DTEJD1997 Posted April 1, 2014 Share Posted April 1, 2014 Hey all: Mawson West came out with earnings this PM. At first glance they look pretty good. Operating cash flow for the year was $85MM. Net Earnings of almost $.07/share for the year. So this thing is trading for a Price/cash flow of less than 1? Cash has grown to $48MM with outstanding debt of about $8MM, leaving net cash at $40MM. That is over half the market cap in cash. This is one of the cheapest stocks that I know of. Anybody have any thoughts? Link to comment Share on other sites More sharing options...
bizaro86 Posted April 1, 2014 Share Posted April 1, 2014 I've followed this slightly. The biggest reason is the cheap open pit ore is gone, and they're on to more expensive ore from the underground portion of the mine. From the release: http://www.marketwired.com/press-release/mawson-west-announces-full-year-net-profit-after-tax-of-us133-million-tsx-mwe-1894321.htm For 2013: •C1 cost per pound of US$0.69 •Production from the Dikulushi Open Pit performed strongly during 2013, resulting in Full Year production of 20,948 tonnes of copper in concentrate and 1,942,904 ounces of silver in concentrate" For 2014: •Underground mining is expected to ramp up to produce between 7,000 and 9,000 tonnes of copper in concentrate during 2014. •C1 costs for 2014 are expected to range between $2.00 - $2.25 ($2.60 - $2.85 excluding silver credits) per pound of copper in concentrate produced. So basically cost per unit is tripling as production falls by 1/3rd Link to comment Share on other sites More sharing options...
DTEJD1997 Posted April 16, 2014 Share Posted April 16, 2014 Hey all: Huge news on Mawson West this AM.... They have secured a $50MM prepayment arrangement with Trafigura Ltd. to sell 100% of the copper concentrate produced at Dikulushi & Kapulo for a period of 48 months. So now they have the remaining capital needed to bring Kapulo online. It is estimated that they will have annual production of 20K tons of copper. Stock is up only 16% on this news.... Looks like interesting times ahead for Mawson West. Link to comment Share on other sites More sharing options...
xxx1313 Posted April 16, 2014 Share Posted April 16, 2014 Thanks for posting this good news. Bruce and his team did exactly the right thing. Link to comment Share on other sites More sharing options...
APG12 Posted May 30, 2014 Author Share Posted May 30, 2014 Another VIC thesis: http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/116935 Link to comment Share on other sites More sharing options...
yadayada Posted May 30, 2014 Share Posted May 30, 2014 i thought about buying it, but what i dont like is capital allocation. How to gauge how much value is left in the ground? Maybe they are idiots gambling with shareholder money ? Maybe they will hit the motherload and then start returning a lot of money to shareholders. Or maybe they keep digging untill they lose money and destroy a lot of value in the end? How do you know with somewhat reasonable accuracy that last thing wont happen here? CEO used to work for a goldmine, and they are infamous for this.. Link to comment Share on other sites More sharing options...
DTEJD1997 Posted May 30, 2014 Share Posted May 30, 2014 i thought about buying it, but what i dont like is capital allocation. How to gauge how much value is left in the ground? Maybe they are idiots gambling with shareholder money ? Maybe they will hit the motherload and then start returning a lot of money to shareholders. Or maybe they keep digging untill they lose money and destroy a lot of value in the end? How do you know with somewhat reasonable accuracy that last thing wont happen here? CEO used to work for a goldmine, and they are infamous for this.. Nothing in this life is certain... I have read that: A). MWE has an existing mine underground that has deposits. Unfortunately, these will probably last less than a year, BUT MIGHT last longer than that... B). MWE has spent a significant amount preparing their next phase/mine, Kapulo. They recently received a pre-payment from a customer to finish it off. C). Bruce Mc Fadzean has lots of experience and has grown prior companies substantially. Looks like he can/will do it with Mawson West. D). MWE has mineral rights to quite a bit of undeveloped land, which may hold significant copper deposits. E). Largest shareholder is Chinese government entity. They have made their wishes known that they want capital to be returned to shareholders. I think dividends will be paid once Kapulo is up & running. They won't allow capital to be frittered away. There are risks with MWE, but I think the reward outweighs the risk, especially at this price. Link to comment Share on other sites More sharing options...
