The markets can be fickle: Companies that are long-time favourite sons can hold crazy high market caps despite freefalling profits (what’s up, Blackberry), while other companies doing everything right are ignored, even through continual increases in production, solid finances, and continually hit milestones.
Sierra Metals (
TSX:T.SMT,
Stock Forum), which is a Stockhouse Publishing client, today announced it was
proceeding with development of the thick Azucarera stockwork breccia at the Promontorio Mine of the Cusi Property. Drilling, according to the company, is returning high grades of silver over ‘significant widths’.
Level 9 of the project is averaging 402 g/t of silver over a 30x30 meter area.
Level 10A is hitting 301 g/t over 24x40.
Ore from the project is being shipped to the company’s mill. The company is has multiple working faces, both at Azucarera and at two other veins. The most recent NI 43-101 brought a 70% increase in silver ounces, a 40% increase in silver grade. The company is working towards a goal of having FIVE MINES on the project, and says the best is yet to come.
The Cusi alone would be a great project to build a company around, but Sierra also has the
Bolivar mine in Mexico, and the
Yauricocha mine in Peru.
Yet, despite today’s (and last week’s, and the week before’s) great news, the share price hasn’t budged.
Perhaps potential investors are concerned about finances?
Sierra has $47 million in cash and THEY’RE PAYING A DIVIDEND. And that cash position isn’t falling, it’s fast rising.
In March 2013, Sierra had $6m in the bank.
In June, $25m.
In September, $33m.
Now $47m.
Cash burn? This is a company that for the last year has been pulling money out of the ground.
If this was a tech stock, it’d be a $2b market cap on the NASDAQ. If it was a pharma play, you couldn’t get a share for love or money.
But it’s uncovering silver, and silver has been having a rough year, so though it’s on a lot of watchlists, the Sierra run has been a long time coming.
Look, it’s clear silver is nobody’s favourite right now, but Sierra Metals isn’t some Podunk ‘maybe we have some silver, maybe we don’t’ microcap play, and it’s not a company that needs silver to double in value to make a profit. It’s the end of the silver sector that is ripping resources out of the ground, processing them inexpensively, and selling them for cash money while underfed microcaps look on in envy and wonder if Medical Marijuana might be an interesting side bet.
Ignoring Sierra Metals so you can throw more money at Barkerville ‘because it’s gold’ is like buying a Porsche SUV… you’re throwing good money at something with a limited upside just because of the name.
Sierra is making money in a down market. If the market stays down, you’re still going to get your dividend – at the least. If silver comes back, Sierra will dominate.
Let me put it another way - if Sierra Metals was a Hollywood actress, it would be Charlize Theron asking for your phone number while wearing her makeup from the movie Monster. She may not be so cute right now, but once that makeup comes off… give her your damn number, fool!
Buy ugly, sell the day after the Oscar win.
Manitok Energy (
TSX:V.MEI,
Stock Forum) (which is also a Stockhouse Publishing client) is also killing it. They announced today
they increased oil production in 2013 by 72% to 4113 boe/d, with Q4 production at 4989 boe/d.
Average production per share went up 54%, year over year. Funds from operations per share? Up 96%. Funds from operations? Up 118%. Even their undeveloped land holdings are fast rising, up 81% to 323,907 acres, despite having
sold off non-core assets for $22m in cash in February.
And with all that, their share price today went up 0.82%.
Manitok is admittedly slowly getting the word out to investors. The stock is up from its $1.93 low in December to $2.45 today, a 26% profit for smart money that got in after tax-selling season. But in October of last year, the stock traded at $3.38, so all that bumped up production is still on offer at a cut price.
Side note: Ticker Tax’s
Danny Deadlock picked Manitok in summer 2012 at $1.20 – fortune favours the early.
Pundit
Keith Schaeffer also digs Manitok, saying recently, “Manitok has a lot of leverage because even at very low gas prices, its wells were paying out in 8 to 10 months. It still has very low valuation despite the fast payback, so it is something that investors should know about.
”
Schaeffer says
, “You are looking at very low depletion rates [for Manitok] compared to fracked wells. A tight shale well could decline 65% in year one; these guys are closer to 40%. It makes a big difference in how many times you can pay the well back over the course of the life of the well. It is a big advantage.”
Okay, so as you may have noticed I mentioned above that both Manitok and Sierra Metals are clients of Stockhouse. Neither company has paid for this article, but they do use Stockhouse marketing products and advertising.
Do you know why they’re advertising on Stockhouse?
Because they’re looking to get the word out, because the market has missed these two crazy great Canadian resource stories. It’s criminal that they should even have to tap you people on the shoulder and say ‘ahem.’ With so many horror stories out there, two surging, thriving, producing, cash money stories like Manitok and Sierra should be the stars of BNN. You should be wearing Sierra Metals t-shirts around the house. You should have a Manitok Energy bumper sticker on your Miata.
But they’re not alone. I’ll throw you down another:
Integra Gold (
TSX:V.ICG,
Stock Forum).
Integra (another Stockhouse Publishing client) is turning around a gold mining area in Quebec that has been screwed up by a long line of companies, and they’re doing so exactly as they said would.
Integra management, just an hour ago at the time of writing, released
an NI 43-101 technical report for its initial Preliminary Economic Assessement (PEA) on the Lamaque gold project. In the words of one Stockhouse Bullboarder, Integra’s is ‘
the best looking PEA I’ve seen in a while.’
Integra’s plan is simple: Dig small, zero in on primo grade, and make money to expand.
It’s in an area with loads of infrastructure, loads of trained labour, a welcoming First Nations band, and a location that has such a bad rep due to the ineptitude of those who came before them, that they’ve considered changing its name so they can just get on with things.
But the reality is, they shouldn’t need to worry about such things. And the PEA they just released will help them get to the point where they don’t have to.
- Base Case Pre-tax IRR of 51% and NPV (5% discount rate) of CAD$146.0 M
- Average annual production of 112,400 gold ("Au") ounces per year with peak annual production at 143,300 Au ounces per year and total production of 505,600 Au ounces
- Life of Mine ("LOM") cash cost of CAD$665 per Au ounce and cash costs plus sustaining costs of CAD$805 per Au ounce
They don’t need to move anyone to get at the gold. They don’t need to build a mill. And they have a LOT more land to drill, when they need to.
This is a quick-to-production,
high grade, cheap operating, solid play that gets better with every day gold goes up in value, but can withstand it if gold plays dead for a while.
And, right now, it’s trading at a 36% discount to its 52-week high from mid-March.
There are others being driven to Stockhouse by the fickle nature of the markets:
LX Ventures (
TSX:V.LXV,
Stock Forum) is trading for cheaper than it was before it started its Mobio social media platform, despite now having proven the concept,
ramped up the userbase, pulled in A-list advertisers and built a roster of some of the biggest celebrity names in social media to use the service.
Tech firms with similar social media products in the US get market caps in the billions, which is why LX is moving to a US listing. That should increase the potential investor base by a factor of ten. LX also
recently capitalized one of its portfolio of tech assets, and it’s run by Canadian uber-entrepreneur, Mike Edwards, who has billion dollar exits in his not so distant past.
And yet, today, you can buy it at less than the cost of a share from before Mobio was a glint in Kim Kardashian’s eye.
These companies aren’t failing. They’re doing exactly what they should be doing. They have solid business plans and big futures and they’re de-risking every day and laying out plans that are subsequently proven out. They're Moneyball companies; prospects that the market has discounted because of outdated thinking and bad habits. They’re not ‘down’ in any way but share price.
You’re just not paying attention.
Pay attention.