Update March 1, 2013
As we have mentioned before, BMO Capital market conference is the very good place to pitch Los Azules Copper project for Rob McEwen. BMO is hired by McEwen Mining to market the Sale of Los Azules. Any development on this front will be the Catalyst for McEwen Mining and TNR Gold turn-arounds from the recent heavily oversold levels.
We think that journalist is off on numbers a little bit, required capitalisation to join S&P 500 is 4 billion as per our research and Rob McEwen was talking about 5 billion in his recent video interview with TFNN.com.
"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."
By Allen Sykora of Kitco News
Wednesday, February 27, 2013 11:45 AM
Wednesday, February 27, 2013 11:45 AM
(Kitco News) - Longtime mining executive Rob McEwen looks for the price of gold to keep rising with the debt of Western nations.
Meanwhile, his own company, McEwen Mining (MUX), is aiming to begin construction on the El Gallo 2 mine in Mexico later this year, McEwen said. The company is in the permit process. It is also working to secure the necessary financing, considering alternatives such as a joint venture or sale of its copper projects, McEwen said.
He outlined his views on the gold market and provided a status report on his still-young company during the 2013 BMO Global Metals and Mining conference taking place this week in Florida.
McEwen Mining was formed in January 2012 through a merger between Minera Andes Inc. and US Gold Corp. Minera Andes had a cash flow from a 49% passive ownership in the San Jose Mine in Argentina, while US Gold had a development pipeline of projects. McEwen owns 25% of the shares and works for no salary in trying to build the company. He was the founder and former chief executive of Goldcorp.
He spent the first several minutes of his presentation outlining his views on the gold market itself.
“I want to make one thing perfectly clear – it (gold) is a currency,” said McEwen. “If you don’t think of it that way, you should, because it’s going to play a bigger and bigger role in the monetary world. And it’s going to keep going up, too.”
The biggest driver is likely to be the continued creation of debt by governments, the CEO said. While he said debt is occurring throughout the Western world and are not isolated to any one country, he cited the U.S. in particular. “It’s now in excess of $16 trillion,” he said.
He displayed a chart showing the price of gold has climbed since 2002 as the U.S. deficit did likewise. The metal consolidated for a while back around 2008-09, as it is now, before resuming its upward path.
“The White House last February said the debt was going to $26 trillion by 2022, and I think we can say most politicians underestimate how much debt they’re going to create,” McEwen said. “Gold is going to continue tracking that.”
And, McEwen continued, stimulus measures are likely to continue in North America and Europe. The CEO said he still believes gold will eventually hit $5,000 an ounce.
He sees equities as “historically cheap” relative to the price of gold, losing their premium to gold since around 2008-09. Some of this may be investors instead moving into exchange-traded products for gold exposure, but he also cited factors such as capital-expenditure over-runs in the industry.
The CEO said he sees gold stocks as “oversold” at the moment. “It’s cheaper to buy gold in the ground than it is to buy it in a vault today,” he added.
As for his current company, McEwen Mining commissioned the El Gallo 1 mine in Mexico last month and hopes to begin construction in the third quarter of this year on El Gallo 2. Construction will take around a year and the cost is estimated at $180 million, McEwen said. The company would have to raise some $100 million to $110 million. McEwen Mining is also in the permit process for its Gold Bar project in Nevada, hoping to begin construction in 2014.
“So we’re going from 100,000 ounces of gold and gold-equivalent to 300,000 ounces by the end of 2015,” McEwen said. The company announced last month that full-year 2012 output was 105,050 gold-equivalent ounces, with production in 2013 forecast to grow by 24% to 130,000 gold-equivalent ounces.
McEwen said the company has a large resource base of 7 million ounces of gold, 230 million ounces of silver and 18.5 billion pounds of copper, the latter through the Los Azules copper project in Argentina. He said the company has no debt and $65 million in the bank.
The CEO reiterated the still-young company has a goal of qualifying for inclusion in the S&P 500 index in 2015, pointing out that more than $1 trillion is invested by index funds in the S&P 500 but there is only one gold stock currently. McEwen Mining has met five of the seven criteria and is working toward the remaining two -- $1 billion of market capitalization and four consecutive quarters of earnings, the CEO reported.
By Allen Sykora of Kitco News; firstname.lastname@example.org"
Please Note our New Legal Disclaimer on the Blog, including, but Not limited to:
There are NO Qualified Persons among the authors of this blog as it is defined by NI 43-101, we were NOT able to verify and check any provided information in the articles, news releases or on the links embedded on this blog; you must NOT rely in any sense on any of this information in order to make any resource or value calculation, or attribute any particular value or Price Target to any discussed securities.
We Do Not own any content in the third parties' articles, news releases, videos or on the links embedded on this blog; any opinions - including, but not limited to the resource estimations, valuations, target prices and particular recommendations on any securities expressed there - are subject to the disclosure provided by those third parties and are NOT verified, approved or endorsed by the authors of this blog in any way.
Please, do not forget, that we own stocks we are writing about and have position in these companies. We are not providing any investment advice on this blog and there is no solicitation to buy or sell any particular company.