The latest Investing Matters Podcast episode with London Stock Exchange Group's Chris Mayo has just been released. Listen here.
Hello Rob, Sorry for replying late to your question, but I hadn't checked the board for a while. I am not an expert. I only know this company well and have understood something about gold mining in the past few years. I also know a little about trading. The answer to your query lies in itself: who knows the future value of gold? If you think, like many others sitting behind a computer screen, that gold is on the way out, than the value in resources is next to nothing, but the same would apply to any other miner. If instead you think, like me, that values come and go, and that financial markets have seasons with continuous lows and highs, then you know that gold will eventually pick up again. When, I don't know, and frankly I am baffled as are many others by the continued downward manipulation on the price of precious metals, but gold was predicted to be at $850 by now by many cocky and dismissive analysts... Just like it was excessive to think that gold would go to $2,400 in 2011, the same would apply here. How sure can you be of the "long-term weakness in the price of gold"? If you go back further than 5 years there is no long-term weakness. What I am sure of, is that OMI is a healthy company with a sound management team, and doesn't need the price of gold to go very high to be very profitable. At the same time, it is trading below its assets and has hardly any debt. I am not sure what you mean by your quoting me: I never mentioned assets as "exploration and evaluation _____" nor any specific figure. I will take this opportunity to rectify my statement on that post, because on the heat of the moment I forgot that OMI is also quoted on the TSX, although I do not know for how many shares. So "assets that are worth five times the market cap" (at the time) was not correct. It still remains a ridiculously undervalued company, and if the price of gold recovers a bit more, I do not expect it to remain that way.
"I accept your apology": wow, thank you your majesty.... No I did not make additional errors. Stated reserves as of Jan 2015 according to the company factsheet were almost 195,000 and that's what I mentioned, I never mentioned May figures. Yearly production for 8-2014 to 8-2015 was 53,000 which divided by 12 and multiplied 6 (the months between January 2015 and August 2015, when they reduced output) gives 25,000 Oz. for the period, with a remaining of 195,000 - 25,000 = 170,000+, which divided by projected yearly production of 32,500 circa is equivalent to more than five years. I was only going by the stated reserves on Ororsur's website, in the factsheet and on the dedicated web page, so don't talk about me making numerical errors please. The May reserves you mention relate to Uruguay and are the result of taking off some reserves "off the books as a consequence of using higher cut-off grades due to lower gold price assumptions". To be honest this is all rather finicky and petty, typical English, the fact remains that by reducing yearly output they have another five years which is plenty of time for some of the other 1,500,000oz of resources to become operational. Besides, as I have said, they have a history of extending mine life and finding additional reserves anyway. Obviously, as I have said, much will depend on gold price, but this is true for every miner, so you are not saying anything new. The finickiness continues with this obsession with dividends, which is typical of petty English private investors who still do not understand how stock exchanges work. I made the example of Apple as a company that never paid dividends for years yet appreciated considerably, but there are many more. If you think the billions of shares sold and bought on stock exchanges around the world are purely for the purpose of dividends, you are living in cuckoo-land. I have made far more money buying low and selling high, which is the essence of share trading, than on the measly dividends which are also taxed at source. That's how the cash is generated, pal, and that's how every single trader makes their living, whether they go long or short. Except perhaps in Britain, where traders are also brokers and market makers and they make money by screwing people like you on the difference between bid and ask price, and setting both accordingly, because in Britain as a private investor you do not have direct market access and if you do it's because you are privileged. In Europe you always have direct market access the moment you open a trading account, even with your bank. Here you are in the hands of some faceless guy who will set prices for everyone else. Oh yes, very honest, very rip-off British. As for calling a fool someone who buys or sells OMI shares, then everyone who trades shares is a fool, including you. If you see share trading as just a "game of pass the parcel" I suggest you quit the market and buy yours
APOLOGIES Sorry I have just realised I made some confusion when talking about reserves. My calculations were wrong and I stand to be corrected. Reserves at January 2015: 195,000 oz used up until the summer: 25,000 oz REMAINDER AS OF SUMMER 2015: 170,000 oz REMAINING MINE LIFE AT CURRENT PRODUCTION LEVEL (32.5k): 5+ YEARS Still definitively alive until at least 2020 based on current mines, by then of course the new mines should be operational which will add further years or decades depending on production and market conditions. Again my apologies for the calculation error, very embarrassing on a public forum. Just to further elaborate on their strategy, they know the price of gold will not stay at current low levels for much longer, so rather than burn their reserves when the POG is low they are cutting down and staying afloat in order to maximise their reserves and future projects in time when the POG will rise to more sustainable and profitable levels, I presume around the $1,400oz range and up. Bear in mind it is only a management decision, meaning they can ramp up production back again almost at the flick of a switch. It is a tight policy but makes a lot of sense and speaks volumes of Orosur's management ability, responsibility and experience. Yes they may be only a junior minor during difficult times for the sector but they know what they are doing and they deserve more appreciation from the market, certainly not the de-ramping I saw earlier.
