Fein Fellow, looks like we'll get the retest and possible new lows we've been looking for... most likely NOT in the stocks but certainly possible in the metals themselves.. $1485 was a projected low for gold for nearly a year and it will likely be a bit lower now that the pennant is breaking to the downside. No, it doesn't mean anything but short-term but does give first time buyers a real opportunity for short term gains... and for those of us who've managed to keep some of our powder.. dry! Dollars and Euros.. let's keep our eyes on the acceleration of QEIII as unemployment begins to spike coming into this fall and winter.
A step in the right direction is a good way to characterize this news. We're talking years and years of potential mining at Navidad and during that time Governments can come and go, but if open pit mining is never legalized nothing moves forward. So it is clearly positive. Having said that, Paas management would be crazy to invest major money in Argentina right now. What with inflation, labor cost, taxes, ability to secure equipment and currency regulations it's questionable if they can actually make any money. And if by some miracle they can, the Gov can step in and steal the "peoples silver".
Still, I think the shares should move higher on this news as I don't think Navidad is being given any value in the current share price.
Unfortunately we will not see the Pop from 22 to 30 that I thought would happen a few months ago.
It could be expected that financial demands will be harsh. It is too early to talk about details; 8% royalty is high, but not prohibitively high. It is unknown which other levies will be extorted too. Navidad has sizable room (profit margin) to accommodate many demands.
This law is not adopted yet and once it is, PAAS will have to negotiate with state mining company that, probably, does not exist yet. At some point company will be able to make own news release giving us more certain economic projections for Navidad.
Anyway, this event is a big step in right direction because it reduces uncertainty about Navidad (market hates uncertainty). It should help this stock, even if Navidad profitability gets reduced at the end.
That would be nice. Next major resistance I see is ~$21. I'm planning to sell some 21 or 22 calls against the small PAAS purchase I made back in mid-May at ~$15.50. While I'd be sad to see that stock be called away from me, after a decade of ups & downs with PAAS I'll be pretty darn happy to ring the register for a 40-50% gain in 2-3 months time!
Don't get me wrong, I'd still keep my core PAAS position and I think we *might* be getting close (3-6 months) from some redemption for the mining stocks. I've just seen too many major rallies where I didn't trade some PAAS to not try to be a little smarter now. Hopefully PAAS will continue to rally up high enough that I can put my plan into motion!