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AceofKY

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About AceofKY

  • Rank
    Tri-Centurion
  • Birthday 03/01/1979

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  • Gender
    Male
  • Location
    Lexington, KY, USA
  • Interests
    Investing in precious and base metals, philosophy, theology
  1. Thoughts on PDAC 2013 · Crowd was very good – just as many as last year. I believe that the conference organizers did a better job of handling the crowd because it seemed like lines (such as coat check, food lines, etc.) were much shorter this year. · I had expected to see some empty booths due to junior explorecos not being able to make the trip. However, I was wrong. All the booths were full. There is a good chance the PDAC is the last gasp for many of them as it was noted that over 30 companies exhibiting had less than $200k working capital left. · Exploration activity seems to be slowing with the downturn in finance for the sector. There seemed to be many more junior Geos looking for a job than I remember from previous years. · I met multiple people who were “First Nations Representatives” (consultants/mediators, etc) of one sort or another. This seems to be turning into a big industry. Not sure what to make of that. · Toronto is still cold as hell in early March and I don’t understand why PDAC doesn’t move this convention to Cancun or somewhere warm. I did learn why the conference is held at this time of year. In the old days the explorers up North could work in winter (water was frozen) or summer (via boat) but not when the ice was breaking up in early March. Hence – they had nothing better to do then go to the conference. · The big “World’s biggest mining party” on Tuesday night (sponsored by Renvest this year) was even more crowded than last year. The Dave Murphy band is awesome, but they’re going to have to do something to reduce the crowd next year (or move it out of the Royal York). Keeping the students out would be a good start, I think. · I attended several of the newsletter writer presentations. I had kept some notes but unfortunately lost them when someone picked up my binder (probably by mistake) during the party on Tuesday night. Here are the ones I remember: o Ian McAvity – believes we’re only weeks or maybe days from a bottom o Taylor Thoen – this was a new speaker this year. Apparently she is a tv personality (not a gold/investing expert) in Canada and does a lot of CEO interviews. I enjoyed her presentation and remember that her website is: www.ceoclips.com. Also she was better looking than all the other newsletter writers combined. o Chris Berry and at least one other speaker were bullish on uranium o Keith Schaefer was bullish on oil refineries along the Mississippi River corridor. o Rick Rule – was in typical form (no powerpoint needed). His thesis was that the good stuff is cheap enough even though the sector as a whole will still trend down for a while. He likes PGMs (i.e. Sprott’s new physical fund) and gave a plug to Friedland’s new promo Ivanplats (Friedland apparently gave a presentation at PDAC but I missed it unfortunately). · Here are notes from either presentations or conversations with companies: o Hecla announced its bid for Aurizon on Monday morning and Phil Baker gave his presentation that morning. Supposedly the offer is accretive on all the metrics except for EPS which won’t turn accretive till 2014. There was (supposedly) no quid-pro-quo with respect to keeping Aurizon management or Board members in the merged company. I didn’t see his presentation but apparently Alamos CEO McClusky slammed Hecla pretty hard afterward. o Midas Gold – this project looks interesting but I’m worried it will take a long time to get permitted o Silvercrest – this story keeps getting better and better. The expansion of Santa Elena is underway and an updated resource estimate & production schedule will be forthcoming. I was originally skeptical about the low grade La Joya project but I’m now confident that they have a plan to develop it successfully. Metallurgy still needs to be confirmed, I think. Production should double for Silvercrest with the Santa Elena expansion and then double again when La Joya is brought online. I already have a large position (due to ~500% capital gains over the past years) or I’d be buying more of this one. o Sandstorm Gold – Nolan Watson promised he would never do another deal similar to the Entrée/Mongolian deal due to significant shareholder complaints. o Continental Gold – I first became aware of this Columbian project at last year’s PDAC but didn’t buy in as I thought the market cap was too high. The price has come off some since then but I think it’s still in that “boring” part of the construction/development phase where the stock price continues to drift down. The project itself is very high grade and they are spending a lot of money developing it right now. This is one to keep an eye on for next year. o Rob McEwen/MUX – still promoting his S&P 500 by 2015 goal. I don’t think he’s going to achieve that in the timeframe left with no better assets then what he has. Still trying to sell the big copper project. Will need more financing for the gold projects this year. Not interested in a stream deal and was critical of mining companies who resort to this type of financing. o Rambler – their production dropped somewhat early in the year due to some equipment problems. The solution is not yet in place but shouldn’t be very expensive. The loan with Sprott will be renewed/refinanced as they can’t pay it off yet. The hot IR chick from last year is no longer with them (big disappointment for me.) That’s about all I’ve got time to write up.
  2. The majors (at least some of them) are at a valuation level that we haven't seen since at least 04 when I got into the sector (except maybe for a brief moment in late 08). Sure their performance has been bad over the past decade. That's largely because a higher gold price was already baked into the valuations. Now we have the curious case where the gold & silver price have done exactly what we expected but the equity prices are sinking. Something will give eventually - either gold/silver prices will fall or equity prices will rise. I'm betting on the latter. Bubb, I'm going straight to the source so I don't get all the baggage that comes with ASA. Hecla and Newmont are two that I think are outstanding buys right now. I wouldn't want to own several of the majors in their portfolio - not worth the 10% NAV discount I think.
  3. Newmont is looking appealing here. Trading at ~US$26B market cap, ~6.5x cash flow, ~12.5x PE, ~2% dividend. My very rough estimate of NAV: ~US$45B at 1500 gold, 3.50 copper, 5% discount. I haven't bought a senior gold producer for a very long time. I think the last one was Goldcorp in 04, although I don't think it was considered a senior at the time.
  4. ASA holdings from the latest SEC filing: Agnico-Eagle Barrick Gold Compania de Minas Buenaventura Eldorado Gold ETFS Palladium ETFS Platinum Goldcorp Inc. Golden Star IAMGOLD Corp Kinross Gold Newmont Mining NovaGold Randgold Royal Gold Inc.
  5. I believe $15.9MM of the negative working capital is a liability related to warrants that will be non-cash?? I've been selling Columbus as it looks like they're having difficulty executing the buy-out. I don't want to be stuck with Columbus if the transaction doesn't go through - would rather hold SFEG here so I'm taking a little loss.
  6. Interesting thread. Charlie, you mentioned that some of the investors weren't particularly good at analyzing fundamentals. Did any of the investors achieve their wealth via technical analysis of equities or markets in general?
  7. AceofKY

