OYM

http://minesite.com/news/olympus-pacific-remains-on-track-to-deliver-annual-production-of-200-000-ounces-of-gold-by-2014

Its market cap is AUD$46 million. 200,000 oz of gold at USD$1700 per oz generates USD$340 million per year before cost. The Vietnamese government looks worse than the Australian one with taxes after taxes after taxes imposed on the mining companies. Argentina is also becoming a robber too. These governments are thieves because the rules change AFTER you have found the minerals.

How to buy shares

There were often times when I could say these are the shares to buy... and expect the prices eventually to go up.

Not at the moment. The fundamentals, the logic and the financial news have no bearing on the short term movements of most stocks. Hence, I don't know how to evaluate the short term prospect of a stock. What I buy now are mostly based on long term value and long term prospects. But they may go down during the short term. Because of so much uncertainty and so much whimsical behavior by fund managers, I don't even want to touch too many shares. Selling is even more difficult.

Many gold stocks when it was below USD$1600 per oz but rising towards USD$1900 per oz, are now lower in price when POG is over USD$1700 per oz. POG has found a floor at just above USD$1600 per oz.

GRY

What is going on? GRY made a great announcement... and the share price went down by 0.5c. This is pure madness! I was busy at work. But I have depleted my cash because of GOR's SPP. The market share price is 36c against 32c per share for the SPP. So I applied for maximum with the intention of selling them... but I usually don't!

Many of drilling results for GRY are from infill drilling. But the new area is spectacular. Why it is sold down, I have no idea. Best to ask the idiots who sold. Not only have I depleted my cash but I was too busy at work to follow the market today.

Dead cat bounce

Banks take a cut and EU governments bail out Greece. Or rather lazy Greeks. And the markets around the world zoom up. What is the rational? And AUD rocketed up because lazy Greeks do not have to work harder to pay their nation's debt. Nice! And not nice because a high AUD is terrible for our economy.

Of course, our market will rise too especially with commodities jumping up but the higher AUD dampens the higher prices.

There is Italy lurking in the background. So this is still a dead cat bounce. Buy only what is valuable which has been sold down and likely to make lots of profit. Gold (producers)! Gold (producers)! Gold (producers)!

Alpha

Today, it is a lack of alpha. When good financial news first comes through, my portfolio lags because I have a larger portion of small caps and the All Ords refer to the top 200 companies. However, days later when the commodities start to rise, that is when I collect my alphas.

KMC

KMC is worth under $24 million. It has a resource of over 300,000 oz of Au, worth over $500 million at today's POG before cost, and the company is expecting to uncover more gold. After cost, that amount of gold will generate around $300 million. In 2012, it will be processing its own ore.

Meanwhile, NZO's chief was lamenting that the market is undervaluing its share because it is worth $480 million and the market cap is only around $245 million. Because it is a NZ company, these figures are in NZ$.

He should sell his shares and put every single cent in KMC which generated AUD$6 in revenue in under 3 months. There is undervaluing and real undervaluing.

POG and AUD

POG is up again and AUD is down against the USD. Yet gold stocks didn't shine today. But if you have been reading the papers, this guy Evy Hambro who controls billions of dollars... he follows my line of thinking. He gets paid millions and has a huge throng of underlings to do his research work and run the company for him. I get nothing.

This is how I think and it isn't original. History repeats itself but few people learn from history. When gold went berserk many moons ago, the price of gold stocks in Johannesburg remained low. Only when profits were announced, then only the market noticed. Why wait for that?

Evy said that these gold companies are making huge profits because of the big difference between cost of producing the gold and selling price of that gold. Fewer and fewer are hedging their gold now. So his company is investing big in gold stocks. But unlike me, I go for the fledglings. He can't go for them because they are too small for his company to digest.

POG

What a jump this AM! This is in reaction to EU Foreign Ministers procrastinating. The Europeans cannot make solid hard decision and still pussyfooting around the Greek crisis. How do you make a nation work if the citizens are so lazy?

But this kind of rise cannot be sustained. It is one of those short term reactions, totally the result of big fund managers, responding to one news event.

Still gold stocks will rise again. Some have been badly hit recently. I have been buying but only in small quantities and on fewer occasions. When the dead cat stops bouncing up, it is less painful! I recently topped up AZM because it is below my original buy price.

