Mark and Barbara...
Agree that ALTA is not very liquid (right now... but any stock could suddenly "wake up") and, in my view, this is a big negative for "big" short term investors. I am personally not phased with the PE... many gold mines are right now not profitable! Gold mines can have high PE's has one should take into account the gold they have in their properties... and ALTA has Olinghouse now online...
Weird price action: In the past, we have seen exactly that: ALTA is disappointing at the beginning of a strong move in the POG. It has taken, in the past, 2 or more days for ALTA to come in... In other words, investors will make their big money and profit in the large moves of the big majors or in juniors that are liquid.
ALTA is not dead! and a big move can be expected if POG continues it's up move.
ALTA continues to have strong points:
(a) although it has suffered a big retracement, it has only gone down to it's December 1997 and January 1998 lows! (1.25)... Look at most majors... they showed big time new lows in August... Including the XAU and Fidelity select funds (American Gold (FSAGX) and Precious Metaks (FDPMX)... therefore the other goldmines had a lot to catch up!
(b) Gold Stock Analyst (7/31/98 issue) continues to have ALTA in its favored group of "select" ten: In this group we have a mix of Junior, Spec, Growth, Senior mines... there are at this point: Canyon Resources, Crown Resources, Alta Gold, Greenstone Res, Ashanti, TVX Gold, Arizona Star (a proxy for BGO), Pan Am Silver.
(c) The Red Chip Review (July 15 issue) raised ALTA's ranking from a B to an A because Olinghouse is now online... It has a price target of $4 over 12 months, assuming a cash flow of $0.40 per shares in 1999 (due to marked increased in gold production and hopefully a slightly higher POG). Revenues in 1997 were $12,252,000... Estimated 1998 $21,547,000 and estimated 1999 $41,745,000. EPS 1997 was $0.03... 1998 estimate $ 0.04 and 1999 estimate $0.09 ...
ALTA has an hedging program that should allow selling at $335 / ounces through Jan 1999 while leaving plenty of upside if gold prices firm up. From Feb 1999 and for about 2 1/2 years, ALTA could sell its anticipated production at no less than $280.... By not selling its production forward, ALTA should be able to capture additional upside if gold prices rises (comments from the Red Chip Review).
Finally The Red Chip Review gives a price range for ALTA:
1998: $1.25-$3 1999 $3-5
I remain optimistic about this gold mine. We will see.
Regarding POG... if the $ continues to weakened... we are in business...
Good luck |
