4 stocks that production05 owns ....
Actually, KevinKT was correct as my 4 long term holdings are CMM, HRG, GGG and YRI. I generally do not discuss my other investments unless the topic comes up or I am asked questions, as I like to be respectful of investors on which ever board I am posting on. However, since the topic came up, here are some thoughts.
CMM - Peggy and team have been amazing for many of us thus far, in regards to creating shareholder value. For those who are looking for a good entry point, I would recommend looking at the fundamentals prior to making your decision. You will find that the stock still has a long way to go prior to reaching current fair value, never mind all of the value added growth that is continually being injected into the system. My long term target price is $7-$10 (conservative – maybe $12-$15 if we can get the share price up near term prior to making any serious acquisitions). To Tanoose’s point, based on the infrastructure that Peggy has put in place, 1,000,000 ounces of annual production may not be too far away. Actually, the analysis is telling us that there is a decent chance of getting to $7-$10 by end of 2007 as our production level grows to 248,000 (100K Sigma, 100K Lamaque, 48K San Juan, Colina Dorada???). Of course nothing is guaranteed in life. And there is also that gold price thingy to think about. However, CMM is still probably as good as it gets.
HRG – this was the other company I found at the same time as CMM. I really like their management team also. They have a clearly defined strategy and they have demonstrated very good execution. They are currently the dominant player in Burkina Faso and the #5 producer in Russia (expected to be #2 within 5 years). They have a 70% institutional investment base. They have been in Russia for many years and are well connected within the country. The EBRD (prominent European investment bank) has significant ownership in HRG which goes a long way in mitigating political risks in that region of the world. They currently have 2 mines and 2 new mines going into production in early 2007. They will have a production run rate of greater than 300K once the new mines are in production next year. Management believes strongly in the upward movement of the gold price. Production start up of the 2 new mines were originally scheduled for mid 2006 but were delayed primarily due to management refusing to hedge their production. As such, they still remain 100% unhedged. I was very pleased with the firmness of management on this issue. It’s good when management decides one way or the other and sticks to their principals. In regards to near term, the current excitement is with their Bissa exploration property. An independent resource estimate will be issued within the next 18 days that will officially declare a 1M ounce deposit for the Bissa location. The share price is expected to get a little bump (if not a big bump) once the independent calculation is released. There are 5 other promising gold target areas that are within 10 to 15 km’s of the Bissa project that offer the potential to host a similar size resource. As such, the property has the potential to host multi-million ounce deposits (perhaps total 6M +) and develop into a significant gold mining district. Also, HRG has a number of strategic alliances with junior exploration companies, where HRG has 19% ownership and maintains back in rights for any discoveries. HRG has a production target of 500K ounces which they should be able to achieve in a few years by bringing the Bissa property into production. HRG has a lot more shares outstanding than CMM, but HRG is still a great company. My target price for HRG is $7.
GGG – this has been my worst performing stock by far, with only a 38% gain (in the middle of a gold bull market). However, I am still pleased with 38% given that the stock hasn’t taken off as yet. It often feels as if I am the only supporter of the company but I’ve done my homework all along and the numbers keep coming out positive. Understandably, many people have bailed on the company (or so it seems), but the reality is that I’ve never really expected the share price to significantly move until Q1 financials (mid May) unless some major event occurs before then.
The bottom line is that the share price was held back due to 5 core issues. Three of the issues have been addressed (including cash flow/profitability) and management is in the process addressing the other 2 issues.
stockhouse.com
GGG is now in a new world as they are now generating $7M in quarterly cash flow (s/b about $5-$6M in Q1 based on my calculations). The market will get the news around mid May. Also, GGG will get $46M in cash once the warrants are eventually in the money. The $46M plus the $7M (cf) each quarter will allow them to do some extra things. I have worked out their production ounces for Q1 to be 21,000 - 23,000 (most likely 23K). Production results could come out as early as this week which may jolt the share price as this is all new to the market. The Q1 production is pretty much double what the market has seen from the company before.
stockhouse.com
Their balance sheet is in excellent shape.
stockhouse.com
My target price for GGG is $2.5-$3 (potentially higher depending on developments).
YRI – that is a good point, YRI is no longer a junior.
My short term target price is $17 and my long term target is $25. I expect the $17 to be achieved at some point later this year.
The plan is to sell at that point, but only if I am able to find other quality investments. The plan is to reinvest my RNC/YRI funds into at least 4 different quality junior companies.
However, as we all know there are not many reasonable priced quality junior companies remaining to be found.
Most companies are over priced relative to what they have. CMM was a once in a lifetime find. I am currently tracking a few other companies but nothing I am overly impressed with thus far. If I am unable to find new companies that knock me off my feet then I will leave my investment with YRI for the next couple of years until it reaches $25. It will get closer to the $25 mark as production gets closer to 1M ounces per year and the new cash costs take effect.
YRI is targeted to achieve cash costs of $150 in 2007 and $125 in 2008, mainly due to copper by-product revenues that are used to offset gold production costs.
Again, nothing is guaranteed in life, but you do the best you can. My approach is that I haven’t made one single penny on these investments as yet - not until I eventually sell. As such, I like to continually stay on top of everything and never take anything for granted.
Good luck with your investments,
Production05
stockhouse.ca
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Investment Portfolio
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AZK / MNG /
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Cracker Jack Box Portfolio
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CMNZF.PK/CMM.V (producing)
PRZFF.PK/PRZ.V (production starts Summer 07)
BDRGF.PK/BGL.V (prodtion starts unknown 2010?)
RDFVF.PK/RDV.TO (not producing)
Sold - MUGRF.PK/MUG.V (prodtion starts unknown 2009?)
Sold - PLLGF.PK (will start to drill - Peru - near CMM)
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Watch List of future production stocks
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CUSIF.OB 0.34 (producing in 2006)
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Nevsun Resources Ltd. (NSU)
NSU.V (Soon to production 100,000 oz)
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NORTHERN STAR MINING CORP
NSM.V (producing 2007 80,000 oz)
Message 22301237
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SAN GOLD RESOURCES CORP (SGR.V)
SGR.V (producing in 2007?)
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