Eric O's Favorite Gold Miners

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May 15, 2012 - 4:02pm Response to: that capitulation graph

#2082

Wintermute

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T wrote: so youve got , I

T wrote:

so youve got , I forget how the graph looks.... uncertainty in the middle, then, fear, then dread, then shock, then depression, hoplessness, then capitulation....then Giggles of 'whatever' .... giggles of disbelieving ridiculousness, followed tomorrow by giggles of hope, and then capitulation and comatose giggles next week....... ok, I think that covers it.

I am beyond giggles, I had to laugh out (very) loud when I had a look on the markets half an hour ago. (And on the miners in particular.)

Honestly, this is far beyond ridiculous. Given all those QEs and the high PM prices this is much worse than 2008. Unbelievable.

I will be looking for outstanding bargains to buy, will be hard to decide ...

May 15, 2012 - 4:02pm Response to: that capitulation graph

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Double post, sorry.

May 15, 2012 - 4:54pm

#2084

Eric Original

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Here it is again

So, where are we now?

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May 15, 2012 - 4:57pm

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well I can feel it.

...like I said, I think we are at the "uncontrollable giggles" stage....somewhere near capitulation.....

May 15, 2012 - 5:39pm

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analyzing stuff

Analyzing is great fun, if your mind is oriented that way.

Sometimes its not much more than mental masturbation half the time

but sometimes, when the analyzing yields some good understanding....you decide to buy a stock. or sell it.

Simple idea huh.

Sophisticated technical analysis or fundamental analysis often yields surprizingly accurate forecasting targets .

and now..... something is 'different'

Things have changed. technical and fundamental analysis hasnt been working.

Many folks are saying its because the whole market system is not real, its become totally rigged. Its the algorithms, and the global crisis, and the markets have been manipulated too much to be called real.

So now, at this point, what actually is real and what is not real ?

A biotech company that has made revolutionary , extraordinary ,life transforming breakthrough discoveries in cancer cure ,or virus cure, .....is real.

The short attack campaign to destroy the share price for the last two years....is not real. that is, the share price/value has become 'not real'.

When the biotech company makes an announcement that it has successfully achieved the cure for all viruses....and the stock soars from 1 dollar to 2.60 ....that seems like a real price movement based on good fundamental news, etc.

But when the share price gets short attacked all the way back down to 50 cents, over the next 2 years, even while the company continues to achieve incredible miraculous scientific breakthroughs confirming that they are well on the way to the cure for all viruses...(I'm talking about NNVC) ...and somehow the share price continues to get short attacked and still flounders at the low bottom zone...... its not real.

When miners get slammed down like they have been...is it real?

May 15, 2012 - 5:44pm

#2087

Eric Original

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Miner post over at the

Miner post over at the SpeakEasy. No reason why it shouldn't be here too. Here's a copy:

Over the past month I've been dumping all my non-producers. All the rank explorers, gone. All my development projects that are hoping for a buyout or financing, all gone. Gone for a couple of weeks and many percentage points now already.

I don't think a new mine is going to get built anywhere for a quite a while. If they are not fully financed and with construction already underway, I think you can forget about it. They will sit there until they run out of money and die.

So, I've kept producers only. The guys with cash flow. The guys with production growth already baked in the cake. Just the best of the best, as near as I could determine it. The thesis being that I needed companies that will still be in business in a year or two or three, or whenever the sector mounts a comeback. And today, my whole miner portfolio dropped something like 8%. Probably something like 13% over two days. I guess my thesis is going to be put to the test. Ugh.

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May 15, 2012 - 5:50pm

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Hey Eric

I am sorry to hear that you're planning not to be posting here for a while (although I totally understand it, as the market simply couldn't care less about fundamentals... Or technicals... Nor any kind of analysis which doesn't reach a deterministic conclusion that all miners are extremely overvalued, the bull market is over and the entire group should be shorted until reaching its internal value - 0).

FWIW, I feel that the liquidation phase has only begun yesterday... I think that there's *potential* for a bottom tomorrow (although I wouldn't dare calling it). The ideal scenario would be for a major crash early in the morning (I'm talking somewhere in the neighborhood of 7-15% crash in the HUI index) followed by a dramatic reversal later on in the day. I'm giving this scenario about 15-20% probability. I think that there are probably many other scenarios that could happen - only the insiders know for sure. I appreciate your contribution to this website.

May 15, 2012 - 5:59pm

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brown

Judging by todays posts, this thread may turn into more of a group therapy session for a while, rather than much hard analysis. But that's OK too.

I thank you for your kind words.

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May 15, 2012 - 7:49pm Response to: Miner post over at the

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The opposite is happening in

The opposite is happening in my portfolio, the few explorers I have are stable while my profitable producers and soon to be producers are getting hammered. Look at Claude Resources, if you listen to the conference call everything looks to be heading in the right direction yet it gets hammered today. Same with Brigus, nothing but good news recently yet the SP goes down. Same with Impact Silver etc.

