Hi Kuppy, hope you are doing well! What’s the scoop on Ivanhoe/Rio Tinto ownership challenge by Mongolia government. They surely aren’t that stupid over there are they?
It makes for good politics to play with the owhership and tax structure. I don’t think anything significant will happen, but there will be lots of posturing leading up to the elections.
Is the Bertram acquisition at Energold an example of “the business obviously changing”, “an acquisition that doesn’t make sense” or “a change in how they approach the business” – with this acquisition are we set up for Capex being mostly maintenance and free Cash flow being mostly nil?
I’m not a big fan of the Bertram acquisition. It seems to dilute the ‘pure play’ nature of the greenfield exploration business. However, they got it for a pretty cheap price and it will smooth out the seasonality of the business. In the end, I simply trust Fred to do the right thing here. I don’t think the acquisition will do much to change the allocation of cap-ex and cash flow. I really expect to see cash flow ramp up significantly going forward.
Apex would have to be a great investment at these levels. What’s your opinion? What would happen to their SP if cash at bank suddenly jumped by $10 million? The article in Mining News in April by Brooke Showers seemed very positive. As you visited the mine last year, what is your view on their ability to increase production levels? $A gold price should stay high imo.
I think the share price is too low, and I think the company will eventually be profitable. At the same time, I’ve made a conscious decision to simply not own any more junior miners. I sold what I bought a few months ago at roughly the same price over the past few weeks and am done with juniors. They’re just too hard. I own AAG CN, IPT CN and some scraps of other stuff that friends of mine manage. Otherwise, I’m simply done with miners. Going forward, you’re on your own with AXM.
You have mentioned in the past that you occasionally park money in gold mining stocks. Would you mind sharing a few names (I am particularly interested in any that you wouldn’t mind holding for along period of time)
I’m currently out of all my large cap miners. They’re really trades for me and not businesses that I want to own except when they’re oversold. I have owned a lot of RGLD, AUY, NEM, GG and a few others over the past few years. Basically, I just use the list from Gold Stock Analyst.
How do you compare the risk/reward potentials of EGD as of now and GROW in early 2005? Do you see GROW at current price of $7 as attractive as in early 2005?
GROW currently is not as attractive as in 2005 because in 2005, they were growing their AUM at like 20-30% a month from inflows and performance. AUM has been flat at GROW for ages now. It’s a good spec, but in 2005, it was a sure thing because you could plot out huge earnings growth that the market simply missed.
I think EGD is very much similar to GROW in early 2005 because the balance sheet is so strong and cash flows are about to really ramp up. Even now, valuation is silly cheap with no growth. The market simply does not understand how much earnings growth is possible here. My EGD position now is actually larger as a % of my fund than my GROW position was when I stopped adding to it.
Is it correct to etrapolate from your EGD investment that you worry about/hope for Inflation – maybe even the hyper-kind. If so what do you tell yourself in order to keep calm when you look at your cash balance (did you say before that its a large cash balance).
I would never hope for hyperinflation. It would destroy society. I have large cash balances because I cannot find smart things to do with the cash. I’ll find stuff eventually. I’m not worried. Good market crashes, like we are having now, create oportunities.
Kuppy- I read the alfredlittle report accusing fraud at SVM. Gathering rocks that fall off dump trucks seems like weak analysis to me? No debt and $200 million + cash…easy enough to verify those balances. I own a few shares of SVM and was curious if you think this is a fraud mining company as the allegations suggest? Thanks for the thankless time you spend on this site. It’s a great education and enjoyable to follow your adventures too!
You couldn’t pay me enough to own a Chinese company–even if you let me use your money. I know nothing about the company, but stand by my original thesis from 2005 when Chinese companies began to proliferate on the Western exchanges, “You can learn more about the average Chinese company by reading a fortune cookie.”
Kuppy, silver wheaton seems to have a strong business model and has contracts to buy silver at $4 with spot at 40 and no mining risk. Do you have an opinion of SLW and silver market? Sprott is obviously talking his book but he has been right for 11 yrs now and says silver and gold will both do well but silver will be the better investment this decade and given that 2m oz/day is produced and 80m oz per day is traded, it will only take a small amount is deliveries to drive the price up dramatically. thanks
I’m not a big fan of silver at current prices as I feel that there’s a big glut of production coming and it trades at roughly twice the cost of production. SLW is a better model than standard silver as you get a return on capital function, but you need to figure out if this is the right valuation for you…
Hi Kuppy, I know you read quite a bit, and I was wondering if you’ve had a chance to check out “There’s Always Something To Do.” It’s a book about Peter Cundill’s investment philosophy, and there are quite a few good points in it.
The books mentions that every November Peter would travel to the country whose stock market had performed the worst in the previous year, and search for bargains.
It seems like there are a few countries which will have some bargains available, especially considering what’s happening in Europe. Once the Euro goes the way of the dodo, there should be opportunities galore, especially considering that the exchange rates will likely be quite favourable. I know you are 99% focused on Mongolia, but any thoughts on the merits of the idea?
The idea seems brilliant. I’d recommend that everyone trys to figure out what’s down the most and the cheapest. I’m just focused on Mongolia because the assets here seem to be cheaper than the other beat down assets and even more importantly, they’re growing at amazingly rapid rates.It’s the best of both worlds…