DTEJD1997 Posted July 9, 2014 Share Posted July 9, 2014 Hey all: Huge drop in MWE today on 20x normal volume. No immediate news apparent. Copper markets are relatively calm. I put an order in for more shares, but it did not get filled. I will try again in the AM. Anybody have any input on this? Link to comment Share on other sites More sharing options...
xxx1313 Posted July 9, 2014 Share Posted July 9, 2014 Management predicted cash-costs at Dikulushi underground to be about 2 $/lb copper. Last quarter it was 3.47 $/lb, higher than the market price. They burned cash. Nevertheless, management celebrates that 2014 production target of 7,000 – 9,000 tonnes of copper in concentrate will be met (but maybe at the price of negative cash-flow???). However, Kapulo is the key for the future value of Mawson West. They have to be successful to ramp up Kapulo within the next 2-3 quarters and to reach cash-cost target of 2 $/lb at Kapulo. With reported grades and open-pit mining, these targets seem to be achievable quite easily. In this case, the stock will at least double, in my opinion. Obviously, Mr. Market distrusts management now and is in a wait and see position. Link to comment Share on other sites More sharing options...
Laxputs Posted July 9, 2014 Share Posted July 9, 2014 Is 2$ above the historical average price of copper per pound (not just the last 10 year price)? Link to comment Share on other sites More sharing options...
xxx1313 Posted July 9, 2014 Share Posted July 9, 2014 No. But the same argument would also fit for oil, for example. Looking back more than 10 years, the average historical price of oil was rather 20$ than 100$. About 20 % of copper supply is produced at cash cost above 2$. It would need a collapse of Chinese copper demand to wipe out producers with cash costs comparable to Mawson West. Link to comment Share on other sites More sharing options...
Josh4580 Posted August 18, 2014 Share Posted August 18, 2014 Wow I am getting hammered on this position. Here are Q2 2014 earnings: http://finance.yahoo.com/news/mawson-west-announces-date-q2-120331132.html Any comments? Link to comment Share on other sites More sharing options...
yadayada Posted August 18, 2014 Share Posted August 18, 2014 the more I look at mining, the crappier it looks. Unforeseen larger cost base, dependance on commodity prices, and just general poor visibility of future profits seem to make it a hard industry to get an edge in. Link to comment Share on other sites More sharing options...
alertmeipp Posted August 18, 2014 Share Posted August 18, 2014 I just started looking into this. So what caused this to drop so much ytd? Geographical risk or something operational? Seems cheap that we can now buy the mine that costed 110m plus to build at less than half the cost. How much do they need to shut down the dikulushi mine if they found is not economical anymore? Link to comment Share on other sites More sharing options...
alertmeipp Posted August 18, 2014 Share Posted August 18, 2014 So say the old mine is done this year. If they make their low end of production for the new mine, cash flow will be 15 m vs EV of 45m assuming they get 1$ margin About right? Link to comment Share on other sites More sharing options...
Josh4580 Posted December 5, 2014 Share Posted December 5, 2014 Mawson West Kapulo Mineral Reserves Update http://finance.yahoo.com/news/mawson-west-kapulo-mineral-reserves-133346819.html NPV10% US$156 million @ Cu price of US$7,100/tonne (after tax, excluding construction costs) Life of Mine C1 cash costs US1.92/lb Mawson West Announces Q3 and Year to Date 2014 Financial and Operating Results http://finance.yahoo.com/news/mawson-west-announces-q3-date-142906562.html Cash balance of US$12 million as at 30 October 2014 (unaudited) Wow, Market Cap now under $5 million. Anyone buying more? Link to comment Share on other sites More sharing options...
yadayada Posted December 6, 2014 Share Posted December 6, 2014 What the hell happened? All because of ebola? Link to comment Share on other sites More sharing options...