    Mining Valuation Model

    1. Options/Warrants: I just calculate the exercise value; i.e. the cash that the company will receive. Then I use the fully diluted share count in per share valuations. 2. Profits: I don't calculate profit. Cash is what's important. Profits are just an accounting gimmick. My guiding principle is that a company is worth a sum of its future free cash (which could be distributed to shareholders), with the sum being discounted somewhat for risk & time preference. 3. Taxes - I call or email individual companies to get this info. It varies widely.
  8. Hi folks, I haven't posted here in a very long time just due to being very busy with running my business. I was fortunate enough to see Dominic at PDAC and resolved to try to come back here more. Hopefully everyone is doing well. Here is what I currently have in my portfolio in order of largest to smallest positions: 1. Gold Resource Corp (GORO): I've sold about 1/3 of my position since this went up about 500-600% for me. Pretty expensive stock now. Pays a monthly dividend. 2. Fronteer Gold (FRG): This equity is being taken over by Newmont but I'm still holding to get the free shares of the spinoff company. Probably not worth buying now that the takeover has already been announced. Watch for the spin-off explorer that will be called "Pilot Gold" and run by the same guy Mark O'dea. 3. Hecla (HL): This is a good mining company in the Silver Valley & Alaska, primarily silver but also big amounts of gold, lead, and zinc. I think they are still undervalued and I wouldn't feel bad about buying some right now. 4. Alacer Gold (ASR.to): Gold miner in Turkey & Australia. Probably still a buy but not spectacularly undervalued. 5. Silver Wheaton (SLW): This is a good company but very expensive. I wouldn't buy it now. My position came from the takeover of Silverstone several years back. I've been selling this position down. It will basically track the price of silver with approximately 1.5x leverage. 6. Santa Fe Gold (SFEG.ob): A junior gold/silver miner in Western U.S. I think this company is a good buy right now but their performance is still unproven so it could go either way. If they are successful it will be a 3 to 4 bagger at least. They are currently taking over Columbus Silver and I've been buying shares in the latter to capture a few % in arbitrage. 7. Nevsun (NSU): This is a copper/gold miner in West Africa. I bought more of it in the past few weeks as the price took a big dip. I'd say it is a buy anywhere under $8/share. 8. Rambler (RAB.v): This is a copper/gold junior building a mine in Newfoundland. I've been buying it over the past couple months. Be prepared to wait for a couple years for the payoff. Very small and illiquid. 9. Rio Novo Gold (RN.to): Junior gold miner in Brazil that I just became aware of after the PDAC conference a couple weeks ago. I think it's a buy. 10. Silvercrest (SVL.v): This is a junior silver/gold miner. I'd rank it a hold right now as the price has already gone up substantially. Performance still unproven. Good luck to all, Ace
  9. FR - high cost miner; current prices likely have all three of their mines operating in the red. Options on silver price would likely be safer. EDR - I don't follow GPR - I haven't reviewed their status lately SLW - Watch out for counterparty risk. Highly liquid if you are a trader rather than an investor. Bill Cara likes them. SST - I own some of this. Neves-Corvo may shut down if copper keeps falling but I think the Minto and Capstone streams should be safe due to hedges in place. Much less debt than SLW. SSRI - I haven't reviewed their status lately. PAAS - be careful here, PAAS doesn't give sufficient disclosure to determine how exposed their mines are to base metal price plunges CDE - A bunch of crappy assets and are in danger of losing their NYSE listing You are missing Hecla on your list. They currently have a financing/loan problem but if they get that straightened out then I think Hecla will emerge as one of the stronger silver miners b/c they have two great assets in Greens Creek & Lucky Friday with costs in US$. Also you are missing GORO which is basically half gold half silver. You have to be very careful with silver miners right now because many of them are dependent on lead, zinc, or copper for a big part of their revenue.
  10. Yes, this is the regulatory paperwork needed to pull down an equity financing open to the public. They do need cash as they are basically out of working cap & at their credit limit, but they don't need nearly $200MM. Dolores should be cash flow positive very soon. I think Mark is getting his ducks in a row for an acquisition.
  11. 1. Good pick with Minefinders 2. I concur strongly with Frizzers (I'm having trouble with the new name) on GORO; it is my largest holding 3. I like Hecla better than First Majestic here. They have better assets IMO and lower production costs (although you will see their cash costs go up due to the base metal credits). First Majestic has been executing well and it is on my watchlist, but I'm waiting to see if they can convert all that drilling they've been doing into mineable resource. They really need some more reserves. 4. I like Silverstone here too, and I think the forthcoming bad news of Aljustral shutting down is probably already priced in. Same business model as SLW. 5. Fronteer (FRG) is another I've been buying; they're more of a pure explorer but they have huge cash on hand (~$84MM) and the burn rate is probably only $15-20MM/yr. EXCELLENT assets that are extremely undervalued right now. It is starting to look more and more like they've found another big gold trend in Nevada (Long Canyon) separate from Carlin & Cortez. Pretty much everything is cheap right now.
  12. AceofKY