NEN

I bought this stock in 2008 when it was SAE. It hadn't been a happy liaison. But suddenly, its investment in South China Sea, off Vietnam has become hot property. BHP and STO found dry holes but Exxon is expected to announce a big find soon. There must have been some inside information! And NEN's exploration ground is adjacent. So in the recent months, NEN has moved upwards be give me a nice profit. And it will move many times higher if oil or more likely, gas, is found.

This is one success (but in paper gain only and in hype only). Well, TPT, PCL, RRSO and RMP have been good too. Most drilling for oil or gas usually finds nothing. Ouch! I had to ditch FAR when nothing was found off Senegal at a loss. And MMR almost became oblivion. And in the past with CTP, SGY, PSA, KAR, MEO, ROC and TAP, the share prices plunged when nothing significant is extracted. Even if 'successful', if the gas or oil is not of good quality or quantity, the share price will tumble, too. Another ouch!

GMM

The first few holes didn't find any potash. So the market slashed its share price. Inshallah!

With Olympic Dam, only with persistence AFTER the last hole was sank, then only did WMC discover the huge deposit, deep underground. GMM has a few more holes to check before it can be declared a useless tenement. Keeping my fingers crossed. But it is usually hopeless...

Dead cat trampolining

The Dow has been climbing; a few more minutes to close. The DAX rocketed upwards too. All this is because the French and German governments are planning to do something this weekend about Greek debt. But the Greeks don't want to confront their own problem.

So, don't buy on Monday just because the ASX All Ords is rising. The dead cat is enjoying its bounce on a trampoline. But buy what is cheap and ignored or dumped by the investors. POG has found a floor in the last few weeks when commodities were sold down. The awful news is that AUD is rising again. A rising AUD might be great for traveling or buying overseas but for local exporters, it is a disaster. It is selling a wanted product profitably that makes one wealthy.

At a recent mining seminar, I was told CCC is on a PE ratio of 3. LSA and KMC are virtually at 1 by my uneducated calculation. And CDT has one of the largest tenements in Ghana and haven't explored everything.

KMC

http://www.theaustralian.com.au/business/opinion/in-a-seemingly-parallel-universe-we-have-the-metals-markets/story-e6frg9ex-1226129258018

http://www.proactiveinvestors.com.au/companies/news/21038/kalgoorlie-mining-company-receives-57m-to-date-from-barrick-gold-ore-processing-agreement-21038.html

This stock has a market capitalization that is falling and falling. When I first read about it, it was AUD$25 million. Now it is only AUD$23 million.

If you know how to do simple simple simple arithmetic, the first article created $2 million in one month, and the second article should generate a net of about $4 million for the last month or two. How many investments out there would give you $6 million in two or possibly three months for an outlay of $23 million? The market must be fucked not to see value in KMC or am I blinded by something that I cannot read or see or understand?

Starting in June 2012, it expects to produce 40,000 oz of gold per year. That will generate at least $64 million in revenue before cost at current POG. I don't know what is the debt level for this company though. There is a >200,00 oz of gold mineral resources.

Greek dilemma

How do you sort out a financial problem if all the Greeks want to do is go on a protest? How do you help someone who does not want to 'get on with it'? The European issue will be around for a long time so it is not surprising if the market volatility remains for longer. Eventually, it will affect China because it is a significant market for its goods.

AZXOA

Since the squabble between the company and its biggest shareholder, followed by a desire to settle the issue by amalgamating the two companies, this stock has been on a downward trend. Yet the amount of gold uncovered has risen and POG has stabilized at over USD$1600 per oz.

Not all my purchases on the ASX have done well. This one has nearly halved in recent time. But why should it? Market does not like boardroom problem. However, that has been settled. Still the share price has not gone up. Perhaps because it has not actually physically dug it up yet.

ELM and the other Congo

http://minesite.com/news/elemental-minerals-should-be-producing-two-million-tonnes-of-high-grade-low-impurity-potash-per-year-in-congo-brazzaville-by-2013

The share price has increased by nearly 300% since I bought about 1 year ago when BHP made a move on Potash Corp.

Potash miners have done very well. Indians and Chinese are obviously eating more! But neither ELM or TRH are digging it up at the moment.

