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Carpathian Gold (CPN.to)

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I recently brought this one, and here's why ...

 

Carpathian Gold is a near term production company, with two main projects, Riachos Dos Machados (RVM), and the Rovina Valley Project (RVP).

 

Firstly, a little about the projects -

 

RDM is a past producing mine in Brazil, capable of production of 100,000 ounces Gold per annum, with projected cash costs of $428/ounce according to their preliminary economic assessment. On top of this, the mine has 812,000 ounces in the measured and indicated category and growing.

 

Now get this, the mine is yet to have results of it’s full feasability study, but they look to have secured all the funding they need to put the mine into production.

 

They recently engaged in a $51.6 million brought deal financing with an investment sydicate between Cormarck, Canaccord, Hayward, and Jennings Capital. Essentially, this means some well known institutions have actually gone long on Carpathian’s shares.

 

As well as this, they have arranged a $30 million gold stream financing deal, of which $7.5 million already received, and a $75 million financing facility with the Macquarie Bank. The last, is a $$22 million financing from CAT, for equipment. Now, all this financing does have some conditions, such as a put/call collar structure for a proportion of gold produced (I will update the structure when the deal becomes more apparant), and the completion of a feasability study, which I do not see any issues with, given this is a past producing mine. http://www.carpathiangold.com/site06/Default.aspx?tabid=226

 

RVP is a larger project in Romania which has 759 million lb copper deposit, and 3.07 million ounces of gold, both in the measured and indicated categories. Combined, this is a gold equivalent of 5.23 million ounces. The PEA suggests costs of $379 per ounce gold, with copper as a by-product.

 

Value

 

Now, say for instance management were to dump the RVP project (which they won’t), I think it would fetch between $129-155 million on the market, perhaps more if the buyer was enthusiastic of their inferred mineral category.

 

The company has a market cap of $240 million (428m share fully diluted @ 56 cents). Now for argument sake, lets give RVP a half way value of $140 million. This means you are only paying $100 million for a company projected to produce 100,000 ounces per year. Plus two Hungarian exploration properties thrown in free!

 

Or to value another way, $44 per gold equivalent ounce. For small cap producers, $150 per ounces is more reasonably sounding.

 

I recently brought a half position in Carpathian at 56 cents. The reason being I wasn’t sure if the market would pull back or head higher. Either way, it’s a hedge if it goes higher, and I’ll buy more if it pulls back.

 

 

PS - Visit my blog for future coverage and other gold stocks.

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Thanks for this CP. Been enjoying reading your blog the last couple of days.

 

Thanks for the kind words. I really am lazy at documenting my research, so I thought if I stick it all in a blog, others can view and comment, which hopefully should provide some encouragement. Plus I reckon I can give some of these newsletter writers a run for their money!

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Plus I reckon I can give some of these newsletter writers a run for their money!

Dude you absolutely right on that one!

PS: nice to see NNVC recovering a bit today - you still on board?

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Dude you absolutely right on that one!

PS: nice to see NNVC recovering a bit today - you still on board?

 

Yep, until we get $100 per share, or until we find their drugs don't actually work, whichever first.

 

I wish there wasn't so much pumping of this one, coz that just leads to dumping.

 

It's nice to find stocks like Carpathian, which have next to no following at all.

 

 

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Nice blog Cap.

 

Can you add a subscribe via email button so we can get notified when you make a new entry?

 

CPN looks good - but like all these things the buy was in August

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CPN looks good - but like all these things the buy was in August

 

Sure buying in August 2010 would have been fantastic.

 

But in August 2010 you could have applied the same logic and said the buy was in December 2008 at 10 cents.

 

I haven't finished my research on this one so don't want to apply this comment specifically to this stock but in general I don't think you can look at a pop in a junior gold and conclude "this is done here". Sure these thing may go down a bit or consolidate in a range. But the trend is up and looks set to remain that way.

 

Just look at GORO - folks were bailing out at $14 or thinking nah there will be a better buy point. Now look at it we are over $26!

 

This is why I don't just rely on technicals. In a bull market things get over bought and remain over bought for extended periods. If you like the fundamentals and trust the management taking an initial position makes sense. Just be sure you have some cash to capitalise on any weakness.

 

Edit: of course never chase the price. In this case we seem to be building a new base at a higher level (50-60 cents)so it doesn't seem like a price chase at this point but as I say I haven't finished my research on this one yet.

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Nice blog Cap.

 

Can you add a subscribe via email button so we can get notified when you make a new entry?

 

CPN looks good - but like all these things the buy was in August

 

CC, assuming a long-term bull, would you buy into juniors now at all or is there a better entry point coming? Or average in?

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CC, assuming a long-term bull, would you buy into juniors now at all or is there a better entry point coming? Or average in?

 

Dude, I've missed some of the best opportunites waiting for a pull back. If it looks cheap already, take it.

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Recent interview with CEO Dino Titario.

 

Try to listen to what Dino has to say, instead of just looking at Sandra :)

 

 

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