Now take a look at Hellix Ventures. V.HEL. It has nothing going for it but a Bob Chapman recommendation and it has a $20 million market cap. In this market it should have a market cap of maybe $2 million. There is no logic in this market. The only thing that determines the share price is the commitment of the shareholders. Hellix has good loyal shareholders and thus hasn't had a big sell off.

I feel like dipping into my margin and loading up on gold and silver puts, I guarantee the market would turn on a dime if I did that.

May 15, 2012 - 11:38pm Response to: well I can feel it.

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T wrote: ...like I said, I

T wrote:

...like I said, I think we are at the "uncontrollable giggles" stage....somewhere near capitulation.....

Yeah my rear end feels violated. It would seem like you epitomize your own conclusions T... the uncontrollable giggles stage! lol.

I'll just laugh this one off... GLTA.

May 18, 2012 - 10:43am

#2092

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more presentations

Precious Metals Summit, in Geneva. April 2012.

http://www.gowebcasting.com/conferences/2012/04/11/precious-metals-summi...

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May 18, 2012 - 10:47am

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Advice needed: Peter Schiff's Europac Gold and Precious Metals

Hi All,

Being a UK resident, it is a bit difficult to get exposure to a lot of the miners. Does anyone have any thoughts on the following:

http://www.europacfunds.com/index.php?ack=true

I've had contact with one of their guys who seem very knowledgeable. Not particularly pushy either. What do you guys think?

PS: I've posted this question on Main Street too

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May 18, 2012 - 10:51am Response to: Advice needed: Peter Schiff's Europac Gold and Precious Metals

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UK exposure

I suggest you message Tabberto on that. He could maybe steer you in the right direction.

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May 18, 2012 - 11:06am Response to: UK exposure

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RE: Peter Schiff

Will do Eric, thank you

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May 18, 2012 - 7:23pm

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I almost feel like I've

I almost feel like I've already written this myself. From a guy who works with Ben Davies at Hinde Capital.

Gold and Silver Mining: A Post-Mortem

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May 18, 2012 - 11:50pm

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Golden Band does a refi

I don't know how I missed this news, but GBN did a refi on May 10 which should help ease their financial situation considerably. $5.5M in a bridge loan, and negotiations underway for a $20M term loan. The interest rate is pretty high, but you would expect that. This is risky business.

There is an agreement to sell production to the lender, but it appears to be at market rates. As long as that is the case, then I bless it.

If/when they get the term loan done, that should give them the capital to get Komis up and running, by mid year they say, and I think that should push them up toward about 70,000 annually.

This is the way to do it, in my opinion. Hardly any stock dilution. No giveaway in terms of a royalty or streaming deal. And it gets the wolf away from the door for a couple of years, financially.

http://www.stockhouse.com/News/USReleasesDetail.aspx?n=8508972

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May 19, 2012 - 9:16am

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Eric O's List of Favorite Miners

Just a quick update to the List. Adding Impact Silver, plus a comment about Golden Predator, and then just tweaking some of the text.

Before getting started, this would be a good time to review the parameters I've laid out as to where my biases lie.

Location Risk

Size Matters

Royalty Deals

Just a reminder that this List is just a window into what I'm thinking at any given moment. Readers of this thread remain entirely responsible for their own due diligence, their own risk management, and their own trading decisions.

And with that, let's get going!

Atna Resources: Atna has the Briggs Mine in California producing around 40,000 per year, but the big news is the recent consolidation of the Pinson property in Nevada. This fully permitted 12 g/t underground project should be operational by YE 2012, and shooting for an annual rate of about 75,000 for next year. They are funding it all through cash flows and a loan from Sprott. Repayments to Sprott are pushed back to 2013. No stock dilution.

Argonaut Gold: Open pit operations in Mexico, with stellar operational success so far with their initial mine. Start up of a second operation is underway. Guidance for 2012 is 88,000 to 97,000, while 2013 looks more like 130,000, all at industry average costs.

Aurcana: Start up at Shafter (Texas) is scheduled for June. If all goes well this should vault Aurcana up to a similar silver production size as compared to something like Endeavour, at a much cheaper price.

AuRico Gold: Recent asset sales are designed to lower overall average costs and improve financial metrics. The leaner, meaner AuRico now has two mines in Mexico, the start up of the Young-Davidson Mine in Ontario, and a significant cash hoard. Current production is around 234,000 oz/yr. 2012 guidance is 323,000 to 363,000, as YD gets up and running. If you look out to 2014, company guidance is 450,000 to 530,000. AUQ is hoping that YD alone will be producing 250,000 by 2016. These are some eye popping growth projections, though much depends on a successful YD start up, which is never a sure thing. Silver fans should note that the Ocampo mine has a significant silver component added in to the totals as Au equivalents.

Aurizon Mines: A favorite buyout candidate as far as I'm concerned. A single top quality underground mine in Quebec, and lots of cash. Still a great buy even if you value all their development projects at zero. Casa Berardi should keep cranking out about 160,000 per year, for years and years to come, at below average costs.