Dead cat bounce

Is the recent rise in share market performance a dead cat bounce? All the financial problems are still there. And in Australia, the Carbon Tax is going to be introduced. I think we should have a Carbon Tax... but only if the whole world has a uniform Carbon Tax. In Australia, it should be called the Socialist Green Tax.

I have put very low bids to mostly top up some stocks I own. And if there are desperate sellers, I am happy to oblige.

TRH

Looks like there will be a lot of potash for TRH. When the earlier drillers were looking for oil and gas, they have already found the potash there. Why no one else bought the tenements for its potash? I don't know the answer but I do know it has risen more than 8X what I paid for just over a year ago.

I have BHP to thank for. It made a bid for Potash Corp in Canada. I made a tiny bid for both TRH and ELM. STB has already risen by then. And recently I bought into AGR for its tenements in Brazil.

RRSO

Wow! It jumped up by 2c today from 9c when I topped up on 13/10/11. The drilling result in Georgia will be known soon. It will either be very, very good or very, very bad! In the meantime, I cannot understand why there are dumpers.

AVB

This stock has been falling. But with today's good announcement, it jumped by >30%. Most drilling results have not been spectacular after early ones until today.

I kept my faith. So with this jump, I collected alpha for my super fund portfolio. There are more areas to explore. What is interesting is why didn't Vale pick up those tenements a long time ago?

CLR

I bought this sometime before the market went down. Why? It was for its prospective takeover but nothing is certain. So it has been a loss for me. Today I topped up because that activity is in the horizon.

http://www.theaustralian.com.au/business/mergers-acquisitions/carabellas-coal-mine-in-play/story-fn91vdzj-1226168581963

So we will see whether it has been profitable to ride on the tailcoat of a highly likely takeover.

Bullion outperforming stocks

http://www.mineweb.com/mineweb/view/mineweb/en/page31?oid=137600&sn=Detail&pid=31

I didn't read the article in full. But the heading caught my attention.

If you can see a beacon giving you the direction to El Dorado, but others cannot see it, you will get to the place first... usually. Apparently in Johannesburg many years ago, it took nearly a year before the market woke up to realize that gold producers were generating huge profits when price of gold had been high for a while.

Is it that difficult to read the future? What you cannot predict are Black Swan events and illogical market sentiment. Last week, I also topped up on KMC which is generating a lot of cash but its investors continue to dump it. It might continue to fall or nothing much will happen until its profit is announced.

PCL

The volatility of this stock is more dramatic than a yoyo. Why it went up so much on Friday? I have no idea. There is no announcement. Like a lot of explorers, there is a lot of hype. The difference with this one is the number of farm-ins... with deep pockets. With Apache, Tullow and BG, you are unlikely to get careless investors who didn't scrutiny available data before committing themselves to the expensive exploration.

What I dread when price jumps is whether inside informants are at work. It becomes a very unfair market place. It is extremely difficult to expose the illegal activity.

For those wanting to trade and you are good with the yoyo, until it actually strikes oil, it is a great one to trade. But pure trading is blind gambling. Mine is 'calculated' gambling. I prefer just to buy when the price dips and wait for the predicted oil strike.

Alpha

When markets fall, it is still alpha for me if the net loss for me is less than the market average. Today, a bid is made for SBL and I cannot believe the management accepts the 2c offer. I suspect the board has been bribed. There is no evidence from me of course. But you really question the integrity of the board to take such a low bid for a company with a high enterprise value and good prospect. I don't intend to sell at this offer.

SBL

If Aussies don't want SBL, then Singaporeans/Malaysians will buy it. So today, at 2c, it will be taken over. Ridiculous that the board accepts the offer. It is worth a lot more! Australian companies are so cheap.

PRU

Placement as a method of capital raising is the most unfair. It is sold to institutions and sophisticated investors of a particular stockbroking firm. Even worst is when it is offered only to Canadians. It is almost always at a discount to prevailing share price. And the share price inevitably falls.

You can be certain that the board of PRU does not care a fuck about the shareholders, especially the smaller ones. Unfortunately, this is the norm amongst many uncaring managements.

Some will offer SPP to offset the favourable treatment given to a select few. But many will just tell the smaller shareholders to piss off.

