RE:RE:RE:RE:RE:RE:RE:with Not too many posters on this yet. Some patient money that bought a lot during the financing last year has aggressively added to their position recently. Given his trading history this is going to increase the eyeballs on the company.
How did you guys - OK, Diggin and Goldfinger come across this one?
To me this s a very simple bet now. Here is a point by point summary for me. Please point out flaws or add on.
1. Ridiculously cheap
2. Previous disasters with their bank going under, mgt not delivering on Campo Morado, rumours of metallurgical issues and high operating expenses while they came up with a milling plan. I believe this has now been resolved via simple ore blending plus some equipment upgrades.
3. Ramping production at the new gold mine - much delayed second mill is fully installed and operating. The pea said it had a 66% IRR at $1850 gold. How about $2400?
4. No more new financings needed
5. Massive increase in metal prices just as production is increasing
6. Permanent improvement to mine and mill management, ongoing engineering contracts
7. Lundin Family/network connections added credibility
8. Costs are dropping as volumes increase
9. Much higher metal recoveries- plus continuing improvements ie copper from 40% to 70.
10. higher grade concentrates improve selling price to refineries.
11. New separate concentrate streams to improve prices further coming this summer. IE get the lead out!
12. Three newsletter writers with large followings are waiting to scream success to their subscribers when it is evident.
So to me this is all about credibility and timing now. Q1 should strongly address the credibility gap. We will see some improvement in Q1 cash flow with acceleration thru the next three quarters. Using current metal prices 2025 would generate 150 million USD in cash flow or about 200 million CAD.
Which leads to:
13. Stock markets are forward looking. If we have a little progress in Q1, hit production targets by the end of Q2 then the stock is going to start forecasting that huge future increase in cash flow.
what is a mining company worth that generates 80-90 cents per share in operating income?
What can they do when the operators are not cash constrained? Both mines likely have sufficient reseves to double production once operations are running smoothly.
I expect this either to be a HUGE win or a flat trade.