[Editor’s note: The following article first appeared on the blog A New York Nickel on November 4. Read the original entry here.]
On October 29 we issued a note on a group of junior mining companies we termed to be "The Cash Kings": those that not only had profitable operations with positive net income but also had the most amount of cash and equivalents on their balance sheets.
Here's an update on the fourth trading day after we published our results. Some interesting stuff.
Gobimin Inc. (TSX: V.GMN, Stock Forum): They announced November 3 that they are selling their operating mines in China to raise cash and further bolster their balance sheet. October 29 closing price was 34 cents. Four days later it's trading at 65 cents. That's a pretty nice pop, folks. Hope you got in.
But if you didn't, there's still time: Apparently they are going to distribute retained earnings as at Oct 31 to existing shareholders via dividend and then look to develop some of their other projects with the $55 million or so ($87 million net of taxes) they are receiving from the sale. With $95 million in shareholder equity in the most recent quarter and 75 million shares outstanding it's worth over a buck a share. Feel free to jump in here if you think I've misread their release but at the end of the day these guys seem to be doing the right thing by selling their properties. I'll be interested to hear more about what the plan is going forward.
Energold Drilling (TSX: V.EGD, Stock Forum): The last news release announced they issued a million in stock options exercisable at $2.50/share. These things expire in five years - nice options! At the time of our note, the stock was trading at 90 cents. The stock is trading at $1.14 today (Nov. 4). Again, a nice pop. By the way the volume on Oct 31 was over 700k. Personally I think these guys could do a way better job with their IR but judge for yourself. I kind of like companies that have room to improve on their IR because when they do... They would be wise to check out the website of our next favorite:
Silverstone Resources (TSX: V.SST, Stock Forum): They announced a share buyback on August 19 (trading at $1.40) - not sure why they would waste their money on buying their own shares but it's too late for that now. I see there were 2.3 million shares purchased on Oct. 22 (54 cents) and another 900k on Oct. 28 (46 cents). Hmmm. On the date of our note (Oct. 29) the shares were trading at 53 cents. Today (Nov. 4) it's trading at 68 cents. This is a company with very good net income and lots of cash ($34 million at the quarter ending 12/07). They have another $135 million in assets. With 122 million shares outstanding, the book value/share is $1.41. This little baby might be undervalued at least until the shares reach the price when they announced their share buyback.
More to come on other “Cash Kings” - there are a bunch of them.
This article was written by a member of the Stockhouse community.
Read more Stockhouse articles by jackp27.