RRSO

Wonder why some investors sell when the results of drilling are coming out. Of course, it can be abject failures with no hydrocarbon discovered. Then share price will plunge. Most drilling activities are failures. But why conduct seismic studies if ALL are failures. When it is a successful hit, then it can be spectacular if it confirms or exceeds expectations.

At a low bid for some time now, I have another top-up of RRSO at 9c. With recent downturn of markets and price of oil and gas, RRSO has been drifting downwards. I love to top up when stocks are dumped. But tomorrow, if it announces that nothing was found in Georgia, then I have to retire from my profession later.

ABU

According to the map by ABU, the high grade area in Old Pirate, 300m northwest, has not been sampled yet. So while the sampling area is within the jewel in the crown of its NT tenements, the jewel in the crown within Old Pirate has not been sampled yet!

Trenching is superficial so if the grades are that good, it means a rich shallow deposit. But for JORC compliant resource figure, you need to drill and drill and drill. Top sampling can be deceiving but that area is already known to have lots of gold.

ABU

http://www.asx.com.au/asxpdf/20111013/pdf/421q9zkc18zv85.pdf

This Old Pirate deposit is expected to be the jewel in the crown. And look at the trenching grades! It is located 1.8km from where ABU already has a JORC compliant resource.

I have tried to top up at 5.7c but I don't know if I will get any. The news is hot so the market has only started to react to it. As far as I know, only one other reader has bought into ABU. It has one of the largest tenements in Australia for an explorer and so far, it has been gold, gold, gold!

Yet people are not buying into it. In fact, that lone buyer was tempted to sell his shares the second time, and I told him that he would be crazy to ditch ABU and trading is never wise with a stock that is doing well. Of course, market sentiment like the recent one, can cause share price to tumble but that kind of event is unpredictable and you would be gambling rather than investing.

At the end of this note, I noticed I missed out at 5.7c. Usually, the price jumps and then settles down.

IGR

http://minesite.com/news/integra-mining-has-annual-production-of-140-000-ounces-of-gold-already-in-sight-but-longer-term-is-aiming-for-much-much-more

Some stocks producing good announcements, not hype, and never get marked up. Others produce PR rubbish, and the market reacts positively.

I used to write about IGR but like Our Man In Oz says, the share price is "stuck".

While lots of gold miners have stagnated, at least this one has been profitable for me.

SBL

I am onto 45% loss with SBL. But like many of my stocks, I am pretty confident this will reverse in time. It was worth more when the POG was lower! And since then good announcements have been made. Why people sell? I have put another low bid for it. I have already made top-ups at 1.5c. And if people continue to dump this stock, I am happy to pick more up to lower my average buy price.

TAS, OYM

The Ferret has spoken. He said TAS sellers must feel stupid after the announcement on Monday. I call them idiots. And it is incredible how many there are. I actually love them!

Today I am looking at OYM. Like a lot of gold miners, this one has been steadily falling. I have no idea why when you consider it is actually a producer in Vietnam but discovering more gold in Bau, Sarawak. If idiots continue to sell it cheaply, I am happy to oblige to take the load off them.

Market reaction

There are two phases, legally and officially, to any critical announcement.

The first legitimate phase occurs soon after an ASX announcement occurs. Only the diehards look at it. They have no other jobs other than stare at the ASX announcement website. If the reaction occurs before the announcement, it is due to insider trading and that is illegal and unfair.

Then the next day, the press publishes the journalistic reaction and the readers of newsprint or webpages react to the day old news.

That is TAS. Yesterday, I told a surgeon I worked with, that even at 11c, TAS is cheap. This AM, it has climbed to 15c. So I am on my way to buying an Olympic swimming pool. If it turns out to be larger than Olympic Dam, then this stock is work 20-50 times over its current price if not much higher.

After today, my TAS turns green in one portfolio and nearly green in the other. Unfortunately, this kind of rally is rarely sustained. But if it falls to 10c or below, it is definitely worth topping up. RIO is intending to pump $92 million into a stock valued yesterday at under $25 million. Go figure!

GUF

Recently (last week), I bought into GUF because coal still rules the energy-generation world. It is a bad pollutant but nothing can substitute it totally at the moment. China and India are hungry for it. Their own coal supply is inadequate.

