In the absence of buyers during the summer doldrums, combined with today's 343 point drop on the TSX and gold indices off 3%, it wasn't that difficult for some CMM sellers to knock us all the way down to 41 cents today. There were three sellers of 200k shares each, including Canaccord who seem to have a never-ending supply.
When you consider the current gold price and everything that Century has going for it, it truly is amazing that the share price is in the low 40's.
Tomorrow is the last day of the quarter. In Q2 of 2009 San Juan produced 4,290 ounces of gold that was sold for an average of $926/oz. That resulted in an operating profit of over $2 million. In Q2 of 2010 Gold has closed above $1,200/oz more days than it has closed below $1,200 so the average selling price should be close to $1,200 and we should be somewhere around 5,000 ounces produced. That would produce revenues of $6 million for the quarter - 50% higher than a year ago.
Lamaque should now be making a profit. Prior to Sigma-Lamaque shutting down in 2008 we were told that the break even point was approximately 700 tonnes/day and that was when gold was selling for around $900/oz. Based on reports posted here we appear to have exceeded the required 700 tpd and the gold price is a lot higher. Of course the earnings won't appear on the balance sheet until Century declares commercial production, but there should still be positive cash flow from operations.
Yet sellers are willing to part with their shares for 41 cents each. Where is the long term risk in holding or buying shares at these prices? San Juan is a proven operation that can sustain a 41 cent share price by itself and if Lamaque is processing over 700 tpd, then we are on track to meet current forecasts.
I believe gold is going much higher than current prices. The attempts by the bullion banks to suppress the price are becoming a lot more difficult as evidenced by the price action last week and again this week so far.
Here is today's trading summary:
7 comments:
It's a shame we can't put up the buy and sell cartoon from the economist!
I suppose that the people selling aren't looking at the fundamentals, but there's probably no point trying to figure their motives, just take advantage.
I remember buying Randgold years ago, then it dropped 50%, so I bought more. With CMM I took a small initial position, it dropped about 30%, so I loaded up. I'll be aiming to buy more in the next month. It strikes me that the risks are pretty much known, but the value isn't being recognised.
Hi Carib,
Thanks for the trading info and your thoughts. You make a lot of good points.
Poster ``ilikegoldstocks`` posted a CMM update on Stockhouse today. I thought I would post part of that post on the blog. I`m doing so because it appears to be consistent with independent vibes I`ve gotten over the past couple of weeks. I think it`s also consistent with some of the vibes that the likes of ``justwondering`` have been sharing on the blog.
I wouldn`t be surprised if the recent Lamaque tour includes at least one or two of our 3 public supporters (our public supporters being V. Goncalves, C. Ecclestone and the VP from Hampton Securities). I wouldn`t be surprised if Mr. Goncalves was one of them. He would need to get an update for his newsletter. After all, Century is his top pick. Newsletter writers do not continue with a top pick without performing the research. Let`s hope he likes what he saw. If so then maybe he will spread the word about the start up progress at Lamaque - not just in his newsletter but maybe the next time he gets interviewed.
I also wanted to comment on the upcoming analyst tour. (One could never know for sure and things can easily change prior to the tour, but) everything I have heard would suggest 10 to 12 (or more) analysts are booked for the tour (most likely 12).
It would be nice if we get at least 2 analysts to initiate coverage on Century in the near future. I imagine some analysts might use this visit to gather info while taking a wait and see approach for a quarter or two until production numbers are further ramped up (the earliest they will see Lamaque financials is April`11, Q1, if commercial production is declared early enough in Q1`11, or possibly August`11, Q2, if commercial production is declared at the end of Q1 or early enough in Q2). Of the possible 12 analysts to visit, it would be nice if we eventually get coverage from 6 (2 near-future and 4 in about 3 to 6 months from now, as we get into long-hole stoping and as North Wall comes online).
It would also help if Century is able to realize some success with the institutional road show. It`s unfortunate we don`t have our new Chairman. My vision was that we would have a new Chairman (with heavy connections with institutions) in place by now and the new Chairman would be the face of Century for our institutional road show. In the January conference call I believe Scola mentioned he would make himself available for these types of tours. Let`s hope he is able to attend when they visit the institutions.
Here is part of the Stockhouse post from ``ilikegoldstocks``:
``He also said he just got back from a site "tour" visit of Lamaqe and he toured the underground and mill with a couple guests and all looked great.``
``i asked him about the lowprofile stuff and he said productivity has sure increased as they figure out how to use this new equipment as it hasnt been used much in north america?....which is a good sign...he said the tour is on the 8th and the plane is getting full...so also a good sign...and something about an instituional roadshow in the middle of july...so sounds busy...which is good to hear``
I talked to Peter today.
Said that the headgrade is coming in at 3-5 grams per tonne and in some cases 4-7 g/tonne.
The low profile equipment is turning out to be much more efficient .. less time and less muck. As the operators learn how to use the new equipment things will only improve.
V Goncalves did a site tour recently and will be on BNN on Friday .. again says he will have CMM as his top pick.
Bedard dyke portal was delayed because the regulators wanted more stabilization than originally planned. This has now been completed and mining of Bedard has now commenced .. " picks will be posted on the web shortly"
There was a stope at the entrance of the Bedard grading 25-35 grams/tonne !
Peter went into detail about mining of various stopes. The head grade is coming in as expected which is very encouraging .. some better than expected and extending further than is given in the reserve (extra tonnage .. in one case 9000 tonnes extra as the stope went 50 meters further than predicted)
More of the new low profile equipment is due to arrive in Q3 .. further advancing the path towards increasing tonnage.
That is much of what I can remember from the call .. we talked for a good 15 minutes.
Production numbers will be given in the July report coming out next week .. prior to the July 8 site visit.
From Pete's comments .. things are going much better than I had anticipated. Especially in regards to the ore grade getting to the mill .. conservatively 4 g/tonne
Mike
Mike, thank you kindly for the update. It was an excellent summary. You touched on many of the key items.
Also, your update is very consistent with the story a number of blog contributors have collectively painted over the last few days.
I thank all of the contributors.
I also appreciate the update and the work on this WS. As the stock price lags, I continue to add. . . I must admit, I never expected to have such a huge percentage in my portfolio all in CMM, but I just don't see any other play that is so mis-valued. Once the story gets out, I don't see how we don't recover and then continue on to our original minimal target of 1.50 and on.
Real_Economics
Glad to have something to read coming in off the road. I discovered that this is a great time of year to be a Yankee, New England being about perfect this time of year! Thank you, gentlemen, for some good reading. Just sorry that I missed that buy at .39 the other day!
Looks like time to load the scoops, fellas.
your views on this topic are really interesting and give a clear cut view. Thanks for sharing the knowledge
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