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Jaguar Mining Inc. Message Board

  • blake71383 blake71383 Apr 25, 2012 3:34 PM Flag

    close at 3.01

    from trough to peak, JAG up almost 10% intraday

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    • Now looks like the close should be changed to 2.01 instead of 3.01 as the stock looks like it is going lower before higher.

    • Rights issue history info very interesting.
      Shandong a possible equity/development partnership seems a real possibility. My thoughts during the past 2 weeks while Shandong was halted that probable JAG-Shandong discussions were also going on in respect to different scenerios. The confidentialty agreement would have prevented any leak of this to the news. As the Shandong spokesperson said last week, "Shandong is still following JAG and it's a big target."

    • Back in Oct 11 they were looking at how to re-structure the debt to remove the convertibles (Which were supposedly being used to manipulate the stock) and they got very close to securing funding to do just that (And to advance Gurupi). Obviously the takeover 'bid' halted that but they have since been approached by other banks interested in doing a re-financing for them if there is no takeover.

      Clearly they will need some sort of re-financing or capital raise before the $168m 2014 convertible bond expires.

      The feedback I got from them was that they had been told very clearly by the major shareholders that a rights issue would not be acceptable (And this was back was when the stock was $5/6), and at this price its even more unlikely (Never say never I suppose).

      If there's no sale the plan at the moment (I believe) is to delay development of Gurupi (Keep proving up the resource), refinance the debt and get the existing operations working. Given that Shandong were involved initially as a potential partner for them for Gurupi, I would consider it quite likely that there is some sort of equity/development partnership for Gurupi on the cards if a bid for the whole company proves too rich.

    • 1. 74.5 Million in cash isn't enough for them run their future projects. They need to raise money no matter what.

    • >JAG has always had a very low valuation based on gold in the ground relative to peers. There is a reason for that, and that's not going to change anytime soon.

      I wanted to clarify that the reason for JAG's valuation relative to gold is not just crappy management. It's also questions regarding production costs. How accessible is that gold? How expensive is Brazilian labor compared to say Minefinder's Mexican labor.

    • Peter- solid, very informative info provided this morning-thank you.
      Couple questions:
      - You noted that if deal not made, a dilutive rights issue is not on the table at this time. Is that noted in the strategic planning process, or how do you know if BOD's stand on that will change?
      - If JAG doesn't sell, what's the chance that they come out of this review process with some sort of partnership with Shandong or other company... or sell only partial holdings.
      Again, thanks for sharing your insight and expertise.

    • To get a takeout north of $7 is going to require a serious move higher in the current equity price. The M&A's I have seen in the gold space have not produced those kind of steller returns (i.e. 2 or 3 bagger).

      Look at Minefinders. They are very similar to JAG. Crappy management, great resources in the ground. MFN were acquired by PAAS at a very low premium to market.

    • Good question. Im using $900 as a long term life of mine average (Taking into account as you rightly say, this year will be higher) and its based on an assumed USD/BR rate, and other factors such as mine grade etc. My conversations with the company (Not that I would place a great deal of weight on their opinion given the track record) suggests the new ops team have a viable plan to reduce costs, and that 2012 guidance might be intentionally conservative given their history of constant production guidance misses. But that is subjective obviously.

    • Agree completely that the company has been a constant dissapointment to investors, and many are quite rightly frustrated, to say the least. If there is no takeout the company has a long road ahead to restore confidence and value as you say. At this price the market has totally discounted any chance of a deal, whereas my view remains that if due diligence on the assets is positive a takeout at a price north of $7 is not inconceivable. On a risk reward basis its a compelling stock right now. Time will tell!

    • Thanks for the nice analysis indeed.

      May I ask you where you get your $900 cost figure ?

      2011 Annual report (bottom of page 4):
      "Average cash operating costs for 2012 are expected to be in the range of $950 to $1,050 per ounce based on an assumed exchange rate of R$1.75 per US$.

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