Taking an unemotional 5000 foot view of this company and it's stock, without getting into minute financial analysis, getting what can we discern here?
A company which has secured the financing (albeit at well above current market rates) to assure that even in the case of unforeseen events (short of global armageddon) it can complete the build out of it's new mining property relatively on schedule.
The company has in the past demonstrated far greater aptitude for mining operations than mining development in the past, which will be a positive once the build out is completed and the property is operational in the next 12-18 months.
There will be an ample marketplace for the output of this operation, primarily gold and copper, but at what prices?
(And what trends could affect that pricing?)
The company operates at the forefront of two massive global trends that will only serve to benefit it hugely in the years to come, population increase and currency devaluation.
The new mining property will be very profitable at current metal prices, will still be profitable at much much lower metal prices and will be insanely profitable at higher metal prices.
Copper appears to have a much higher upside than downside. Copper pricing is in extremely low territory right now, historically, and we know that the human population continues to grow despite regional recessions, depressions and general financial malaise around the globe, which will result in increasing demand.
Gold is at historically high levels. But, due to the uncertain economic futures mentioned above, and the massive pent up inflationary pressures being introduced by nearly any government that is able to increase liquidity and print money, it would seem extremely unlikely to see anything but increasing gold, silver (and other hard asset) prices over the next several years.
Yet this company's stock is currently selling between one quarter to one third of estimated book value and it is priced as if the performance of the past quarter is the only way to value this company, as if it will have zero growth, as if it does not have a huge new asset on the verge of completion and that none of the above global trends are factual!
So, do I have this about right?
Does anyone have anything rational to add other than "this stock is going to zero, get out while you still can"?
Regarding management, I believe too much negativity surronds their efforts. they have faced the same challages as all thier peers in the mining world, they have done worse than some management tams, better than others. I think they've got a handle on those issues now.
Every mining company out there with a project has had the same unexpected issues to deal with, from BHP on down. Many mining companies have nmade far worse missteps than TC has. Not to say TC has done a great job, but let's be realistic about it.
Also, many of these other companies are operating in shall we say, less than friendly environments. TC operates in the US and Canada, and the entire Canadian mining industry is about to get a nice solid boost from the all but sure passage of bill C-38. Yet TC is priced as if it's operating in lookoutwhatsnextsastan or something. Freindly, even supportive governments now, infrastructure, no terrorists (except for environmental ones) no civil wars or regime changes to worry about etc.
TC puts out plenty of news on it's website and in it's annual reports. No, they don't do a good job of connecting with investors day to day, but I would rather they put their resources towards running the company profitably. There is planty of information out there if you look for it.
Once TC gets on track, it's going to roll. Roll out profits, that is.
There are only two reasons to pay 12.5% for financing in today's environment.
1) You are desperate, you may go out of business, and the local loan shark is an even worse option than the bankers who are taking you to the cleaners.
2) You need some cash now, but you want more than you really need in order to not have to go back to the well again for any foreseeable reason, and to get more than you need you have to pay a premium since you are not in a position of negotiating stregnth right now.
However that doesn't bother you that much, since the cost in miniscule when compared to what your ultimate payoff is.
I believe that TC falls under option #2, not 1. As always, due your own DD...
Honestly, TC seems like a company that doesn't care about shareholders. Their plan seems to be to run a company as best they can, and not "play to the shareholders". The truth is, this is how every single company should be run... on merit, not on talk. But in reality, a company does need to use its mouth not just its hands. TC probably will report on Milligan at it's Q2 results, and it will probably just say "Milligan is on schedule". No need for monthly updates.
I agree with most of what you say except for the "on schedule" comment. Management here has not shown an ability to properly manage the build out of the new property. Time will tell if they have more time delays and associated cost over-runs. They have a cushion with the capital raise but we'll see.
Pressing continue to churn out dollars and Euros. Eventually metals will pick back up.
Just to clarify, I am looking at an "on schedule" mine start to be in Q-1 2014. That gives them about a 6 month cushion over what they are saying publicly.
Frankly, I fully expect them to beat those expectations. These are very smart people, and I think they have learned a lot, the hard way, in the last 12 plus months. However, I freely admit that is simply speculation and a gut feeling on my part, and I have no inside knowledge that may in fact be the case. Call it a very strong gut feeling, and no, I can't quantify it but I have learned in the past that I am right more often than wrong when my gut tells me something. Let's hope it is this time, yes?
Unfortunately, I have to agree with your analysis. Been buying into the continued downtrend which has gone on for too long and beyond reason. The delisting from the TSX mining index [if that's what happened] explains alot and is obviously going to hurt short term but there's just too much value here to ignore...
The biggest short term known risk, IMO, is the price of moly pluments due China having a hard landing and TC has to raid the funds for the Mt. Milligan project to keep the moly mining business afloat. Couple that with any unexpected construction delays and TC could become insolvent.
Having said that I'm staying long TC. Hope springs eternal.
A substantial risk of insolvency would explain the high bond yield. 12.5% is credit card rates. I've been long here but there's gotta be some legitimate reason TC is under performing to such an extent.
Too much demand in the world for Moly prices to "Plunge" They may continue to slightly drift down a little more like they have been but their drift down has more than been offset by the lower transportation costs which have dropped by 20% this quarter. They are a huge componenent of their production costs for moly. No one has talked about this but it is going to result in a nice upside surprise for this quarter. That is why you see such a large swing inthe nalysts projections for the quarter. Some have figured this out and some have not.
Moly pricing is already low. I believe TC has secured enough funds via their controversial recent trip to the financial markets to survive virtually anything for 18 months short of a complete shutdown of operations...
Should that happen, I remain confident that even a fire sale of the company would result in a profit at these current depressed share prices...however it would be more likely they would divest themselves of certain valuable assets in order to keep the current project alive, which again would still result in nice profit over my time frame based off the current share price.
And of course as the time frame to completion shortens the likelihood of any such event diminishes rapidly.
Please understand, I am not trying to pump anything up. I have thought over dozens of worse case scenarios. Short of a zombie apocalypse, a global civilization collapse or all gold in the world turning back into lead there is too much value here to ignore.
Absolutely, unforeseen human and natural events could turn this 3 or 4 bagger into a 50% gain or a double. But I seriously question the mathematics of anything less based on a time period of 36 months or greater.
Honestly, I am not even concerned so much with this quarters results, or the next.
Barring an unforeseeable and materially relevant "black swan" type of event, I am much, much more concerned with the results of Q-4 2014 and Q-1 2015.....
I realize that my investment horizon may not be the right fit for everyone, especially for most traders.
I may just buy the 12.5% bonds...today they are trading for a return of 12.8%. Very little risk vs owning the stock since the company has significant assets and bondholders get at the front of the line.
I own some stock but hesitate to add more based on my previous ill timed add ins of $6.50, $5.20, and $4. Also the bonds don't care much about further dilution...they just say "pay me please, k, thx"