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Southern Copper Corp. Message Board

warmcamp 12 posts  |  Last Activity: Jan 24, 2016 4:43 PM Member since: Oct 15, 2003
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  • Reply to

    Selling

    by edthelorax Jan 21, 2016 4:15 PM
    warmcamp warmcamp Jan 24, 2016 4:43 PM Flag

    Both NTO and NXG were mostly base metal plays unlike EXK, and, in any case, EXK could looks more similar to NXG rather than NTO, because it has mining operations.

    Also, talk about similarities must include a bold assumption that bull market in metals is already on the way as it was in 2004. This assumption looks shaky because of Chinese factor. It was mostly Chinese growth that fueled strong metal prices in 2003-2008. At present juncture, Chinese growth changed to Chinese crisis.

  • Reply to

    Silver and Oil

    by leebagain Jan 11, 2016 5:52 PM
    warmcamp warmcamp Jan 23, 2016 8:18 AM Flag

    Silver presents a minuscule sector of global economy. One can hardly find any big market player caring about silver price. For example, US government or Fed Reserve do not care about it; they care about US economy (it is mostly Fed Reserve). Sometimes, gold and silver price suffer collateral damage in this process. In any case, no "manipulations" can be responsible for it. It is better for investment purposes to identify and assess the process (Fed policies), whether it is successful or not. The accuracy of this forecast would be extremely important for every investor.

  • Reply to

    Thompson Creek Metals

    by sandler135791 Jan 16, 2016 10:29 AM
    warmcamp warmcamp Jan 16, 2016 8:22 PM Flag

    In general, streaming companies provide money to miners in conditional way; it is usually called a "deposit" and it is considered a debt, secured by miner's assets. Once a miner gets to production, it starts making payments to a streaming company; these payments reduce amount of the deposit. If a mining company goes under then remaining part of the deposit constitutes a monetary claim on miner's assets.

    If I remember Mt.Milligan streaming deal conditions correctly, then it was exactly a story of "deposit". Please, note that I didn't look at that deal details for many years, since the deal was announced. It was made in a very different market.

  • Reply to

    End of RBY legend

    by warmcamp Nov 3, 2015 11:39 AM
    warmcamp warmcamp Dec 20, 2015 12:57 PM Flag

    Gold mining is a highly cyclical industry: it goes through brief surges and long declines. Please note, I talk about mining here, not about gold metal price. There is another important feature: gold mining requires lot of money to be raised before any production may appear, and this waiting period for production can take long years. When these points are combined, they present following notion: it is possible for a gold mining startup to raise enough money and start moving to production. It is true, if fundraising stage coincides, partially at least, with gold mining surge period when "hot money" look for speculative vehicles in the sector. However, it is likely that the surge will be over, when company really gets to production point; it is a brief surge.

    The notion above means in practical terms that investors in gold development companies should prepare for low gold price, when the company actually gets to production. It is the likeliest scenario, but many people prefer to ignore it and they stay in the stock and, moreover, they ignore all red flags, only because they want to get to production. In reality, it often makes them prepared for a big disappointment ahead.

    At some point, in 2012-13 RBY was an overvalued gold development company with doubtful resource base and without serious resource studies. Anyway, many people wished to continue the ride, because production will be achieved "soon", and pumpers helped to keep this self-deceit going. It became clear in spring 2013 that gold sector goes to serious bear market and, if RBY would ever reach production, then it will have to deal with low gold price. This notion was largely ignored.

  • Reply to

    "Constructive discussion"

    by flashback_dave Dec 19, 2015 6:57 PM
    warmcamp warmcamp Dec 19, 2015 8:07 PM Flag

    Thanks for this reminder. I wonder whether sewells learned now the differences between various cost definitions or anything else from more generic accounting terms.

    I remember as many years ago I had to dispute with two experts, sewells and dennis, here telling them that PEA can be done for inferred resources (it was before any PEA made here) and so it is a not a very solid document. They didn't know that. As it could be expected, goldmania and piopuke actively participated in the "discussion".

  • Reply to

    End of RBY legend

    by warmcamp Nov 3, 2015 11:39 AM
    warmcamp warmcamp Dec 19, 2015 8:00 PM Flag

    I was not able to continue this thread, mostly because of technical difficulties. However, it looks now that resuming at this point could be even more appropriate. I saw few recent messages here and I agree with an idea that time is coming for mostly postmortem investigations.

