutback in costs compared to the same period last year.
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The stock exploded along with metal prices this tuesday (+30%) with a small correction yesterday under weak volume. Probably there was a few owners satisfied with 3-400% increse in the stock price the recent months. Not a bad profit, but I'd instead like to congratulate those who got to buy more stocks at these remarkably low levels.
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I've gone through TAM's financial report for Q1 and the MD&A and found some really interesting facts:
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"All work on the project has stopped and Tamerlane has advised the stakeholders in the area that at the first indications of a turnaround in the base metal markets, financing endeavors will recommence."
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Yes, we are all aware of that. But come on, "first indications"? Have you all looked at zinc- and leadcharts at www.kitco.com recently? With this in mind notice the Pine Point Project is profitable at metal prices over $0,50 and we now see prices well over $0,70. I believe that TAM might present a financing deal any day now, and that would take the stock price to the sky. We might also just have to wait a few more months for TAM getting an even sweeter deal since the credit crisis fog is clearing each day. The potential wait demands a good liquidity to withstand PP's, from the report:
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"The Company manages liquidity risk by maintaining adequate cash and cash equivalent balances. Management continuously monitors and reviews cash flows and matches the maturity profile of financial assets and liabilities. The Company ensures that there is sufficient capital in order to meet short term business requirements."
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TAM has no long-term debt and Ross Burns expressed these fantastic facts through e-mail in May:
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"The company has sufficient funds to survive the financial crisis and has managed to this point to retain people that have the critical project knowledge of the project."
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"I do not believe there is any chance of TAM going bankrupt as expenditures have been minimized."
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This is confirmed in the Q1 report. Ross also elaborated in the matter of marketing:
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"Currently we have no marketing plans but we are starting to consider a plan."
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Reading the report you also see that TAM are not shy to look into future investments at these bargain prices:
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"The Company is currently pursuing exploration opportunities with other advanced exploration projects in the Americas. Management believes that this is the time to acquire lead and zinc reserves for very low prices."
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Ross wrote me this about the Lynne deposit being a threat to the Pine Point Operations:
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"Our interest in the Lynne deposit represents an attempt to bring another deposit into the company to strengthen its resource base. We have permitted the Pine Point project in the NWT and it has been a long and rigorous procedure. I believe that we may be able to do the same in Oneida County and show them the Lynne deposit can be mined in an environmentally considerate manner that will not negatively impact their waters. I do not believe that the Lynne deposit will negatively affect our attention to Pine Point as I believe that we can evaluate and permit the one while constructing the other."
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TAM's proposal is reviewed by the Forestry Committe in Oneida County today according to this article:
https://www.rhinelanderdailynews.com/articles/2009/05/07/news/doc4a0396781b3bc055216799.txt
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As you see this is not the time to get greedy and take your profits early. TAM is still valued as they we're on the way to bankrupcy. We're on our way to a serious upturn in the valuation of the stock. According to the Q1 report the equity alone is worth 0,27 CAD which at todays price actually presents a discount on pure money!
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According to my caluclation of the future value of the proven resources of the R-190 deposit approximately 1,70 CAD should be added to the equity value adding up to a 1,97 CAD target price for TAM today (!!) with only the R-190 deposit in the calulation. I've presented my calculation, which actually is a cautious one, on a swedish forum and will in the near future translate it and present it here as well.
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With a reasonable risk factor the short-term target price for TAM would be somewhere between 1-1,5 CAD which means an upside of at least 400% today!
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Are you still not convinced or are you worried about TAM's future? Consider this:
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"The Company has successfully completed a full environmental assessment and received all necessary land and water permits to commence construction and production on the R-190 deposit."
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"Tamerlane Announced a 10-year Electrical Power Deal for Pine Point Wednesday, 10 December 2008."
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"The Company is in receipt of the required land use permit and water license for construction and operation of the Pine Point Project. The Company has signed exploration agreements with a number of aboriginal communities that will provide employment opportunities and ensure that mutually beneficial relationships are established as the Company develops the Pine Point Project into production."
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"Despite recent trends (Referring to the downward trend in 2008) in zinc and lead spot prices, this new financial analysis shows that the Pine Point Project can generate positive operating results at today’s metals prices. However, Tamerlane will not pursue financing of the project at this time because of the credit crisis."
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As far as I know everything shows the credit crisis is coming to and end. Stronger and stronger macro data are presented every day and China and India will keep on booming. A whole lot of people wants more and metal prices will test and force record levels in the coming years.
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I've used this opportunity of bargain stock prices to buy more TAM. At todays valuation I wouldn't consider selling a single share.