Claude Resources: This has been brutal. The stock has been beaten to within an inch of it's life recently, largely on concerns about stagnant production and rising costs at the Seabee Mine in Saskatchewan. Meanwhile, management has gone about it's business expanding the mill, deepening the shaft, and drilling up new, higher grade ounces. All of this should mean rising production and lower costs going forward. The other big thing is the Madsen Project, near Red Lake. This former producer has the permits and the infrastructure to be a quick and cheap start up anytime that Claude wants to pull the trigger. For now they are continuing to drill, in order to really start it up with good size.

Detour Gold: Gigantic open pit fully financed and well along in construction in Ontario. Should average about 650,000 per year for 20+ years, with start up scheduled for Q1 2013. Still trading at a discount to where it should be upon a successful start up.

Endeavour Silver: Solid silver miner in Mexico. The recent El Cubo acquisition from AuRico has gotten mixed reviews, but since El Cubo is only 10 km from their existing operations I'm fine with it. If anybody can straighten things out at El Cubo, Endeavour can. Current production is around 5.6 million oz AgEq. When the El Cubo deal closes, they should be more like 7.6m AgEq, with about $50 million cash left over to work with. Endeavour has long wanted to buy Great Panther's adjacent operations, but El Cubo is the next best thing.

First Majestic Silver: Top shelf silver miner in Mexico. They've been running around 8 million oz AgEq per year, with plans to double that by 2014, largely on the back of the steady start up and expansion of the Del Toro Mine. They recently acquired Silvermex on the cheap, just days after SLX reported some terrific drill holes. When the deal closes, SLX will be adding around 1 million oz Ag to First Majestic's annual totals, for starters.

Golden Band Resources: This is the smallest share price and smallest market cap on the list. There is steady production in the neighborhood of 40,000 from their Saskatchewan operations, with plans on the board for growth. I believe the concern right now is the precarious nature of the financial situation. These guys are basically living paycheck to paycheck, trying to fund exploration, development, and debt payments all at once. They are working on borrowing some money from Waterton at this moment. They have a $5.5M Bridge Loan in hand, and are still negotiating a $20M Term Loan. The Bridge Loan gets the wolf away from the door, and the Term Loan, if/when finalized, will allow them to move forward with the next growth phase in production, towards 70,000/yr. If they can steadily work their way out of the hole, then I think there would be a steady revaluation upward toward their peers. I think that would be a double or triple from here. Also noteworthy is that Chairman Ron Netolitzky has been a heavy insider buyer of the stock recently.

Great Panther Silver: GPL is running two operations in Mexico for a combined total of around 2 million ounces AgEq. Plenty of cash flows for further development. The thing I love about the Panther is the excellent trading liquidity and volatility of the stock. When silver bullion moves, you can count on the Panther to move.

Impact Silver: Producing around 1.0 million ounces of Mexico silver. Plans on the board for steady growth, funded from cash flows. For so small a company, IPT seems to have excellent market action. Similarly to my comments about Great Panther, when silver moves, Impact moves. No doubt about it.

Kirkland Lake Gold: Steady resurrection of an historic Ontario motherlode that logged past production in excess of 20 million ounces. Currently producing around 100,000 per year, though at above average costs. Mill expansions are underway that should vault KGI to 250,000 to 300,000 per year by 2014, with costs improving.

Rubicon Minerals: Fully financed, permitted, and under construction, the PEA from last summer on the F2 Deposit, near Red Lake, Ontario, envisions 180,000/yr for 12 years, though high grade underground mines tend to outlive their initial life estimates by a large margin. The economics look good, and they just hired a new operational guy who brings just the right experience from Goldcorp. Target for start up is YE 2013.

San Gold: San Gold is currently running at about an annual rate of 88,000 from the Rice Lake Mine in Manitoba. Capacity expansions and recent good drilling bode well for the future. Guidance is 120,000 for 2013. The other nice thing about San Gold is that they are the big dog in their district. All the penny juniors around them always come to San Gold looking for JV's. That tells me that San Gold will be involved with anything big that comes along in their area.

Timmins Gold: They've successfully restarted the former producing San Francisco open pit mine in Mexico, and are posting good growth in resources and production. They're currently going at an annualized rate of around 86,000 per year, with expansion programs underway to hit a steady 130,000 per year by 2013.

Next candidate for the List is likely to be Golden Predator. They are in the process of arranging a line of credit to fully fund the capex on the Phase 1 restart at Brewery Creek, at about 50,000/yr starting in late 2013. Once that financing deal is inked, they go on the list.

Now, let's get out there and make some money!

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May 19, 2012 - 4:01pm

#2099

Eric Original

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This thread is too long

This thread is getting really long in the tooth. New readers are not going to go back to the beginning and try to catch up on the whole thing, and there's no reason why they should.

As time allows, I think I'll go back to page 1 and start cherry picking some of the best stuff, and reposting it. "Best stuff" is a fairly broad term, and entirely subject to my own discretion. It might be something really useful in picking miners. It might be just the funniest joke or the best music video. But it will give us something to do while we wait for the miners to bottom. Plus, I have an idea or two in mind for links to add to "The List". If only I can find them....

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Don't Fight the Tape.
Sitting around complaining that the market is "wrong" is an excellent way to keep losing money.