Update May 14, 2013.
Gold Melt Down stage 2 did not happen on Friday even with US Dollar popping up on Yen 100 line breakdown. After initial dive Gold has recovered very nicely in the second part of the day. Every hedge fund manager and their grandmother are Short Yen now. We will caution them that Apple style blood bath could be just around the corner.
Any thought about FED even just "considering the limiting of the Drug Supply" is totally unbearable for the Wall Street now, divergence between the Market and Real Economy is just frightening. So, we guess, that Mouth Open Committee will be preparing for the Operation Withdrawal like for the Second Coming. There will be a lot of talk, some faith and it will be going for a long, long time...
Meanwhile China will graciously accept all the Gold thrown in the market.
Action with McEwen Mining was quite interesting this week and, particularly, on Friday. Stock has refused to follow the Gold that day and stubbornly was climbing higher all day. Rob McEwen was making some of his magic on Thursday at the conference call after the Q1 update and McEwen Mining Shareholders meeting will be taken place next week. Chief Owner has promised release from one of the exploration program before it and Los Azules new resource estimate is due by the end of May. According to his facebook page, Rob was on the road last few weeks talking to numerous Investment Banks.
Talking about Los Azules Rob McEwen has confirmed the very important information about Rock Glaciers on the property. According to him there is No White Glaciers, there are some Rock Glaciers and they are not affected by the development of Los Azules and only one historical access road "has cut thought the corner" of one of the rock glaciers.
Deposit is growing in size, there is a new emerging potential Copper Trend and final drill results from the recently finished exploration program will be released with the new resource estimate by the end of May.
The final bids for Los Azules are expected by the end of Q2 and there were a few sites visits by potential buyers. Rob McEwen has downplayed the valuation for Los Azules sighting as the most comparable the valuation based on market price of Lumina Copper with Taca Taca Copper deposit in Salta. Normally, we would think that purchase of the 100% of the asset will command a certain premium to the beaten down market price. At the moment of writing Lumina Copper is trading at 325 million market cap, last September it was as high as 500 million. Argentina could be very unforgiven in case if you can not move fast. Plan about sale of Los Azules was announced right after the settlement with TNR Gold in November, but Mr Market was not feeling happy in mining after that day.
Rob McEwen was very cautious informing investors that: “I don't even know if $200 million is a number that can be achieved.” Shareholders listened very carefully, some complained that they are surprised by the very low price for such an asset, but stock price indicates that it could be a Catalyst for the future.
TNR Gold was brought to light with its Back-In Right to the Northern portion of Los Azules. Rob has confirmed that TNR Gold Back-In Right is at Feasibility and it will survive the sale of Los Azules: "They will deal with the new owner."
Here where it is getting interesting: McEwen Mining theoretically can try to buy out the TNR Gold Back-In Right now.
PI Financial Corp. Engaged as Financial Advisor for Sale of TNR Gold's Back-in Right to the Los Azules Copper Project, Argentina TNR.v, MUX
In this case McEwen Mining will have much stronger sale proposition of 100% of Los Azules to potential buyer without any strings attached, but we will not speculate about it - we will see. Next two months will be very interesting: new resource estimate in May will provide the new base for valuation of Los Azules and whatever will be the price for it will be known by the end of June.
Needless to say that there is no any point for Rob McEwen to talk up the Los Azules price before he has made up his mind with TNR Gold.
On another hand even 200 million in cash for Los Azules will be the game changer for McEwen Mining - company can move ahead with El Galo 2 right away or even acquire another company to bring back Rob's dream about S&P 500 by "The End of 2015."
We have now Three White Soldiers for MUX on the Weekly, which is Bullish. Mind the Gold Retest on Monday and Tuesday, which we have discussed above - but in all other cases Shareholder Meeting cheers can bring us, hopefully, another week up.
TNR Gold has now 1 mil shares of McEwen Mining and has engaged PI Financial for sale of Los Azules Back-In Right. Any bids for Los Azules will provide the pricing and benchmarking information for the valuation of TNR Gold's Back-In Right next two months. It will be very important for 7 million market cap junior.