The best thing about GUF's coal is they are in addresses of interest to the Chinese and Indians. If you know your geography, one is in Mongolia and the other is in Galilee Basin in North Qld where the Indians have been very active in the last year. A resource update is due soon. So I could be lucky or I could be miserable! This is another stock where the top-up came through after the market closed.

MMW

This stock has been falling badly but the announcements have been good. So, why is this explorer going down?

Price of platinum and palladium have trailing gold so I don't understand why other than the fact that it is not producing yet.

So since I have now generated a loss with this stock, I decided to buy some to average down my buy price. I thought I picked up some but it was GUF and AMX that I collected after the market closed. Keeping my fingers crossed for some desperate sellers in the coming weeks.

AMX

Why has it been trending downwards? Is there a problem with this stock that the average investor does not know?

It has been as high as $3.42 in the last 12 months. And the announcements have been good. POG has found a floor at USD$1600 per oz and currently it is rising again towards USD$1700 per oz.

Yesterday, I put a low at $1.72 and picked up some shares in it. I think this transaction came through after the market closed.

TAS

Is anyone listening?

RIO is giving $10 million to TAS to explore and up to $92 million to earn 80% of TAS if it decides to go further when the first tranche of cash reveals IOCGU-type minerals... near Olympic Dam. Yesterday's rise to 10.5c gives TAS a market cap of AUD$22 million.

I am still under the water for TAS. But it is a matter of time before I go green with this stock. I hold two parcels of it. If it proves to be bigger than Olympic Dam... I might buy an Olympic-length swimming pool for the house!

Crazy markets

The volatility is frightening. I have been keeping my dividends handy. I still buy some stocks but I have not been splurging during the recent dips. All the recent causes of the plunge are still there. Government interventions have a dark side to it. You cannot print money forever and debt that cannot be repaid cannot vanish just because central banks have stepped in.

I read this AM that the Chinese government is stepping in to shore up its banking sector. That is ominous. The CCP is good at controlling the freedom of its citizens but dreadful at controlling the rampant property sector.

Where are we heading? Inshallah! But I am only looking for stocks that have plunged hard.

TAS

Like many stocks that I have researched, after I bought them, the share prices have been dwindling. But patience is required. Sooner or later, a large company will notice it. Today, it is the turn of RIO taking an interest in TAS. It has been known for some time now that the TAS tenement near Olympic Dam has potentially bigger IOCGU deposits. To be more specific, there are 3 potential deposits, one bigger and two smaller.

It is very, very expensive to drill deep. It is usually a matter of time and funding. When another investor with deep pocket arrives, that is when a rocket will be placed under its share price. Today is that day for TAS.

EXT

Chinese companies are notorious for underbidding. Seems no one has advised them how to take over a company successfully at first go. They must think they are shopping in the bazaar.

They are making a bid for Kalahari indirectly at 11% premium to market price on Friday. And Kalahari owns 42% of EXT. The Australian law requires a bid for EXT if anyone wants to buy Kalahari.

My prediction? The buying price will have to be higher. Who by? RIO. RIO has afford a higher price because it owns an adjacent uranium processing plant which is running out of ore to produce. Because it holds more than 10% or Kalahari and under 20% of EXT (I think), it will have a big say who owns what. EXT is one of my most successful investments but I could hardly top it up because it was rising and rising and rising since I bought the first parcel.

The market is a circus trampoline act

The markets around the world are behaving like trampoline performers in a circus. The difference is there is a hole in the market trampoline and you don't know when you are going to fall through it.

The Greeks are still lazy and haven't resolved to work harder (instead they are striking and protesting). Long term job prospect in the States is still awful. And Japanese are hardworking but the progress is still hampered by the natural disaster. And China depends on Europeans and Yankees buying their goods; the internal economy is nothing like America's.

In early August 2011 when share markets were plunging but POG was rising, it was easy to spot the winners. But currently, it is near impossible although POG seems to be holding above USD$1600 per oz. I speculated on GUF because of its Mongolian coal that the Chinese want and its coal in Galilee Basin that lots of Indians want. Unfortunately, logic does not matter, volatility and sentiment rule the game. Only takeovers (or speculative takeovers) can cause a jump.

Where is the market heading?

I don't know is the answer. Unless something is of great value, then I buy. Neither can I sell unless it has risen ridiculously over its worth.

