Loading ...Timmins Gold
Ever since Fully brought this to the table I have been trying to wrap my head around what is happening at the company.
They are high grading and harvesting San Francisco to keep the lights on thru 2016. They have assets but can’t build them because they don’t have any money. Their 1 producing asset, San Francisco is being put on care and maintenance at the end of 2016 unless gold is over 1300.
They are going to have a profitable 2016 based on the gutting of their San Francisco asset, but after that I don’t know what they are going to do. If only for a year, these numbers look good considering the company is going to be trading at 3x EBITDA for 2016 with a bunch of gold at 2 other mines still in the ground. If gold goes to 1300 and they keep San Francisco going, the company will be ok. If not, this is bankruptcy in motion.
On the plus side, it appears that last year they threw out their founder (Much like Richmont did) and if the people they have in charge now know what they are doing, we could see a massive transformation a la Richmont with Renaud Adams. This is one of the few TRUE GOLD CALL OPTIONS that is actually producing and not just gold in the ground. This could be one of the biggest hits or a zero this year. Maybe someone else can chime in here.
Also, Goldcorp is in their and those guys are not good. Assets are more easily acquired in bankruptcy than out.
From their investor presentation.
- Increase profitability of the mining operations at San Francisco
- – Adjust mine plan to maximize cash flow
- – 2016 mine level EBITDA ~ US$25M at $1,080 gold, ~US$35M at $1,250 gold
Timmins also diluted the heck out of shareholders and about tripled their outstanding shares. They also need to raise some more cash to move the other projects forward. I agree a great call option on gold. Wish I had the cojones to buy in near the lows. But, who knew that would be the reversal point?
What could happen is we get a major pump then they hit the market with a secondary around 50c… based on its inverse head and shoulders pattern that is the target anyways as I see it.
An article from SA stated Sprott lifeline was only extended by 6 months counting from Jan 2016 and carried a 12% interest rate – or around $100,000 thousand dollars a month in interest on the $10.2 million dollar principal balance. That is a significant monthly cost simply to finance debt and a significant amount to pay back for a company that had a little over $9 million dollars in the bank as of December 31st 2015. And if they are going to put their San Francisco mine under care & maintenance, no idea how their debt is going to be serviced going forward. They need around $100-120 million to advance the Ana Paula mine to production, current market cap is $100 million, so it means they need to dilute their shares by 2x(?) in order to raise the cash needed. Place your bets accordingly.
With the mine plan they are running on San Francisco, they will have no problem paying Sprott in June. The call option is gold 1300+ or they need to JV Ana Paula with Goldcorp.
Thanks for that last comment, Cashcosts. Very tempted to sell here, up 30% in less than a week. And I could easily buy more of the “better” bets in the PF, or load up on some calls on a solid performer like Richmont. Gaaaaah!
Nice discussion. I also bought this 2 weeks ago. I am sitting on all my positions for now, however this one I am going to have my fingure on the trigger. I agree this management team is probably scared to death of their near death experience and will dilute to survive.
Whenever the inevitable correction comes this could get mauled
IMHO, there are safer Call options on Gold – Both Pilot Gold and Nulegacy Gold are some examples that are worth researching.