Time has come to head to the beach because I might start to sell ALL my miners after a 20% to 80% rise from the depths of the five-year bear market.
It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I’ve known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine–that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. –Edwin Lefevre in Reminiscences of a Stock OperatorSeth Klarman’s 2021 Letter: Baupost’s “Never-Ending” Hunt For Information
Baupost's investment process involves "never-ending" gleaning of facts to help support investment ideas Seth Klarman writes in his end-of-year letter to investors. In the letter, a copy of which ValueWalk has been able to review, the value investor describes the Baupost Group's process to identify ideas and answer the most critical questions about its potential Read More
Why don’t YOU have a crack at valuing these companies? I will provide supporting materials.
Royal Gold, Inc (NASDAQ:RGLD)
How to value a net smelter return:http://www.goldroyalties.ca/how_to_value_a_NSR_NPI_mining_royalty.phpand http://www.frickcpa.com/tvom/TVOM_PV_SS.asp
Romarco Minerals Inc. (TSE:R) A pre-production gold miner (Speculative)
http://youtu.be/qwZeJjXmN1A Brent Cook of Exploration Insights discusses junior miners.
Doug Casey:8202013casey (21-minute Audio/Excellent!) on searching for opportunity/miners. His book recommendations : Economics_in_one_lesson and Liberty: The Market for Liberty. His suggestion: Read widely and ask a lot of questions.
Handbooks on valuing mining equities: book_excerpt Invest in Gold and Silver and GSA_2012_User_Guide and Profiting from the Dismal State of Gold miners and Explorers
RTRAF Excerpt: There is another company that I like, but it’s not in production yet. Romarco Minerals Inc. doesn’t have a full permit, but I feel strongly that it will be able to get permitted. The mine is going to have about 91 million tons of ore at 1.6 grams per ton for a total of 4.8 Moz gold. You are essentially buying this thing for $50/oz at the current trading price of $0.39/share. I believe Romarco will get up and running, because its management knows a lot of large institutional shareholders who would be willing and able to front them some more cash. I believe the Haile project in South Carolina will be a mine in a couple of years.
TGR: How does that $50/oz compare to its peers?
HI: They range from $40/oz to almost $120/oz. It is definitely in the lower range, and it should be because it doesn’t have a permit. It is not as derisked as a producing mine.
TGR: How likely are those permits to come within the next year?
HI: If you asked me that question a year ago, I would have said about 75%. Today, I am going to give you the same answer. There is a very decent chance that the permits are going to come reasonably soon. The permitting process, especially in South Carolina where there are no real mines, is not easy. The company has to have constant discussions with the U.S. Army Corps of Engineers. Romarco Minerals Inc. (TSE:R) claims to be making progress. I am inclined to believe that, but these things always take a lot longer than you would like.
TGR: Meanwhile, Romarco Minerals Inc. (TSE:R) has increased its resource and it has brought in more experienced personnel. What institutional support does it have?
HI: Van Eck Global, BlackRock, Inc. (NYSE:BLK), Baker Steel Capital Managers, Oppenheimer & Co., Tocqueville Asset Management and so on, the usual suspects. Seventy percent of shares are institutionally owned. Those firms haven’t owned this and watched the stock sink in order to throw in the towel when it actually comes time to build a mine.
TGR: Can this management team get the permitting done?
HI: Yes, it should be able to do it.
Romarco Minerals: http://www.romarco.com/Investors/default.aspx
Instructions: You have two ends of the investing spectrum: A major royalty company and a pre-production mining company–though not a pick and shovel exploration company.
Try to come up with reasonable values. If you can’t, pass. I will present my thoughts upon my return next week.