Right... Proven and probable reserves from operational mines were around 195,000 oz as of January 2015 (look it up on the company factsheet on their website), of which they have used up about 25,000 until the summer, which leaves about 150,000 oz, they have cut down yearly production guideline to about 32,500 oz, which actually gives exactly SIX YEARS from around June this year, that is at least until the end of 2020. So they are not going extinct in two or three years as someone suggested. Measured and indicated resources for the new projects are between 1 and 1.5 million oz, and they are working hard at getting them going, so I don't see much reason to worry. My only worry is fretful investors who **** in their pants (and who shouldn't be investing in shares if they can't cope with the idea of losing some money), and of course market makers and brokers in London who are renowned to be mostly dishonest and shifty. Actually my only worry is how long before the price of gold returns to a more normal level. As for future dividends, it is not for me to work out how much and when they will be, but I can't believe that British investors are so finicky about dividends when it comes to investing in shares. Apple went for nearly three decades without paying a single cent to its shareholders, yet the price rocketed for years before they started to pay dividends. I am not comparing Apple to Orosur, I am just bringing a single example of one share that rose significantly without any history of dividends at all. The return on investment (or loss) from shares is far more dependant on share price than any petty cash you may get from dividends, certainly on high-risk sectors like mining or junior companies. I have seen plenty of times when petty investors lost money simply because they were only after companies with a steadfast dividend history. Yeah sure you earned a bit of money from your (taxed) dividends, but then lost half the investment because the share dropped... Great choice. Even if the share price doesn't drop the return from dividends is nearly always in the very low percentage, not very useful unless you are investing millions. The great majority of share trading is purely based on the difference between buying and selling price. I appreciate that dividends are a good incentive for shareholders, but you can't base a share price just on that. It is about value. And talking about market cap, it is obvious that OMI is trading way below even its own assets, and as I said before this is due mostly to protracted weakness in gold price and especially market sentiment, which is overly negative at present in this sector. But winds always change eventually on financial markets...
At current production the existing mine life is more like 4 years, and they have several sites in preparation with measured reserves in excess of 1 million ounces of gold, which will be ready before the current mines are exhausted - assuming they will be, because Orosur has often been able to further extend mine life thanks to their good knowledge and experience. True they should have paid a dividend last year, but they chose cashflow and debt repayment instead of distributing candies to investors, they chose to be responsible when many other miners are full of lies and deceit, and you think that warrants a share devaluation? The bottom line remains the weak gold price and the lack of interest in the sector, but as I said this situation cannot last forever, one day it will change and it will be sudden. Orosur has never been so undervalued as it is now. More than "market consensus" it is simply market stupidity.
I really cannot stand it when people come out of nowhere only to patronize when the going gets tough. Are you de-ramping perhaps? Are you planning to buy at the lowest possible price? I have been following Orosur for more than two years now and I know the company well. The current share price is an insult to a company that has turned around and has good management and good prospects. Where the heck where you when Orosur was turning a profit last year, yet the share price barely moved up? The reason for this year's minor loss is a consequence of extended low gold price and temporary adjustments to processing to compensate for lower grade extraction. Steps have already been taken to both reduce these operational costs and reduce total extraction in order to maintain good cashflow. Current year production guidance therefore has been lowered slightly but that is precisely to keep the company healthy and ready to take up the slack as soon as gold price goes up, which it will. Additionally, the company has hardly any debt, enough cash, and I would expect it will be debt-free in a year's time - find me another gold miner in the same situation... It has experienced, reliable management, plenty of reserves and many future projects, and is also active with acquisitions and partnerships. It is a far more solid investment as a junior miner than many of the absolute jokes on AIM, has had a brokers' target price of 32p for quite some time, has assets worth five times more than its market capitalisation and you tell me this current ridiculously low share price is still too high? I cannot openly tell you where I think you should go because we are on a public forum, but if you are intelligent enough you can imagine it. The main reason for the low share price is because the entire gold sector is unpopular due to the persistent weakness in gold price and OMI is seen as a very small player, NOT because the company is bad. But this cannot last forever, and already I think the time for a gold sector re-evaluation is coming. I for one am considering adding some more shares before the price shoots up for good.
