RE: RE: Sharpie - Why So Worried about TRR Going U I have to say, and before doing so i note that I have been in this one for a while now as well, that i can't really understand the action on this one. It is clearly only priced the way it is right now because it is a Junior. That said, the reality is it is getting very close to the stage where a decision will be made, and thus is, at least in my mind, a significant takeover target. The one outstanding bit at this point would have to be permitting. However, if they currently have an operating mine on a nearby property, save for the fact that they are looking to build a mine around and probably under a lake, you wouldn't think it would be a stretch to get permits approved for this. That being the case, this is about as secure of a junior gold company as you are going to find. They can probably justify the $1500 price moreso than can other juniors as they are very close to production (noting that TRR's value is more elastic to the price of gold due to its inherently low concentration), they are in a safe, politically friendly district, with lots of other mines around, and they have systematically drilled this property to the extent where we are not likely to see any significant surprises, either negative or positive, over the next year and a half or two.
All this, plus the fact that they should have enough of a cash horde to see this through (particularly when you consider they could ramp Chester up at any time), or close to through a feasibility analysis, mean to me that Trelawney should be trading at a premium to other juniors, and should be considered to be a takeout target in the short to medium term.
However, the market price does not reflect this. In fact the stock is now trading at the same level it was one year ago, which was about two weeks before they released their first RE which caused the SP to shoot up to about $5.50. Granted that was probably a bit of Euphoria, but there are plenty of resistance points between the two. Personally i don't think it makes any sense that this stock is trading below $4 right now, and I think it would make sense that it be trading in at least the $4.80 range, which is where it was right before the announcement of the last RE. To think it is now worth less than it was before the last RE, when even the most optimistic people were saying there might be a total of 7.5 million oz inferred there, is crazy. We now have close to that shown to be inferred, 1 million indicated, and no doubt will reach that target, and possibly even get closer to 10 million. With 10 drills (which is about double any other Junior I currently follow) turning we are going to get there very quickly. So again, all of this to say, the downside risks are very minimized with this play. It should be trading somewhere close to a valuation of a small, miner (ie - AEM), but is nowhere close to that.
All juniors have been severely beaten down since about June of last year. My own portfolio of Juniors is down between 35-50%, not because the water in the beans has changed, but because a lot of money has gone out of the juniors and either to the sidelines or wherever. Time after time, I watched as very nice NRs were released this summer and fall and did not move the SP of the juniors i had. KAM as an example had a huge summer, but ended up basically where it started. GPD is another example. All of this to say, I am not sure whether this news release is going to drive the share price of this company tomorrow. However, the observation i would make is that all of the big players have been holding all of these juniors through this rough patch, while all of the retail investors have been selling off. Assuming the market can generally stay stable, and the price of gold doesn't nosedive, which in my view is unlikely the way the world is going these days, when spring programs are announced and summer draws near, all of those retail investors that are looking for a better return than they will earn in their mutual fund will start to see juniors inching up, and will pour back in. There will be nobody left to sell as everyone has already fled, and the prices should rocket right back up to where they were at the start of last summer. So if we don't see it go up tomorrow, in a way we should all be happy, and use the opportunity to keep averaging down. For any of you techies out there, we are essentially in a cup and handle trading pattern across all of these juniors (or at least so far as I can tell - the tree has been shaken twice) and i think once we see positive movement upward, and assays going to labs this summer, we will see accelerating upward growth for a while.
That is my two cents, but obviously if i knew what Mr. Market was going to do on any given day i would have sold everything at the first of June last summer and i would be floating in cash to buy all those companies that I've been hammered in over the past year.
I will make one other comment about the share price on this stock. It has a history of retail investors hitting the sell button in a huge way on news. Ie - a whole sleugh of Gordon Geckos that think they are world beaters buying on rumor and selling on news. I mention this because after last years RE, the stock was held for about half hour. Then as memory serves it went from about $4.80 to $5.50 in the next two minutes. From there it dropped precipitously to end the day even or slightly down. Since that time the has been days where it has traded 10% in either direction of the previous days close within the same day. So there are a lot of traders playing this one. If you are in it for the short haul be wary of that tomorrow.