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Jaguar Mining Inc. Message Board

  • celestialconstant celestialconstant Dec 29, 2012 10:16 PM Flag

    New Bag Holder

    It's a gamble at this point. The odds are stacked against JAG but there is new management. This isn't an investment, it's a game of roulette. JAG will have to acquire financing within 6 months or so to stay afloat. Cash burn/cost of production has been reduced by new management. There are properties which can be sold or a portion of the interest in those properties to generate funding.

    If the cost of production can be brought down $150-200/oz, the conservative side of production would project $15-20 million in savings or $22.5-30 million on the high side. (using production targets of 100-150k oz per year)

    From what little I read, the new management is trying to get a solid foundation to work from. Meaning production from their mine currently on standby will remain so until fundamentals improve. While more product would generate more cash, it also costs cash they do not have to dig it out of the ground.

    They're also working against brazilian inflation which should get better as the dollar weakens and inflation in their region settles. I do see a pop in the price of JAG in the short term, followed by a decline for a couple quarters until improvements are seen in the business. Unless new management can pull a rabbit out of the hat, I don't see JAG moving much from here- or at least until the end of 2013 assuming management can execute the" Plan", that's assuming there is a JAG at the end of 2013.

    Catalysts I'm watching for:
    securing financing/selling property or interest in property
    taking on a partner/merger
    reduction in spending/10Q
    US/worldwide inflation/investment in gold
    buyout bid

    Sentiment: Hold

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    • well, aren't you worried about the financing they had originally intended on completing a month ago? And if they don't achieve it impendingly, is Ch.11 a distinct possibility, in the near term, or not?

      • 1 Reply to longtimefollower
      • I don't know. No one knows except the bond holders and JAG. Being optimistic, I don't think the bond holders will move against JAG at the moment, since the assests are greater than the debt, they should feel confident they will get their money back from JAG. If debt continues to increase and the business model is still failing, I'd start worrying about the lenders. JAG may choose protection from the courts but this would not benefit JAG or shareholder value (higher interest loans and reluctant lenders, heck even cancellation of current stock and reissuance under a new ticker)
        I beleive the loan you're speaking of is the $30mil, I think i read somewhere with the fees, the effective interest rate is 17% That amount of cash should last about 3 quarters by my guestimates. 3 quarters assumes that management is executing on their turnaround plan.If not 2 quarters.
        What I would like to see is a partnering up or a selling of interest in one of the properties. This could generate cash and other resources for JAG. Heck, they may open up the mine on standby and increase production by 50K oz/year. I don't forsee that happening until cost have gotten under control or a partner steps up.
        JAG may have a quarter's worth of cash in the coffers. Some type of financing will be required and soon.
        Like I mentioned above, I do see the price going down from here. I'm looking for a 10-25% increase from current levels and sell into the strength of earnings report season. After a disappointing year, I expect the price to slump down to possibly .50 or less. Which at that time I'll have to re-evauate a permanent position. Management will give us an update on the liquidity issue, the turn around progress, and future prospects. The only thing I foresee that could cause the price to move up significantly would be a line of credit with favorable terms.

    • well at least you have a plan. Although we disagree on the outcome, it's almost refreshing to see a long who appears to have done some homework. Better than the "I play the charts" guys running around here who have no idea what they're talking about.

      • 1 Reply to brettbaker8899
      • I play the charts too. From that standpoint, it looks good for JAG. Then again, it's looked good in the past based on the charts. I think the fundamentals have kept the pressure downwards. Instead of periods of moving upwards, this stock has moved sideways. A bad sign is the dumping of shares about a week ago. From the volume it looks like a MM dumped their position. The good sign is that the .58-.62 seems to be the sweet spot to position yourself (one man's trash is another man's treasure). So, if you're playing this one by the charts, play it on the conservative side- the gains will be less than they should. Once fundamentals improve(or a generous loan/line of credit/partnership), the charts should start acting as volume and price would indicate.

        Sentiment: Hold

 
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