I don't understand the 4m share volume. I could see it selling off on low volume. My guess is some funds were just selling all small cap miners as SSRI was also down 7% on very high volume. I think the funds were freeing up money so they could gamble on fraud China stock Alibaba.
That is not how it works. Debt doesn't rise with inflation for one thing but metals tend to. Thus in 10 years the debt in 2014 dollars might only be 75% of the value it is now.
If by 2018 they have refinanced 900m at 7% and paid down 90m from the current debt with cash on hand, they will have net income of 95m after debt payment. Figure 158m income from MM at flat metal prices of $3.10 copper $1.40 cost of copper and 63m in debt payment.
Applying $60m a year toward the debt and increasing that amount by 7% per year they would have it paid off by 2028, 14 years from now.
Increasing inflation, increasing metal prices, eventual moly production starting back up and they could pay off the debt by 2025 or even earlier, at which point a small dividend of say, 15% would be easily possible.
Here is what I can guess for Q1 2015 production and net income:
Endako: 2M pounds @ $12 pound production cost, $12 pound sale price, $24m revenue, $0 net income
TC: residual sales of some small amount, maybe 2M pounds, $24m revenue, $16m net income
Lang: $3m revenue
MM: 90% capacity during the quarter, $3.10 avg. copper selling price $1200 gold. $1.40 adjusted cost per pound copper. $110M revenue, $35M net income
Total Q1 2015 revenue $161m, net income $41m, interest expense $22.5m, net income including interest expense: $18.5m or $.08 per diluted share.
The driver in late 2015 will be an advanced deal to refinance the 350m 2017 9.75% notes at a more reasonable rate. A deal to refinance at 7% would mean an extra $9.5m per year net income or $0.04 per diluted share. This coupled with reaching 100% of design capacity by end of 2015 would mean 2016 earnings of $0.24 to $0.28 per share in 2016 even without any moly.
Q3 moly production: TC 6m pounds @ $13.50 avg selling price, $4.50 per pound cost, $54m net income
Endako: 2m pounds @ $13.25 avg selling price, $12.75 cost, $1m net income. Total net income $55m on revenue of $107.5m
MM: slightly cash flow positive including interest payment, meaning revenue of around $90m
Lang. some $4m in revenue
Total: 201.5m revenue, earnings of 0.25 per share, diluted earnings of $0.10 per share
Cash on hand goes from $216m to $274m
If we get just a wee bit of positive spin (I know, unlikely) this should put us back in the $2.70s
I just have a strong feeling based on past history that the Oct 9 or 10th announcement of production results and strong moly sales will drive the price back up a few cents, probably to $2.65 now. I will make a few thousand and move on.
Yes, right. At $3 per share it would be a 133% yield. Yowza! Back up the truck!
No news likely until Oct 9 when they release record sales and cash balance swells to near $300m
You stole candy from a baby.
Perhaps a little bit of margin calling thrown in since the volume was 2x average. Sorry for those who got margin called but that way lies madness.
Merry Christmas. I am all back in now with a much lower cost basis than I had a few months ago. Got to play to win! Brass balls might turn blue if metals trend a lot lower but such is life.
Confused? I am too!
Well actually to cherry pick dates, TC is up quite a bit at $2.48 from last year's low of $1.72
$3 in earnings, $2 for the dividend, $1 toward debt.
PE9 company with earnings growth past 2015, paying a 7% dividend
This in a stock market valued at PE20 and 1.8% average dividend.
Sometimes you just have to buy.