| | | What I have noted about silver is... very much like last year at this time... there seems to be something going around that means the silver miners output is unexpectedly down.
Fresnillo reports they have Covid issues, again... so production and the stock, both, have been hammered. Its trading around $8, now, which is back where they were in 2020. MAG cratered in sympathy... but put out PR saying that Fresnillo's problems don't effect them... which has to be a trick, given Fresnillo operates their mine for them... ?
A remarkable thing that so many producers are having difficulty producing, all of the sudden... ?
Perhaps they're just finding it not worth the bother with silver prices 50% below where they should be ?
PAAS, HL, CDE, AG, FSM... all up 5 to 6% today... Junior silver miners have been working on making bottoms since last week... and today seem to have fully accomplished the task...
I've been poking around in the discount bins looking for used miners... and in the scratch and dent section, I found AUNFF (+6.9%), GPL (+7.2% and +1.84% after hours) GATO (+1.82% / +3.57% ah) and FNLPF (-0.35%) MAG (+4.12% / -4.74% ah)
Only PGL and GATO have options traded... but PGL is only $0.21 so... maybe makes more sense to buy the time value of the permanent option...
Of those"used" miners:
AUNFF had a rock fall in their newly renovated mine... and are dithering in getting it going again... or, in fairness... are putting safety first, as they should. I don't have issues with them... but, they are telling you "wait for it"... ? The market didn't care, today...
GPL a similar issue with rock based reality... heavy rains in Brazil destabilized a wall in an open pit mine causing them to shift primary production to other holes nearby... but, also causing them to raise $20 million in the market (at $0.26/sh) and driving year ago ROE from +35% to today's -!6%. Looking, they put out news two hours ago... Great Panther Files NI 43-101 Technical Report for the Topia Mine... which news I haven't read yet... as all the Yahoo link says is "go to SEDAR to read the report"...
GATO is a complex story... and one I fear has not yet been fully or adequately told... but, they "just discovered" they have "a problem" with the prior reporting on resources. They say it is pointing toward a 50% reduction in what they said they had. It hasn't slowed production down, it seems... but, until they show they have resolved the liability and other business risks inherent in having "got it wrong"... I'll steer clear of it. Look at their PR for the last six to eight months... and the sequence is 1. they lawyered up (+ legal expert on board) 2. fired the CEO 3. hired new CEO from a company well known for "massaging" similar issues. 4. raised money in the market and paid down some debt. 5. "hey, look... the numbers don't add up"... Wait for it... to provide entertainment value.
FNLPF... seems unable to manage to get things working. And, that's odd... because it seems MAG has no problems... in spite of it being Fresnillo managing to get things to work... but only for MAG ? Hmmm.
Fresnillo shares plunge as COVID absences hit production
Some of that difference is clearly due to MAG being "carried"... while Fresnillo owns the debt for building the mine, and the responsibility for operating it... But, they do seem to bend over backwards to ensure MAG thrives... even at the expense of Fresnillo's own shareholders ? Maybe Fresnillo management... own MAG stock ? I don't see any news that would account for the hit on MAG stock in the after hours trade...
The point, in Fresnillo... is that they ARE levered up to fund mine development... but, in theory, when they get the mine going... should be lucrative enough to pay off the massive cost of developing it... rapidly... how rapidly depending on the price of silver... but, also, on "it happening". It was supposed to happen in 2020... but "Covid"... and, now, its 2022... and "Covid, again"... and it still hasn't ramped up production... while the banks still like being paid. So, the "way to play it" is made clearer... buy anything else... and make money... until they get their shit in one pile. Then, if / when they do... wait for silver prices to double... and suddenly the debt is made a non-issue... Pretty much the same routine as you apply in buying oil companies at the lows in the oil market... |
|
