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.
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.
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.
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.
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".
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 :).
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?
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.
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.
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.
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?
Alex, I think your message misses following: it wasn't just Yellen words coming last week that suppressed PM sector again. It was mostly chain of reports that delivered strong reading on US economic situation.
Please note, generally speaking, PM prices do not depend on nominal interest rate and they do not depend much on direction in rates. You may look back at 1970-80s. Gold prices went up strongly along with interest rates moving up in Carter years, and then gold prices crashed down when rate was lifted even higher in Reagan years.
The point is that PM prices move in inverted mode vs. strength/weakness of US economy; it is the best for gold when public confidence in US economy hits low point. It provides both explanation (why PM sector looks awful now) and hint (when the sector could have a turnaround).
Hello, Thino. I am glad to see you again after so many years elapsed since old Minefinders days.
I visit this board on relatively rare occasions and post on very special situations only, and didn't do anything in this stock for many years. Also, I do not invest in any PM stocks now and do not have any big plans here. Sometimes, I visit PAAS message board, mostly because of old connection to Dolores mine. I don't post often there too; the board quality went down seriously, in my opinion; i.e. no messages there that could be linked to mining fundamentals or financials.
However, I continue investing and have full-size portfolio across many sectors that look better at this junction. Most of my positions have either bad quality (common things on Yahoo:) or completely dead message boards; therefore, I don't post there either. Probably, I will have to wait until gold stocks make turnaround, providing better input points, before I would start investing in this sector and possibly posting on more regular basis too.
Regarding RBY, this sad story is about finished. It was able to create a big impact affecting, as you mentioned, not just many retail investors; it affected quite credible companies, such as Royal Gold. Imho, it indicates one more time very challenging investment climate in this sector, where investors try to assess situations that may or may not arise only in few years ahead, relying on data that is often preliminary and incomplete in nature. It was difficult in better market times for this sector, as we are reminded by Minefinders story.
Good luck with your business.
I tried to post continuation to my message, but unfortunately, Yahoo doesn't allow it. It is mostly conclusions and they are mostly identical with this message, posted by Whompu1.
Some people do not have shame. It means Pio and Sewells. Probably, they were born this way.
Unfortunately, it caused other people to lose money on this stock.
I am sure that most of present RBY shareholders are familiar with this stock and message board history. It ran high in the midst of bull market. Many plain folks believed in the story and expected huge gains ahead, even sitting on very high, as it became clear later, price. Any cautious remarks or even moderately positive assessments were derisively dismissed and posters attacked in the most obnoxious ways.
Anyway, I feel obliged to remind few things. During bull market years RBY stock price achieved high levels based on assumptions that company has very sizable gold reserves. It was fueled partially by initial talk about geological potential (if I remember correctly the number was in 15-20 MOz range). Soon enough Canadian security regulator (BCSC) clamped on this strangely enormous number and forced company to return to more credible ways of reporting. However, the number went out and produced harm; many people swallowed the bait. It can be said here that message board pumpers made every effort to make sure that it is swallowed.
Also, the same faulty reporting resulted in very high gold grades (something in high teens) reported for RBY project. Again, pumpers supported the numbers and attacked anyone expressing doubts. The same tradition continued, when company moved closer to development. It started to transpire on that point that it decided to go without normal procedures, common to the industry, such as feasibility studies. In other words, company went to construction and later tried to go to production without making thorough plans how to do it, i.e. how to do actual mining. It was an enormous red flag and again pumpers made every effort to dismiss and suppress any cautious opinions in this regard.
Continued in next message.
Thanks for your answers. I have IPI on my target list, and don't have any particular knowledge about the industry. I apologize that some questions may not sound smart.
Is it correct that present weakness in potash pricing caused by Belaruskali dumping? If this assumption is right then could it explain that langbeinite pricing is a bit better than traditional potash? Also, I saw in some articles that overall potash demand is lower this year. What's the reason for that?
I didn't intend at all to make an advertisement for IPI. Actually, I wanted to hear your opinion, as I try some DD there, and nothing else.
I noticed "imminent danger order" too, but it seemed to me that the issue was addressed properly and doesn't affect production. Is this assumption incorrect?
My main concerns about IPI are small size of the company and US location making it difficult now, as I assumed in general currency terms, to compete with major Canadian producers, taking into account weak Canadian dollar. In this respect, I would like to ask you more specific question. Does POT try to increase production in Canada and sell more in US?
I noticed that you posted for many years on this industry and your messages indicate clearly that you do research and know lot of things about this place. May I ask your opinion on IPI stock? Thanks.
I don't think that present stock investment case relates to longs or shorts. I owned IPI in past and doing DD now; it looks to me that it is more an issue of company competitiveness vs. foreign potash producers. Strong dollar definitely puts IPI on defensive in this fight.
It seems to me that US dollar reached max versus Canadian currency and it, probably, creates some optimism. If strong USD didn't kill this stock yet, then hopefully it provides some ammo when Canadian dollar starts reclaiming ground. In any case, I would be interested to hear other investor opinions on this topic.