    The next big red flag came in at the point when company hired new contractor, made new PEA and announced change in mining methods. This event alone would not be too surprising, unless it yielded the unusual result: total project value (NPV) went down with this change. You can rarely see a gold exploration company willingly downgrading project value many years before production.

    The most rational reason for that action, as it was proposed in some posts here, was that the former mining plan showed serious deficiencies. What would be another reason to drop it and go for a different plan with worse economic projections? This simple taking of the situation dictated that investors had to accept the fact and also re-value their own expectations here. It was about the time, when I started preparing for exit.

    Around that time gold market took turn down. It is a very big topic that I will probably re-visit it in next message.

  • Most likely, Argentina will offer green light to Navidad development in near-term. This project had enormous value in good silver market. Probably, it would be still profitable now, depending on taxes and royalties. Former development proposals included onerous royalties that caused company to shelve the project.

    If green light is delivered and development proposals are modified to more reasonable version (it is possible with new pro-business Argentinean government), then PAAS will have to make a challenging decision. It already spent good portion of the funds that were raised many years ago to develop Navidad. Actually, that fundraising is still the reason why PAAS has strong balance sheet. If company decides to proceed with Navidad construction, then it will have to use all available cash and full extent of available $300M credit line and, maybe, raise more money.

    In other words, PAAS investors will have to decide whether taking risk on going with the company, fully leveraged unlike it is now, is worth of possible rewards. I am going to re-visit this issue on the projected point when PAAS would be disclosing actual terms of Navidad story. PAAS was the last PM stock where I did some investment many years ago. It is possible that it will be the first stock to get back to the sector. Again, it will be based on numbers and data (this part is borrowed from Fed lexicon :).

  • Reply to

    added at 6.25

    by sakhaneft Dec 17, 2015 12:21 PM
    warmcamp warmcamp Dec 17, 2015 4:23 PM Flag

    Are you sure about Fed rate plans? It seems to me that Fed has forecast for rates at the end of 2016 at 1.375%. It is 0.50% now, so it indicates few increases in 2016.
    By the way, what was your forecast for silver and miners for 2015, 2014, 2013, etc?

  • Reply to

    added at 6.25

    by sakhaneft Dec 17, 2015 12:21 PM
    warmcamp warmcamp Dec 17, 2015 2:58 PM Flag

    It could be that share price stays in 6s with the same silver price, but it would be the best-case scenario. PAAS has cash; therefore, it could withstand few more years of low silver price. This company burns about $100M/year now, so it has $$ for 2-3 years and then it has a big credit line, if I remember correctly. Will it work the same for more leveraged silver miners? Probably, not.

    In any case, the idea of sitting on the same level, would not be too promising for many investors. After all, we invest for capital gains and they could be pursued in many market places. Investing in silver miners, even in the most solid, relatively speaking, is a gambling proposition at this point, and it was this way for many years.

  • Reply to

    added at 6.25

    by sakhaneft Dec 17, 2015 12:21 PM
    warmcamp warmcamp Dec 17, 2015 2:16 PM Flag

    It won't be known whether it is a "bottom" until few years elapse after it, i.e. in case of real bottom. It is a general observation (for investment purposes). In more practical sense, one should note that investing in a mining company is not the same as investing in a metal price. What if silver price just stays at present level for couple years? Yes, PAAS has strong balance sheet, but even for this stock the result would be likely negative (measured in investment return terms). Some silver miners could suffer more serious losses.

  • Reply to

    added at 6.25

    by sakhaneft Dec 17, 2015 12:21 PM
    warmcamp warmcamp Dec 17, 2015 2:09 PM Flag

    I don't see any reasons to discuss your personal trading record. If you can make money, then it is good for you. However, it has nothing to do with this stock or this industry or Fed policies.

    Regarding these fed policies, I disagree with your assessment of yesterday's rate increase as "meaningless". This move is in very visible contrast to most other countries; it shows significant relative strength of US economy comparing to other places. This persistent strength may continue.

    Also, this move affected markets in many ways. Take, for example, this sector. It was suppressed by rate increase expectations for long time. In this regard, one should pay attention, imho, to Fed forecast of further rate increases. What if they make good on these promises and really increase rates few times in 2016? That's very realistic scenario and it should not be ignored, especially in the same overly dismissive way as this rate increase was ignored.

  • Reply to

    added at 6.25

    by sakhaneft Dec 17, 2015 12:21 PM
    warmcamp warmcamp Dec 17, 2015 12:47 PM Flag

    Fed will continue rate increases. It can take long time before this process stops. What does it mean for PM producers that already eat big losses?

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