Elizabeth:
Larry Abraham writes a newsletter called the Insider Report.
He has been around for quite a while, and his focus is on political
changes which affect the markets. He also recommends specific
stocks which he considers undervalued. In some cases, he
is of course financially rewarded for the recommendation. Madison
has been recommended by several groups, and as you notice, has
received relatively little notice from SI members.
I personally would not short the stock at these levels, as they
will be soon coming out with a new resource calculation. If you
look at a chart, just last year the stock traded over C$7
with less information about their resource than they will be coming
out with. They believe that they have several (2-4++?) million
ounces of gold. In fact they suspect that ultimately, Mt.
Kare could have a larger resource than Placer's adjacent Porgera.
However, even if the resource amounts to 3 million ounces, at
$25 per ounce, this puts market value at about $75 million U.S.
With about 17 million shares outstanding, the current market cap
is about $24 million U.S. In short, no pun intended, I would
consider the stock fully valued at about triple current levels.
Certainly, there could be a brief sell-off on the news, and the fact
that gold continues to languish spooks resource investors into
selling a stock that has moved up substantially. I think that 1999
could be a better year for resources in general. We'll see.
Regards
Dan |