My father attended school for only two years. In his time, there were only the papers, company correspondence and dividend cheques to tell you how the stocks were doing. He was not privy to stock market announcements nor direct communication with the management.

Papers delivered financial news one day after the event. One thing was very clear to him. If you park your cash in the bank and the interest is lower than the dividend, and you have read that the company is doing well, then buy that stock. Based on that, his estate has produced more than enough income for my mother to live without any financial assistance from the children.

You don't need any degree to be successful with your superannuation. Recently, my cash position has improved a lot because of dividends. As I age, it is time to ponder stable income for my superannuation. Considering the price I paid for those blue chip stocks, the yield is many times higher than cash deposits. My father was right.

So it is better to be born with high level of intelligence as your main asset than just having a tertiary education. He was also very thrifty and disciplined.

MEL

The rumour is over. So the real value of a company is dumped! You will now have to wait for another investor to make a bid for this stock.

TRH

I don't know why some potash stocks jump so much while others languish. The becoming-richer Chinese and Indians need to eat, so ALL potash stocks should be jumping. TRH is the hot favourite potash stock at the moment but I have only topped up once (luckily a long time ago at under 20c).

The truth is if the amount of potash in the tenement is as expected then this stock is worth even more. I am onto over 500% profit after just over 1 year. After EXT, this is the second most spectacular stock in one of my portfolios. Both are expected to perform even better still in the short term.

AZM

http://www.asx.com.au/asxpdf/20111005/pdf/421jzlqsy42h7y.pdf


It seems like every time, a drill is used in West Africa, it comes up with gold. You really wonder why can't the West Africans do it themselves. Or at least buy one Aussie explorer and use it as a beach head to explore their own region.

With history of success in drilling repeating over and over again, you wonder why investors sold off their West African investments.

OYM

http://www.asx.com.au/asxpdf/20111005/pdf/421jzlqsy42h7y.pdf

It only went up relatively little for such good gold discovery. You really wonder how the market prices its stocks! I am still in the red but most of the fall has been recent. This company actually produces gold but the second deposit in Sarawak is showing great promise.

MEL

Like many stocks in Australia which are doing poorly at the moment, only when someone with a deep pocket wants to buy a big chunk of a company, then only does the market realizes how valuable it is.

Take MEL which has been in the red for a long time. Luckily I participated in the SPP recently because I believe it has great prospect. Yet, the market is uninterested in its true value for so bloody long. So today, there is a rumour that it is going to be taken over. Hence, it spiked.

MNB

Last week, the markets tumbled. But tomorrow, you will still have to feed the billions of Indians and Chinese who are becoming richer.

Before the close of business on Friday, MNB announced a fantastic phosphate deposit in Angola, relatively shallow. Yet, the share price fell by 2c. Why were there sellers? Maybe, they knew the US market was going to fall. The ASX will fall on Tuesday when it opens.

I will be watching because markets cannot keep falling and certainly not at the recent rate. All because of lazy Greeks? That must be a big financial joke.

PXG

I love the EV/resource valuation.

http://imagesignal.comsec.com.au/docserver/01214467.pdf?fileid=01214467&datedir=20110902&edt=MjAxMS0xMC0wMiswODoyMzoxMCsxMjArMCtjb21zZWMrcmVkaXJlY3QrL2ltYWdlc2lnbmFsL2Vycm9ycGFnZXMvUERGVGltZW91dC5odG1sKy9pbWFnZXNpZ25hbC9lcnJvcnBhZ2VzL3BkZmRlbGF5ZWQuanNw

And during the recent turmoil, it has come down but I am still in the green zone with it.

CTP

This stock is fantastic for generating hype but haven't really found anything commercial yet in the centre of Australia. The latest is an article on Helium by the Nobel Prize winner in Physics who developed the use of liquid He.

Strange that the USA which controls the supply of He in the world has not inflated its price. But the scientist wants it to jump to stop wasting it as current stock will not last forever. Helium is so light that it is lost due to escape from gravity. Only salt domes above granite traps it in the ground.

Good reading but science does not affect share price... usually. That is determined by idiots who control the supply of investors' money. But enjoy your He balloons while you can!

http://arstechnica.com/science/news/2010/07/science-policy-gone-bad-may-mean-the-end-of-earths-helium.ars