CMM
posts from SH:
I dumped some CMM yesterday after listening to the CC ---> VERY DISAPPOINTING!
It sure sounds like Peggy wings these Calls with little preparation or thought. First she said in her opening comments that she would have Ross talk later about the schedule for the 43-101 Reports but when she got done, she went straight to the Q&A session. Why wasn't Brent steering her in the right direction? Thank goodness someone asked a question about it or we would still be relying on individual contacts for information.
IMHO Margaret Kent mouths the words that she is aligned with shareholders, but she just does not get it! She cares little about the interest of the "average" retail holder. The information they provide is useless. They have not effectively managed their projects and developed the mines. CMM appears to be afraid to answer shareholder questions or get into the tough issues.
Rosario was purchased with out defined resources. CMM has no idea how many ounces are there nor what its mineable potential is. There are no feasibility studies and no production studies. It was touted at EXTREMELY low grade of 0.9 gpt but so far has reported 0.4 to 0.6 gpt material. After all, if CMM can't make an open pit work at 1.8 gpt in Quebec, how are they going to make a 0.4 gpt mine work in Peru?
I expect Rosario to fall behind its ramp up schedule and have a schedule more akin to that of San Juan, which took 18 months to get moving. I would not expect any wonderful profits from Rosario until 2009 at the earliest.
Then there is the issue of once again "over promise, under deliver!" On the last CC, CMM clearly stated that they would be running San Juan at 350 tpd by the end of the year. Now it looks like that is pushed back to 250 tpd, which may be dependent on the development of a couple of new veins. That 750 tpd rate that was suppose to be achieved by the end of 1Q2008 (per previous CC) is now on "hold" until they can raise cash. The Full 750 tpd rate isn't going to be achieved until "mid to late summer." Translation from CMM speak: by the end of 2008.
Then take a look at Lamaque! CMM has a ramp up problem because it needs underground miners! But apparently the union rules allowed unqualified open pit miners to bump experienced and active underground miners out of their jobs! That has to be the stupidest thing I have ever heard of! Why would CMM layoff experienced and qualified underground miners in favor guys that need training? Why didn't they keep the experienced people as well as those with bumping rights? Sounds like CMM could have had more bodies in the mine except for an HR snafu!
Then the Mill at Lamaque is being run like San Gold's operation - 1 to 2 days per week! That kind of intermittent operations is a desperate move and has to increase the cost per ounce by a bunch! After all the union boys get paid for their work week even though they might only work 1 or 2 days!
But achieving the designed production of 1,800 tpd is contingent on SURPRISE SURPRISE, getting environmental permits! LOL! How long has CMM had plans to ramp up Lamaque u/g? And we are back to being constricted in production by PERMITS!? Then I find it amusing that CMM is going to try to claim the the Pit is closed, but yet it isn't closed, all as a "technique" to avoid having to spend money on reclamation! If they loose that argument, who knows what the cash costs will be to perform environmental restoration to the Pit? I'll be surprised if CMM gets it together and is profitable from the pit until 4Q2008 or 1Q2009.
Look for more PPs, flow through offerings and other dilutive financings as CMM struggles to have the cash it needs to build out its projects during 2008. It needs cash for Lamaque Mine studies, rehabilitation and possibly Sigma Pit restoration. It needs cash to ramp up San Juan and do exploratory drilling on the property. It needs cash to do engineering studies, define the resources and plan operations at Rosario
I feel sorry for SUE shareholders. Their management appears to be so focused on lawsuits that they got themselves painted into a corner where the only solution is to do a deal with Peggy Kent and this band of marauders. Geez.
12-3
stockhouse.ca
=================================================
I dumped some CMM yesterday after listening to the CC ---> VERY DISAPPOINTING!
I guess you bought back too soon. Was that the 1,200 shares sold by TD or the 6,000 shares sold by ETrade, because those were the only shares sold yesterday after the CC.
I guess we can look forward now to a steady diet of slanted and distorted negative posts for the next 30 days although there is enough negative material available without the exaggerations and distortions.
Re Rosario, I suspect that the purchase of Rosario was part of the whole Shahuindo deal. When the deal was announced CMM estimated that it had 18 million tonnes grading 0.9 g/tonne or 500,000 oz, which could be processed for a cash cost of $250 - $300 per ounce. Since CMM only started operations with a new mining contractor a few weeks ago, they don't really know what they have yet. If we assume a worst case scenario that there are only 250,000 recoverable oz that will cost $500/oz, that will still generate $75 million in cash flow. The $20.5 million purchase price includes a new 5,000 tpd mill and the potential to increase the resource base as the deposit is open along strike.
Currently the contractor is working 1 shift per day at a production rate of 3,000 tpd. At a grade of 0.5 g/tonne and a recovery rate of 50%, this is equivalent to 2,170 oz/qtr. The short term goal is to increase production to 5,000 tpd which will increase annual production to less than 15,000 oz/yr. At 5,000 tpd they will need to process higher grades than 0.5 g/tonne and/or improve the recovery rate in order to reach 25,000 oz/yr. I wouldn't expect much more than 10,000 - 12,000 oz in 2008.
