The company is for real, but the drop in the price of gold is real also. All the company's profits will evaporate if gold hits $1050. With gold at $1200, the P/E based on the current stock price should be around 12.
Share buybacks may "show" up good on the stock ticker, but the bottom line is that a buyback is an investment just like any other. It really does little for the company's health; all it does is give the appearance of health.
I'd rather TGD use its cash to survive the Gold Apocalypse right now, then waste it on buying back shares that may or may not fall even more. What if TGD uses its cash to buyback shares, the PPS falls, and for an indefinite amount of time TGD now suddenly just has less cash to meet expected and unexpected costs?
No, a buyback is not the right thing to do here.
Very simple. Get your board to authorize a large stock buyback. Since you have positive earnings, use the money to buyback some level of shares when the price gets below you book +ROA percentage (as an example to set a floor), you buy "strategically" across the quarter. Just doing nothing while your valuation tanks is not the right approach- learn from the big guys- this is what a number of large companies have been doing to show good earning while their revenues drop from sales.
I'm inclined to agree with you, but I remember everybody saying that about $1.60, and then all the way down to where we are now.
When will the madness end? I don't think anybody was predicting a few months ago that TGD would fall like this. Tremendous upside, I suppose. But also tremendous risk.
I would advise waiting until the price actually shows firm support. So far, there has been none.
2 stock % down, But good things to have this before the Bounce play coming.. Must see the charts...
Sentiment: Strong Buy
As much as I love this company, but its a gold miner, and that is a bad busines model with declining gold prices...stay away, IMO...gold could go to 1,000, and this could go back to under a 1.00....sad, but very possible.
tr (dot) im/4kh96
VANCOUVER — The outlook on future production came into sharper focus for Timmins Gold (TSX: TMM; NYSE-MKT: TGD) in early November, when the company released an updated reserve estimate and mine plan for its wholly-owned San Francisco gold operation 150 km north of Hermosillo, Mexico.
The release incorporated the results of 220,000 metres of drilling completed over the past two years — which bumped reserves and inferred resources by 20% and 77%, respectively — as well as an economic study on Timmins’ revised mining strategy.
San Francisco is comprised of two pits, the larger San Francisco pit and La Chicharra pit located around 1.5 km due west. Timmins has focused on expanding and extending mineralization around its existing operations, with its recent resource and reserve estimate being the most recent in-situ gold update at the project since July 2011.
The largest contributor to San Francisco's reserve growth was La Chicharra, which accounted for around 77% of the global increase in gold ounces. Total proven-and-probable reserves at the project now total 91.2 million tonnes grading 0.54 gram gold per tonne for 1.59 million contained oz. at a 0.2 gram gold cut-off. Average reserve grades at the project declined around 5% since the previous update.
Meanwhile, Timmins also expanded resources in both the measured-and-indicated and inferred categories. Measured-and-indicated resources jumped roughly 30% to 102 million tonnes averaging 0.57 gram gold for 1.9 million contained oz., while inferred resources increased to 122 million tonnes grading 0.45 gram gold for 1.8 million contained oz. All resources were calculated under a 0.17 gram gold cut-off.
As a result of its drilling, Timmins was able to extend San Francisco's life by roughly seven years relative to an amended mine plan released in Aug. 2011. The company achieved steady-state throughput of 24,000 tonnes per day in October, and intends to maintain that rate through 2015 ....
hockey, how is that projection influenced by the spot price? More specifically, if the spot price was, say, $1800, what would that mean in terms of the result?
According to BMO Capital Markets:
tr (dot) im/4kcs9
Stock Rating: Market Perform
Lower Grade and Higher Strip Impact Economics; Downgrading to Market Perform
Timmins Gold announced an updated reserve and resource estimate along with a revised mine plan for the San Francisco gold mine in Mexico. Positively, TMM reported reserve growth of 20% to 1.6Moz gold, albeit with a 5% decline in grade to 0.54g/t gold. The revised mine plan outlines life of mine annual production of 122kozs gold over ~9.5 years at by-product cash costs of US$823/oz. Throughput is expected to average 24ktpd over 2014 and 2015, increasing to 30-32ktpd in 2016 with the addition of the La Chicharra deposit into the mine plan.
Impact & Analysis
Negative. BMO Research has aligned operating costs, ongoing capex with that outlined by TMM, and given the large inferred resource (1.8Moz at 0.45g/t gold), modelled a further 4.5 years beyond the reserve life with associated costs. Although TMM has made the best of a low-grade, high cost deposit, and has presented the best possible option for San Francisco., the TMM 10% nominal NPV has declined 40% at spot metal prices and 35% using the BMO price deck (despite the extended mine-life).
Valuation & Recommendation
BMO Research forecasts 2013E gold production of 119koz at co-product cash costs of US$730/oz gold. TMM trades at 1.4x the 10% nominal NPV estimate at spot gold prices, versus emerging gold producer peers at 1.0x. BMO Research is downgrading TMM to Market Perform with a $1.50 (previously $2.75) target price. The C$1.50 target price represents 1.6x the 10% nominal NPV estimate at US$1,283/oz gold.
It hit $1.20 this morning. There is only one more target left on my list. It might bounce first, but I think there is a decent chance this stock will hit $1.00.
This is a profitable miner that has nice leverage when the price of gold rises, but it does not matter. All gold stocks are toxic waste right now. Maybe things will be different in 2014.
The last corporate statement shows negligible capex going forward. By my understanding, each year TGD will stockpile about $60 million cash. In three years, cash would equal the current 180m mkt cap. In the life-of-mine ten years, TGD will have $6 cash per share, ostensibly forcing stock price at least to $6. Does this not seem a no-brainer buyout candidate?