Saturday, February 23, 2013

Rob McEwen: People Will Return To Gold - Will They Return To McEwen Mining? MUX, TNR.v



  Nobody likes to ride the roller coaster which you see on the chart above. Nobody loves Gold any more, "economy is improving", "there is no place for Gold in expanding economic phase" and All Junior Miners are Slaughtered. We have the perfect set up for the new Bull Leg up in Gold and, particularly, in junior miners. Not everybody will survive, only those who have real assets, teams and shareholders backing them will prosper again.

  We are following McEwen Mining and TNR Gold story for a long time, we call what we think is right and what is wrong and it is only our opinion, as usual. Nobody can suspect us in the particular blind love to Rob McEwen. All the perceived by us negatives has brought McEwen Mining to the levels where it is at the moment and now it is the time for Rob McEwen to shine again. It is always a probability game, we will just share our logic: why we think he can produce the most impressive turn around in the Gold Miners market place now.

  The main reason for our Call is that Rob McEwen has his own skin in this game and even more: His Name is all over it. Shorts should rethink their  positions twice over this weekend. They will be fried at some point and 29 million shares sold Short will provide the fuel for the fireworks in McEwen Mining. TNR Gold will be pulled up as well with any positive development in McEwen Mining and Los Azules particularly.

  The things, as we see it,  should bring out the New Valuation report on McEwen Mining in the nearest future, including the valuation of Los Azules. The project now contains 18.5 billion pounds of Copper. The latest transaction with Copper assets in Argentina was done by Stillwater Mining buying Altar deposit located within 50 km from Los Azules. It was the same country risk, at the similar altitude and within other similar conditions. That transaction was valued at around 0.04 dollars per pound of copper in the ground. This benchmarking valuation will bring Los Azules value to 740 million dollars. Now you can slice it and dice it and analysts and the market will do it, but the magnitude of this asset is there. 

  Ongoing review of the Glaciers issues will be another point for catalyst. Barrick's Pascua Lama has received the "clean bill of health" in the end of January and, even more important, the support of San Juan government for its development. Now the contract for the final stage of the mining construction is announced and Barrick is "pushing ahead with Pascua Lama."

  The most important project development will be with the ongoing drilling on TNR Gold's part of the project - where the high grade core is located. This area has become available after the announced Settlement of Los Azules litigation on November 12, 2012 and the drilling should be well underway there by now. The latest very impressive results were reported just next to it. We can expect that intersections from drilling further North will be even more impressive and this deposit will grow further.

  Why is it so important? At the moment of writing total market cap of McEwen Mining is 754.8 million (296 million Common and Exchangeable shares at 2.55 closing price). Other people will describe for you the value attributed to other assets of McEwen Mining much better than us, we will just point out to you the magnitude of Los Azules potential valuation one more time. 

  In relation to total market cap of MUX even with additional 50% discount on "Argentina circumstances" gives you an astonishing leverage of at least 370 mil potential Sale value for Los Azules in comparison to 754.8 million market cap of McEwen Mining. Another benchmarking point could be Lumina Copper valuation with, as well depressed, market cap of 379 million dollars as of this Friday.
  New High Grade Copper Intersections from TNR Gold's Northern Part, released Valuation of Los Azules and any hint about potential buyers kicking the tires from BMO can ignite the next rally in McEwen Mining.
Update FEB 25, 2013. Latest from Rob McEwen himself, please note Lumina Copper and McEWen Mining comparison.

McEwen Mining Presentation.

CITI: Gold Has Fallen To A Pivot Point, Minimum Price Target Now $2,055

"Here where Rob McEwen will be coming at his prime as promoter - running against the clock for his goal to qualify for S&P 500 by 2015 he has the last opportunity to turn this story around. 70 million in cash will not buy the place in S&P 500 by itself or even the Second Stage at El Galo, but it will be enough for the "Chief Owner" to fight for his company. Research valuations of McEwen Mining, including the Los Azules valuation will draw the market attention and any hint about the potential buyers for this world class copper asset can make Shorts rushing to cover." 

