I've been asked similar questions by a few people over the past 24 hours so I have decided to post this personal reply I sent to Rob yesterday re:
I have read the postings on the stock chat.
Several months ago, I purchased shares when the stock price was higher
but, as time proved, on the down. At the time $2.65 was the lowest that it had been in 52 weeks according to my information and I thought it would not go lower. I have now (on paper) lost more than half of my
investment.
I am a new entry into stock investing but it seems to me that when YRI
had financing the stock price rose when discoveries were made. When this financing was not renewed, I believe mixed messages were sent causing a loss of confidence regardless of the findings.
I also believe that once recognized industry financiers come on board,
and spring comes in November to continue exploration, the stock will
rise again.
I do not intend to sell my shares, but may purchase more depending on
price, after spring arrives. The information indicates to me this is an undervalued stock.
Your comments would be appreciated.
Thanks
Rob
Rob:
Concerning your comment: "... when Yamana had financing the stock price rose when discoveries were made. When this financing was not renewed, I believe mixed messages were sent causing a loss of confidence,regardless of the findings. "
I assume that you are speaking about our earn-in JV partners, Rio Algom and Westmin, which financed last season's explorations in Argentina at Santa Cruz, Vanguardia and Fin del Mundo. It is quite true that having a JV or an earn-in partner on a project helps because a) we are spending their money and not our own; and b) their presence offers some apparently independent confirmation of the prospectivity of the particular project. Therefore, when they withdraw, it does seem to send a negative message. However, it's also worth noting the reasons they withdrew which, in both cases, were corporate and NOT geologic.
To oversimplify only a bit: Rio Algom, which had a new president, decided that the company was not interested in gold. Despite the fact that all of the senior (and junior) geologists and other technical people involved in the project argued for staying with it, it was decided in Toronto that the results we had gained in the field didn't matter. Westmin, on the other hand, had just become involved with a huge new copper project in Chile which would take up a huge portion of their resources and about which The Street and their investors had expressed serious concern (a project based on a grade of 0.31 % copper when roughly 0.4 to 0.5% are considered the bottom end of the economic grade scale); they are already running a major production / mine in BC and they are deeply involved with a huge exploration project in the north known as Wolverine. In the midst of all of this, the man who ran the project (Westmin was operator) last year was moving back to run their North American operations, thus putting a further strain on their manpower. As the head of exploration said to me: "This was a business decision, not a geological one."
About these decisions, we can do nothing. About the mixed messages, there is only a bit more we can do... which is what I have been working on.
I will be announcing shortly the start of drilling on a couple of South American projects and that may just remind the market we are alive and reasonably well. Meanwhile, we are still in discussion with several different companies (more than a dozen) concerning several of our projects. As I've said before, this part of the process is slow so I don't expect anything dramatic, in terms of a JV announcement, for a couple of months... although it is possible something could happen sooner. At this point, the most serious discussions regard Santa Cruz, Argentina, the Northern Porphyry Copper Belt, Chile, Fin del Mundo, Argentina, Tierra del Fuego, Chile and, (although time is running out there before we start drilling on our own, without a partner) Paraguay.
As to issue of Yamana's valuation, let me make a couple of observations / comparisons:
If you were to select a fair group of exploration companies (ie. like ourselves, not producers) with projects in Chile, Argentia, Indonesia, and PNG, calculate their average market caps and add them together so that you get an "average" company, like Yamana, with projects in all of these countries (adding a minimal amount for Paraguay but nothing for Washington), Yamana's share price would be about Cdn$4.00, rather than one-third of that. (The comapnies I'm referring to for these purposes are: Argentina Gold, Indochina Goldfields, Pacific Rim, Indo-Pacific, Scorpion Mines, International Pursuit, New Guinea Gold, IMA Resources, Sonoma, Mansfield, Indomin, Spire and South Pacific. The calculation was done on August 14, the day before our AGM in Toronto. It will have changed some, but not much.)
Also, with US$11 million in the bank, 40 % of our share price is supported by cash, giving the full value of all of our projects at (a paudry) US$16 million.
That's the market's value of more than 100 properties, 13 projects, in six countries. It includes (or rather, 'excludes') significant precious metals intercepts on several properties, repeated anomalous geochemical and geophysical results indicating high gold, silver, copper, zinc and other base metal values on several more properties, and, not incidentally, a 15% share (today -- going to 30% by year-end) of a 521,000 oz. gold resource -- and all of the multi-million ounce potential surrounding it. and property etc. etc. etc.
I hope this helps.
Greg
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