    Victory Nickel

    Better volume for NI also. Is this due to RTP's statement that they are looking to acquire nickel assets? I would think NI is too small for RTP. VICTORY NICKEL INC COM NPV(Toronto: NI.TO) Last Trade: 0.17 Trade Time: 3:59PM ET Change: 0.01 (6.25%) Volume: 600,500 Avg Vol (3m): 143,047
  13. AceofKY

    crowflight

    Finally a nice high volume day for Crowflight: CROWFLIGHT MINERALS INC. (Tier2(CDNX: CML.V) Last Trade: 0.2150 Trade Time: 3:59PM ET Change: 0.0550 (34.37%) Volume: 2,159,355 Avg Vol (3m): 524,542 It has been a long ride down with this one. Glad they have those hedges in place as it looks like nickel is going to sit at marginal cost for a while. Sep 24/08 Sep 24/08 Humphrey, Raymond Bruce Direct Ownership Common Shares 10 - Acquisition in the public market 300,000 $0.195 Sep 24/08 Sep 10/07 Humphrey, Raymond Bruce Direct Ownership Common Shares 00 - Opening Balance-Initial SEDI Report Aug 01/08 Aug 01/08 Ladd, Anna Man-Yue Indirect Ownership Common Shares 10 - Acquisition in the public market 4,000 $0.345 Aug 01/08 Aug 01/08 Ladd, Anna Man-Yue Indirect Ownership Common Shares 10 - Acquisition in the public market 16,000 $0.340 Aug 01/08 May 26/08 Ladd, Anna Man-Yue Indirect Ownership Common Shares 00 - Opening Balance-Initial SEDI Report Aug 01/08 Aug 01/08 Hoffman, Michael Indirect Ownership Common Shares 10 - Acquisition in the public market 300,000 $0.330 Jul 03/08 Jul 03/08 Collins, Gregory Direct Ownership Common Shares 10 - Acquisition in the public market 40,000 $0.480
  14. AceofKY

    Silver Wheaton

    I like Silverstone (SST). They have the same business model as SLW but a much cheaper valuation.
  15. AceofKY

    Victory Nickel

    It's a no-brainer for INI shareholders. For NI shareholders, we just get diluted for a 4th asset when the first 3 aren't even close to being developed yet. All junior shares are worthless now anyway, so I guess it doesn't even matter anymore.
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