from another board... good read
Talked with company, think understand it now.
Had a long talk with them. Indeed the company is about 0.5 P/E right now. A reason for that is that the bonds are and will be mostly converted to stock. Yahoo shows 143 mill shares, but its likley higher due to frequent conversion of bonds to stock. Its trading about at the conv price in light of discount on bonds (about 75 ish).
The person talked to was super knowledgeable and helpful, been there since day 1.
If every bond converted it would be about 1.4 billion shares, but then the debt would be gone ($163 mill face, or 8 times the mkt cap today)
They are buying the bonds with excess cash now and will continue to.
I will guess 1.1 billion shares by 2020 when bonds mature. At their current profits and EBITDA of $40 million a year at a 10 P/E that would be $400 mill mkt cap and no debt /1.1 bill shares = $.36 a share. But they would be paying no interest at that point so there would be a lot more profits, and if gold goes up, even more profits. So it could be a lot more, maybe $1.50-$2? by then. If its $1 three years from now, that would be a 94% CAGR, or gain per year.
Outside of some extreme event, see no reason for CGM.to to go broke. They were technically broke last year, went thru something milder than bankruptcy and got the bond monkey off their neck by the restructuring.
So the bonds being converted to stock and sold is driving the volume and holding the stock back, but if share price drops that will dry up.
Their grade is super high and they can get the gold just by gravity, it is an inherently profitable mine(main one). the insiders were major players to convert to stock from bonds as part of the deal. Sign they expect survival.
This may take some patience but looks like a winner. JMHO the risk is not bad.