I urge not just the shareholders but the market analysts especially to go on the Orosur website and take a good read at their recently published brochure, which outlines not only the excellent improvements since last year, but especially the true value of the recent merger (more like an acquisition) of Waymar. There is no practical share dilution, no net cost and no disadvantage whatsoever in this operation, in fact only advantages and future good prospects. I also think that as usual the lack of a turbo speed in the price of gold discourages the superficial investors, I have said it many times, for a gold producer it is all relative, what matters is costs, production and mine prospects. Orosur has got all three and is even growing, the price will eventually reflect that. Once the financial results will be out the market will turn its head on Orosur, no doubt.
You don't need a war, just the fear of it.... Nobody will go to war against Russia, but we had the cold war last century we could well have another one starting now. Political tensions aside, even though gold has fallen out of favour in the west, it still remains very much in demand in the rest of the world, Asia, South America and developing countries. It is still a safe haven and a status symbol for the masses, and that will keep sustained demand. That constant demand is what is keeping the gold price from falling - and the miners in business. Graphically, when a price keeps within a restricted range there are higher chances of a big, sudden upsurge in the future. What gold needs is a driver, a trigger that makes that happen. I believe that will be the next moves in China's monetary policies, something that has been kept quiet or mostly ignored by the market, but when it will come out it will shock the financial world, and it will happen quickly. When? I don't know, this year, the next ....
Hi there, and thank you for the nice words. Yes I kept a low profile mostly because I have been very disappointed with the performance of most of my investments, mostly with miners, and I understood that unfortunately I was not going to get any joy any time soon. I hate selling at a loss, and since I am convinced (gold) miners will come good eventually, have decided to hold on despite the rain. I am not losing on OMI (it's probably the only share with some profit), but I was expecting it to be 20p by the autumn and 40 by now, so I am very disappointed. But I assure you have absolute no regret investing here, the management is working hard and delivering excellent progress, there is not a doubt in my mind these shares will be worth a lot more at some point in the future. As I said, the main problem is sentiment and gold price, until those two take a way up, we'll be muddling in the mid 10s with the MMs playing games....
Hello everyone, I have been an OMI shareholder since last year, and have written before on this thread but not since before Xmas. Basically I got fed up of being messed around by the market and especially the market makers. I see there is a lot of frustration here which of course I share. The drop in recent days is rather annoying and inexplicable, however it all stems from the big problem that all gold mining share have got: the superficiality, lack of knowledge and utter ignorance of some other shareholders and the Market Makers themselves. The bottom line is, they only look at the gold price, and they still think with the mindset of 12 months ago. For them, gold is on the way down, so if it goes up is only temporary, and when it goes down is the continuation of the long sustained drop. Gold price alone does not make a miner rich or poor, it is how they operate, but for these absolute ignorants is the only factor. The point is that gold has given enough signs of a long-term bottom, placed around $1,200, and many technicals are there to say that not only it won't go lower, but it will start a new sustained rise. Many place the beginning of this rise in 2014, spring/summer, so fairly soon. Having been stuck with gold mines for quite some time, all I can say is: if you can't take the hammering, sell out and leave. If you can hang on, see how it pans out, because in the medium to long term OMI and other gold miners will be trading much higher. I expect things to go rather ballistic (in a positive sense) come this August, when OMI will publish its financial results which are bound to be showing a substantial profit for the first time in years, due to all the data and effort they have published recently, but the STUPID market makers are pretending to ignore that. So hold on if you can, and good luck to all.
I am getting really sick and tired of the AIM and its market makers, unfortunately I am stuck with several stocks so I have to wait a while, but it's been awful, worst experience I have ever had on any stock exchange in years of trading. I was also on ECR, they took my stop loss today (day's low of course), so I ended up with a meagre profit where I was expecting so much more - price rose last week and then they smashed it by 45% in two days following TWO GOOD NEWS and 50% buying pressure. Un-f***ing-believable. I don't think they would do this sort of scam even in an unregulated casino or the dodgiest stock exchange in some third world country. Ah but this is the City of London. Luckily I also trade outside of the UK where the conduct is more transparent and it shows in my portfolio. Here is just a rip-off, they got it wrong in 2001, it should have been canary wharf not the WTC. These people are rotten to the marrow.