We do not know whether BMO from McEwen Mining side and PI Financial from TNR Gold will be talking soon or maybe TNR Gold will chose another path with its Chinese connections. Kirill Klip involved with Canada Zinc Metals where Chinese giant Tongling Non-Ferrous holds 36% and he is the President on International Lithium with Ganfeng Lithium holding a strategic stake in that company. China is building up its relationships with Argentina and Chinese companies are on the mission the secure the strategic resources.
International Lithium Corp. Arranges Loan From Strategic Partner, Jiangxi Ganfeng Lithium Co. Ltd. ILC.v, TNR.v
We guess that the best strategy for TNR Gold could be to partner with the strong strategic partner to participate in further development of Los Azules and receive some down payment now to advance its Shotgun Gold project in Alaska. Company has released 43-101 resource estimate for Shotgun last month and founder of Nova Gold Greg Johnson has joined company board last fall.
TNR Gold insiders are accumulating according to the latest filings. Junior Miners market is still brutal and nobody knows the future, but McEwen Mining and TNR Gold are providing the interesting special situations and catalyst opportunities in the nearest future and we will continue to follow it closely.
Kip Keen from MineWeb reports:
McEwen Mining (NYSE: MUX) - produces 29,839 ounces gold, up 31 percent over a year ago, with operating cash costs around $885, up from $688 a year ago (San Jose gold mine only) over the same period a year ago. Production jumps with its El Gallo gold mine in Mexico now online. It reports $50.6 million cash, no debt.
To note: McEwen Mining reports no dividend from San Jose in Argentina (49 percent owned) with such proceeds covering debt and other purchases for mine expansion instead. McEwen Mining also mulls over financing options for its second phase El Gallo mine, which has an estimated $180 million capital cost.
Will it build? McEwen Mining says the preferred route to funding is the sale of its Los Azules copper-gold project in Argentina.
Author: Kip Keen
Posted: Thursday , 09 May 2013
HALIFAX, NS (MINEWEB) -
McEwen Mining (NYSE: MUX)president and CEO Rob McEwen addressed a range of issues in a quarterly conference call with shareholders and analysts from the state of gold stocks (not so bad since 1999, he said) to what he thought its Los Azules copper-gold project might fetch if it sells ($200 million).
Indeed, in a sector where majors are pulling back on mega-projects, McEwen figured that was the most McEwen Mining might get for Los Azules.
“I don't even know if $200 million is a number that can be achieved,” McEwen said.
McEwen drew his figure from a comparison of Los Azules to Lumina Copper's Taca Taca project. Los Azules is, roughly speaking, about two thirds the size of Taca Taca, which is also a large copper-gold porphyry project located in Argentina. So McEwen figured Los Azules could be worth about two thirds Lumina Copper's marketcap - the aforementioned $200 million mark.
Though forthcoming on price, McEwen was not willing to disclose how many confidentiality agreements had been signed since BMO started looking around for buyers for McEwen Mining. But he did say there were site visits and that he expected formal bids to come in June.
Still, he wasn't sowing high expectations for a sale in part given Los Azules' location. In recent years Argentina has, among other things, made it harder for foreign companies to bring in profits.
“Certainly the uncertainty around Argentina is a negative,” McEwen. “So you don't have a stampede running to your door saying they want to buy it now.”
The conference call was dominated by a question and answer period filled with inquiries and some long-winded statements from both private investors and analysts. There was a fair bit of conversation about gold stocks, and some wanted to know McEwen's take on the current state of the market.
McEwen described the current landscape for gold stocks as being the worst since 1999 - a real nadir - but sounded hopeful for a resurgent market by year's end. “I do think we're close to the bottom for gold and gold shares,” he said.
He trotted out an interesting statistic: a gold price phenomena he called the White House effect, which has been noted by some analysts in the past. With one exception, since 1984 gold shares have fallen in every US election year, McEwen said, as they did last year. The year that follows, however, gold shares have risen.
That would be this year, of course.
“If you use the AUX index they have risen between 10 and 80 percent in the years that have followed a presidential election in seven of eight periods,” McEwen said. “The one year they went down was during Bre-X and it pulled the whole sector down.”
In McEwen's estimation this year will not be the second exception since 1984.
“There's a high probability gold shares are going to be higher at the end of the year than the beginning of the year,” he said."
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