After all, if CMM can't make an open pit work at 1.8 gpt in Quebec, how are they going to make a 0.4 gpt mine work in Peru?
The open pit in Quebec is grading at 1.2 g/tonne not 1.8. You know from listening to the CC that comparing the ground conditions on the Abitibi belt to Peru is like comparing apples to oranges as the ground conditions are much tougher in Quebec and the Sigma pit has high strip ratios and much higher labour costs.
Then take a look at Lamaque! CMM has a ramp up problem because it needs underground miners!
Where do you come up with this stuff? CMM currently has more underground miners than planned. What PK was saying is that when bringing back laid-off miners from the open pit there are situations where those with more seniority (because of union regulations)get preference over more junior miners even if the junior miner has underground experience.
The short term restriction on ramp-up of Lamaque beyond 400 tpd is the permits. In an August 16 news release we were told that the application for permits was submitted in July and expected in October. If granted in January then they won't be a factor, but CMM is forecasting 400 tpd for Q12008 because that is their limit without additional permits. The current corporate presentation forecasts 450 tpd for Q1.
The current CMM forecast is 90,000 - 120,000 oz for 2008. My own estimate is 80,000 oz based on the following:
Lamaque starting 2008 at 350 tpd ramping up to 1,200 tpd by the start of Q42008 and producing 43,500 oz in 2008.
San Juan starting 2008 at 250 tpd and not getting to 650 tpd until the end of 2008. Production = 25,000 oz.
Rosario starting 2008 at 3,000 tpd at a grade of 0.5 g/tonne and 50% recovery, increasing to 5,000 tpd by Q32008. Production = 11,500 oz.
Total production = 80,000 at an avg. cash cost of $475/oz.
Cash Flow at $800 gold = $26,000 million. The current cash flow multiple based on my 2008 forecast is < 2.
If the SUE takeover is completed, the company's value will more likely be based on its assets rather than cash flows based on CMM's unreliable forecasts. The value of the Shahuindo property is multiples of the current CMM market cap.
stockhouse.ca;
In the previous post I said:
"Cash Flow at $800 gold = $26,000 million. The current cash flow multiple based on my 2008 forecast is < 2"
Of course it should have been:
Cash Flow at $800 gold = $26 million. The current cash flow multiple based on my 2008 forecast is < 2
stockhouse.ca;
posts from joker
=================================================
engineering studies - are well-documented.
Oh please! There are NO engineering studies for Rosario! NONE! How can they be well documented?
That is the point. CMM bought a project that is a "seat of the pants" development project that apparently lacked the normal planning proceedures. CMM has never publically stated it but it sure looks like she got horn-swaggled into that deal as a teaser for Sahuindo. What does that bring the real cost of Shahuindo up to?
So now we are "hoping" the drills can turn up more ore. We are "hoping" the operation at 50% recovery can turn a profit. We are hoping we can use a contractors to mine while we get organized? Where does the cash come from for the last $3.25 MM payment? Then what about the final Balloon payment?
We know how PK conducts her CC's. What were you expecting to hear her say?
Sorry, I guess the lights just came on. It seems like I learn more about this company from reading speculation on a BB than from the company directly. Great trading vehicle if you are a well connected insider. But as far as even-handed disclosure?
No matter what shareholders say, how hard they complain or how low the stock price goes Peggy will keep doing what she is doing. I now see why there were so many, early on, bashing Peggy and CMM. It was all there, at times I discounted the snafus as just growing pains or problems the industry is facing.
Now it seems readily apparent to me that this team could not sell a glass of water to a parched man in the desert.
I seriously doubt that there is substance here. So what if CMM gets the Shahuindo property? If one applies the past performance to a future scenario, it will take CMM until 2012 to get to commercial operations. Shoot CMM is still having equipment sourcing issues at San Juan! What happens when it needs to buy mill equipment for a 100,000 opy plant? Are they going to get in line and wait 3 years for new equipment? Are they going to try to cobble together some junk from an operation that has been closed for 10-years?
The time to sell CMM was a month ago and start buying the tax loss shares 30 days later.
LOL! Perfect 20-20 hind sight! One size fits all? Why would I have to wait 30-days? Perhaps your scenario is too narrowly focused?
post from dec03
stockhouse.ca;
==============================================
I think this is sounding very pessimistic, isn't it?
Perhaps, but you learn to be pessimistic after being disappointed because of past missed forecasts. Besides I think it is more realistic than pessimistic.
In my model, I'm using average cash costs of $350 for San Juan, $369 for Rosario and $575 for Lamaque. I have $900/oz for Lamaque in Q1, falling to $400/oz in Q4.
In 2009 I'm estimating 131,000 oz at an average cash cost of $395, based on 82,000 oz from Lamaque, 35,000 oz from San Juan and 14,000 oz from Rosario.
These numbers assume a maximum of 1,500 tpd from Lamaque, 650 tpd from San Juan and 5,000 tpd from Rosario.
Cash Flow in 2009 with these "realistic" estimates would be approximately the same as our current market cap.
post from joker
stockhouse.ca;
==============================================
KEYWORD:
CRACKER_CMM
|