Simply because some gold is trapped in the milling circuit and will be recovered much later, they axe the price by 14%!!!!! As if it was some devastating news! They are actually saying this is part of the mill upgrading which will nearly double production in the near future, idiot market makers! Oh and by the way 83% buys on the share today (as has been frequently for quite some time), yet we are near historical lows!
Unfortunately we are the whim of amateur small investors and market makers who of course will second their stupidity. Many small investors just look at the drop in price of gold and just sell gold miners regardless. With OMI, their stupidity and ignorance takes new highs, since this company has recently announced they have an average cash cost of $750/oz, that means that even at today's price level (which is only today and likely to be higher next year), they make up to $500 for every ounce they dig. Multiplied by the minimum expected yearly output of 55k, that means they are looking at up to $27 million yearly profits. However last year they dug 65k ounces, so I have reason to believe they are just being cautious but I would expect another 65k this year, which would bring profits in excess of $30 million. They have also just announced they are going to extract a further 40k ounces out of an existing mine over which they estimate an additional $10 million over the remainder of its life (another 1 or 2 years I guess). So you're looking at a company set to have profits of around $25-30 million for each of the next two years at least: with $5 million cash and a debt of $9 million, it's easy to see this company is turning around and is going to be quite healthy. Considering it has massive land assets (worth up to $90 million), its own transportation system, a bucketload of explorations and licences, and a net asset worth of 37p a share (yes thirty-seven pence), this should be trading now at 40p and on course for 80-90p at least. But no, fretful amateur private investors with little minds and little knowledge of gold mining just see the price of gold and chicken out, market makers speeding up their escape by artificially lowering bid and ask price, therefore triggering stop losses and fear. Of course it then becomes a vicious circle. Are we going to see 7p again? I don't know, but I don't think so. What I know is that sooner rather than later (less than a year maybe) the market will have to re-adjust its valuation and this share will trade above 40p, but unfortunately a lot will also depend on gold sentiment - eventually the bad one will go, but for now it's raining ****. In the meantime silly little investors have to stop running away like headless chickens.
what do you mean? Anyway, same old story, bad news we dive, good news we still dive, bloody MMs. I also think many investors don't really have a clue about gold mining, they briefly look at some figures, see a loss and just sell - amateurs.
In September and October, there where days when this and other gold mining stocks would have 70%, 80% or 100% buys and the price would be slightly positive, unchanged or even negative. Ah, but now, as soon as we have the same but in negative terms, how quickly and deeply do they drop the bid and ask price!!!!!! DISHONEST CROOKS.
In September and October, there where days when this and other gold mining stocks would have 70%, 80% or 100% buys and the price would be slightly positive, unchanged or even negative. Ah, but now, as soon as we have the same but in negative terms, how quickly and deeply do they drop the bid and ask price!!!!!! DISHONEST CROOKS.
Hey bonker99, appreciate your post and agree with it, although - not wanting to sound big headed - I was going through similar iterations a few months back on this and other goldies bb. I have the feeling we're either going to slide sideways for some time until the market realises that gold isn't dead, or we're going to quickly 'go to hell and back', with a dive to around 1180/1220 from where I expect a strong and lasting bounce back. I have read somewhere of speculators expecting 1220 and then ending their short positions from there on. Either way, I too see gold recovering eventually and can't see it below 1,200 and certainly not below 1,000; and of course I too picked the 'economical' gold makers months ago following your identical reasoning. Problem is, it is all manipulated, gold price and AIM shares, so logical thinking has to be applied to a skewed market... So which is it going to be? Sudden death and resurgence or a slow awakening?
Hello everyone, I don't know how long you've been on this share (or other AIM gold miners), as I don't recognise your names, but if you go back in time you'll see lots of posts of mine of exactly the same tone: rage and frustration at a totally idiotic market - or market makers, 'cause it's them who decide the price. So yes, sorry but the british stock market is an absolute joke and a total rip-off. However this is especially true when sentiment is down - which it is at the moment on gold. So yes, good news are almost ignored, small or irrelevant bad news are mushroomed into major setbacks. And yes, if you can hold a long time, eventually this will change. I am glad other people appreciate the value of OMI (which is absolutely not what is quoted at present, but many times over), just wish the market makers would do the same. I did a lot of research on this company and I feel very confident with my investment.