DTEJD1997 Posted December 7, 2014 Share Posted December 7, 2014 WOW: I'm down close to 90% on this position...and I bought in at low levels. My guess is that one of two things is happening... A). Ebola, Africa & copper, & physical commodities & director leaving & operational problems at old mine combine & nobody wants this. Add in tax loss selling and you are down 90%. If the new mine performs anything like it is supposed to, the company will do very well, especially if you buy in at these low levels. B). They don't have enough money to get new mine open. They don't have sufficient weight to get debt financing either, and are short of capital and are done. I wish I had more time on my hands...but I've been working 60+ hrs. weeks and don't have much time for stock research. Anybody with any insight on this would be appreciated. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted December 7, 2014 Share Posted December 7, 2014 1- A junior miner overpromises and underdelivers? That's pretty typical in the junior mining space. 2- You have to be really careful about the costs of underground mining versus open-pit. Open-pit is cheap. So is block caving (underground) and cast/strip mining. Most forms of underground mining aren't. Cut and fill is the most expensive. Different forms of stoping are cheaper but still expensive. Room and pillar is cheaper still but... still expensive. I never researched this stock so I can't even tell you what their mining method is. But it's a junior miner so I usually stay away from these things unless they're shortable. Link to comment Share on other sites More sharing options...
yadayada Posted December 7, 2014 Share Posted December 7, 2014 You seem to be this boards country expert :) Link to comment Share on other sites More sharing options...
xxx1313 Posted December 7, 2014 Share Posted December 7, 2014 Kapulo is open pit and its cash costs are estimated at 1.92 $/lb. Kapulo is fully built, but no money is left for the working capital. If they get the few million dollars needed without much dilution, the upside for stock holders could still be huge! Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted December 8, 2014 Share Posted December 8, 2014 Kapulo is open pit and its cash costs are estimated at 1.92 $/lb. Kapulo is fully built, but no money is left for the working capital. If they get the few million dollars needed without much dilution, the upside for stock holders could still be huge! The other mine was transitioning from open pit to underground. If the upside on the Kapulo mine was huge, then they would probably be able to arrange financing. Link to comment Share on other sites More sharing options...
doc75 Posted December 8, 2014 Share Posted December 8, 2014 If the upside on the Kapulo mine was huge, then they would probably be able to arrange financing. No idea what's going on with this company, but I think the above quote should be highlighted. It's an obvious logical implication that somehow gets flipped completely backward when you start drinking the commodity kool-aid. Look at all the discussion between very bright people regarding the Kami project. Link to comment Share on other sites More sharing options...
Josh4580 Posted December 12, 2014 Share Posted December 12, 2014 http://www.mawsonwest.com/IRM/Company/ShowPage.aspx/PDFs/1666-65160422/US334MillionFinancingandDebtRestructuringPackage US$33.4 Million Financing and Debt Restructuring Package Link to comment Share on other sites More sharing options...
Josh4580 Posted December 22, 2014 Share Posted December 22, 2014 I ran some numbers in regards to this new financing with Galena. Mawson West Financing and Debt Restructure Presentation http://www.mawsonwest.com/IRM/Company/ShowPage.aspx/PDFs/1665-97469649/MawsonWestFinancingandDebtRestructure According to the reserve update (http://www.mawsonwest.com/IRM/Company/ShowPage.aspx/PDFs/1664-30732455/KapuloMineralReservesUpdate), MWE is estimating 122,000 tonnes of copper will be recovered from Kapulo over a mine life of 6.3 years. The estimated cash cost per pound is $1.92, or $4,233 per tonne. Using the current copper price of $6,445 (https://www.lme.com/metals/non-ferrous/copper/#tab2) and an estimated tax rate of 36%, I am calculating the total after tax cash flow to be $172.72 million. This equates to an average annual after tax cash flow of $27.465 million over the 6.3 year mine life. Using a discount rate of 15%, I calculate a NPV of $107 million. According to page 5 of the presentation on the Galena financing, there will be a maximum of 484.8 million diluted shares outstanding. This still gets me to a value of Kapulo of 22 cents per share. The current stock price is $0.055 CAD. Seems like there is still some decent upside here. Additionally, the reserves at Kapulo are now 86% proven. Link to comment Share on other sites More sharing options...
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