IAU.TO

For those who bought this stock or thinking about buying it. Be aware that this company had history of cash flow issue due to irregular grade of Gold production.

Quote :

Feb 28, 2007 New release:
...IAU has selected Claymore Capital Pty Ltd to provide an unsecured short dated convertible loan of A$5.0 million net of facility fees. The loan will bear interest at a rate of 12.0% per annum calculated quarterly in arrears and subject to shareholder approval may be convertible into equity. Finalisation of the facility is subject to completion of documentation and the consent of the Company's bankers.

The proceeds from the financing will be used to re-establish working capital levels at the Paulsens Mine which had been depleted following a period of below target performance....

Quote :

JUN 29, 2007 New release:
Intrepid Aligns Paulsens Debt Repayment Schedule With the Life of Mine Plan

So, what happened to the $5 million they raised. It was used to compensate for the negative cash flow and pay off their administration expenses.

Also note that as of Mar 31, 2007, IAU has 95k ounces hedged at $627 Austrailian dollars. It took the company 9 months to reduce the hedge position to 43,971 ounces (just about 55% of 95K ounces). So, to elimate all the hedges (without the merge), it can take another 9-10 months.

As of Oct 30, the company has only $1.5 in cash. Note that the compnay do not always generate positive cash flow either. As of Dec 31, the cash in hand rose to 2.5 million (this is due to the increase production of gold and the decrease cash cost associate with the increase gold production.
However, if you review their previous production history. The company was not able to achieve gold production rate and low cash cost consistently.)

Here is their production history. I will advise you to review all their previous press releases before buying into this stock.

2005 Sep - 17,159 ounces
2005 Dec - 19,013 ounces
2006 Mar - 20,528 ounces
2006 Jun - 22,148 ounces, inaugural profit of 1.34 million achieved.
2006 Sep - 16,388 ounces (lower grade Au)
2006 Dec - 14,672 ounces (lower grade Au)
2007 Mar - 17,494 ounces, up 19 percent from the prior quarter and 98% of mine plan record stope production
2007 Jun - 15,854 ounces, 88 percent of Mine (LOM) Plan- Site cash costs $467 per ounce ($26 per ounce due to US$ weakness over prior period)- High grade intersections at Apollo (still open at depth)
2007 Sep - 16,690 ounces, an increase of 5% from the prior quarter (15,854 ounces)
Site cash costs $426 per ounce, a decrease of 9% from prior quarter ($467 per ounce)
2007 Dec - 21,426 ounces, Site cash costs reduced to $357 per ounce, down 16% (prior quarter $426 per ounce) offsetting a 5% depreciation in the US dollar reporting currency

I have been trading IAU since 1999 (I was able to make profit trading this stock. however, if I have kept this stock since then, it would be a big red in my portfolio!!)

And how much would it cost them to unwind all their hedge position by end of March??

Assuming that they will continue to unwind their hedge at a rate of (95-44)k / 3 = 17k ounces per quarter. So, they will still have 44k - 17k = 27k ounces left in their hedge book.

If Gold goes up to $1500 per ounce which may be possible according to Jim Sinclair. So, it can cost IAU approximately $900 * 27k = $24.3 million.

The merger will only bring in approximately: 50-60 million. So, they will have approximately $25.7 - $35.7 million left.

The Casposo Gold-Silver Project, Argentina requires a capex of 45.5 million. so, unless they can generate a good positive cash flow immediately after closing out their hedge position, they may need to raise money to fund this project.

Thanks EarthMonkey!

I bought a little, just for a quick trade. I bought for less than shelby claims he paid; I will be quick on the sell button, also.

According to the scheme booklet (http://www.emperor.com.au/news/Emp%20Scheme%20Booklet.pdf), Emperor will bring to IAU approximately A$54 mil (agreed minimum amount) which is about $47.5 mil USD.

Also as indicated in the report, as of Sep 30, 2007, IAU still have debt: approximately $12.2 mil.

The new company has plan to eliminate both debt and total hedge position within 15 months after the merger.

Note that I corrected some data appeared in miningpedia.com - higher cash cost and lower annual production ounces (all based on all previous and current news releases data). Note also that another approx. 17 mil shares (excluding options to be issued to the existing employees) will be issued as warrants. This data was not entered in miningpedia.

As of Dec 31, 2007 total shares issued:
Emperor: 1,046,005,621 (each 4.25 shares will be converted to 1 IAU share) i.e. 246,118,970 IAU shares
Intrepid: 181,573,419 shares

The total shares outstanding after the merger would be approximately:
1,046,005,621 / 4.25 + 181,573,419 + 17,000, 000 = 444,692,389 shares

To fund Casposo project, the new company will need to raise at least: 55.5 - (47.5 mil - 24.3 mil - 12 mil) = $44.3 mil USD (assuming $1500 gold, 12 mil IAU debt).

Assuming $1200 gold, the amount to be raised to fund Casposo project would be approximately: 55.5 mil - (47.5 mil - 16.2 mil - 12 mil) = 36.2 mil.

There is a potential of a sharp increase in share price after the merger. However, be warned that Intrepid never made money for the existing share holders.

Quote:
Originally Posted by bowzer
Miningpedia pick on sale now!!! Down 17%.
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Yep, so I bought a little.

I figure we just got a double bottom. If not, shelby will be poundng sand!

I have a tight stop-loss in place; lets see if someone takes it out.
__________________

The white spinning top candle stick signals indecision. It is difficult to say it got a double bottom base on this candlestick bar.

Besides, Gold just headed below the lower channel line the fist time since last August. There is a possibility that Gold may rebound from this price level. However, I still think Cash is King right now and buying a few PUT contracts may add some insurance to our pm stock investment. It is just my opinion.

Here is my TA chart for GLD...

http://stockcharts.com/h-sc/ui?s=GLD&p=D&b=5&g=0&id=p37602157399&a=94032243

Note that RSI dropped below 50 the first time since August although CCI and the price has a positive divergence. Many TA signals are not agreeing to each other right now. However, the channel line is most accurate when you want find out what trend a stock follows. The Gold big uptrend is still intact base on this chart. However, the short term trend has a negative bias.

Cash is King for me!!

It is good to hear everyones opinion.

I have a significant amount of cash, as well. I was feeling pretty good about that, but now, I'm not so sure.

From the reading I have done this last little while, I'm finding more, and more, bears. Grandich has had a hard time in the market, and now he has gone bearish. Hugh Cleland has suffered as well, now he's getting bearish. If John Embrey goes bearish, well, I won't know what to think.

In the final analysis, I see capital building, which should bode very well for a rally. The names I mention say they believe in a long term bull market in commodities and precious metals.

I bought some SLW yesterday. I think it might be a good way to participate in an unexpected upswing in silver. Mr. Bush could cause such an event to happen at will.

I have also heard that many traders go long the bullion, and short the juniors. Some say they go long the majors, and short the juniors. If the sharp drop in PM's unwinds these trades, that could cause a ferocious spike in Juniors. I think many juniors are highly undervalued at a much lower bullion price. I therefore have a hard time holding too much cash, which I think is overvalued. Oh well, if it were easy, everyone would do what we do.