The Commodity Investor: Copper Prices May Reach $5 by Year End TNR.v, MUX

"We can have a new interesting kicker to our developing story on Los Azules Copper. In case if Housing rebound in US is for real Copper can be making new highs this year. Another very important observation is the introduction of the Copper ETF - with all ETF introduced we have seen the rise of the underlining commodity. It was true for Gold and it was true for Silver. Copper ETF will allow the very easy trade in Copper for the main stream investors and in case of its success it will bring additional buying in the Copper market."

TNR Gold: McEwen Mining Continues to Expand Los Azules' Large, High-Grade, Mineral Resource TNR.v, MUX

"Now there is a truly elephant copper discovery in the making with 18.4 billion lb of Copper reported in all resource categories at Los Azules. We can expect very aggressive push from McEwen Mining to market Los Azules and, hopefully, newly discovered mineralised trend and mineralisation at depth will bring this deposit even higher in its world wide ranking."

Bull Market Thinking:

Rob McEwen: The Economy Gets “Better” When You Add In A Few Trillion — But It’s Illusory And People Will Return To Gold

I had the opportunity yesterday to speak with legendary founder and former CEO of GoldCorpRob McEwen. He is now the CEO, Chairman, and largest shareholder of McEwen Mining.

It was a powerful conversation, as Mr. McEwen spoke to why so many miners are failing to deliver returns to shareholders, the “illusory” strength of the post-presidential election economy, and his thoughts on gold and silver going forward.

When asked about the languishing share prices of miners over the last few years, Mr. McEwen said, “What you’re seeing in the market today, particularly amongst the large gold producers…is they were doing big deals to make big news, to pay themselves large salaries, and the shareholders have suffered as a result…Six years ago a large number of people in the industry said, ‘You have to be bigger to be relevant in the market. We want to have more reserve life, more production’, but they did it without regard for shareholdings.” 

He further added that, “[There's] a point I try to drive home to investors…when someone is pitching you on a story and they say the outlook is great, their company is fantastic, you [need to] say, ‘Okay, I buy all that. [But] how much do you have invested in the company?…Are you taking a low salary?’…In the last six years you saw large salaries, large options, and small [CEO] investment…It contributes to [under performance], because you’re not thinking every day about your exposure in your own stock. That’s why in McEwen Mining I own 25% of the stock, and I don’t take a salary. I wanted to be in the position where I make money the same way that my shareholders do.”

When asked if and when the tides will reverse for mining shares, Mr. McEwen said, “I think you’re going to see a swing back into the [mining] equities this year. It’ll probably be kicked off first by a discovery or two, and then some people are going to look at the seniors and go, ‘Now wait a minute, they’re yielding 3% on a dividend, a lot of them have changed their CEO’s, the new CEO is going to be more cautious…and they’ll work on trying to improve their operating margins’…So you should have some strengthening in the seniors, and when they strengthen, the intermediates and the juniors will follow.”

With respect to owning and buying gold here at these levels, Mr. McEwen said, Everybody got distracted by the US presidential election when they were telling everybody that the economy is getting better—and why wouldn’t it when you push in a couple trillion dollars?…The case for owning gold hasn’t changed. Governments around the world are still printing lots of money, still borrowing a lot, and the reasons gold ran up before [in price] are still there and greater today…Interest rates are so low the only place you can go is in the market right now. It’s [all] very illusionary, and we’ll find people returning to gold…[So] now is a great time to be buying it.”

In regards to whether or not his company will begin to withhold silver bullion from the market in the future, Mr. McEwen said, “It depends on how much you’re making and you’re ability to hold back…When I was running Goldcorp in 2001, we started withholding some of our production. We started off withholding 10% of our production…We [then] increased our holdings to be holding back 30% of our production. At one time we had more gold in our vaults, than 50 of the 114 Central Banks that held gold. If you believe that the price is going higher—than why wouldn’t you hold some of your gold and silver for a future date?

With a concluding remark on price expectations for the metals, Mr. McEwen said, When gold reaches $5,000 an oz., I would expect to see silver at $200 an ounce.”

This was another outstanding interview with one of the greatest wealth-builders of our time. It is an absolute “must-listen” for serious investors and market students.

To listen to the interview, left click the following link and/or right click and “save target as” or “save link as” to your desktop:

>>Interview with Rob McEwen (MP3)

To learn more about Rob McEwen visit:
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Tekoa Da Silva
Bull Market Thinking"
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