Company Update – Mon 18 Jun, 2012

Yamana’s action proves that the Extorre Gold deposit has value.

Click download link to listen on this device: Download Show

Interesting point as an addendum to our conversation is that no insider stock was sold during the time that Extorre was trading at the historic high levels.

Says something about the character of this management team.


Featuring:
Al KorelinYale Simpson
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Comments:
  1. On June 18, 2012 at 9:22 am,
    Tony says:

    This is good news for juniors if you ask me.

    I predict that RPM is next. By the end of the year.

    • On June 18, 2012 at 9:31 am,
      Big Al says:

      HI Tony,

      Well, it certainly shows that the market is at least cooking!

      Big Al

    • On June 18, 2012 at 1:06 pm,
      Bobby says:

      Tony,
      I have to disagree, this is not good for the junior market. With these ‘high risk” investments, gamblers need more than a double. (see my comments below) only a select few made any money here and IMO a double does not justify the risk involved in junior investing.
      Bobby

      • On June 18, 2012 at 3:29 pm,
        Big Al says:

        I am still pretty happy with what I am doing, Bobby!

        Big Al

        • On June 18, 2012 at 3:45 pm,
          Bobby says:

          Al,
          you should be, especially with the opportunity to get in early and on some private placements. Only thing better is to be a congressman.
          Bobby

  2. On June 18, 2012 at 9:26 am,
    ed says:

    Now I am really concerned about XRC. What now, where does the XG/XRC braintrust go now? I feel let down and disapointed with this sale. I do not like it t all.

  3. On June 18, 2012 at 9:32 am,
    Big Al says:

    Hi Ed,

    I would not be concerned at all and remember that through the Encompass Fund I am a shareholder of Extorre.

    Teams of this quality simply do not dry up and blow away!

    Big Al

  4. On June 18, 2012 at 9:54 am,
    allen says:

    Hello Al,
    Would it be possible in the near future to get updates on:

    American Manganese
    Passport Potash
    Premium Exploration

    I am interested in their long term goals and where they expect to be 3 years from now, best case and worse case scenario?

    Thank you,

    Allen

    • On June 18, 2012 at 10:22 am,
      Big Al says:

      Of course Allen.

      I will do this tomorrow.

      Big Al

      • On June 18, 2012 at 12:09 pm,
        Max says:

        Yes Al, Also interested in AMY and PEM.
        Thanks in advance! :)

    • On June 18, 2012 at 11:21 am,
      James Flannigan says:

      I may be of some help on Premium. I contacted a very well known CEO in the gold discovery business with the backing of Lukas Lundin and pointed out the comapny making ground that PEM has in its possesion that being the Orogrande Shear Zone.I pointed out that on only a few dozen holes PEM outlined a million oz discovery with very strong high grade intercepts.He the CEO was very interested in PEM with an eye to helping PEM find a deep pocketed backer.I don’t know the status thus far but Del Steiner told me he would follow up on this lead.Looking at the deal for Extore for $416 million for its combined 2.4 million oz gold discovery one can’t help but ask that the Friday 1 million oz discovery in 750m of strike and with that strike now increased to 1.5km suggesting a 2 million oz foot print how can PEM only trade at a $10 million market cap? The strucure at PEMs Friday deposit is still open for another 3.5km once again suggesting PEM is sitting on a monster at Friday that is still open in all directions.

      Does any one here want the formula for rags to riches.The answer lies in buying an asset that is alomst free compared to its future value.Thats not a plug for PEM its a fact.The current price of PEM no were near reflects its assets.There are going to be some very unhappy sellers of PEM in the near future.There are going to be some very happy buyers of PEM…One must ask what camp are you going to be in?

      James Flanninga

      • On June 18, 2012 at 3:37 pm,
        Big Al says:

        I personally own more than 100,000 shares of PEM and some warrants through the last financing.

        Am I selling? Not on your life!

        Big Al

        • On June 19, 2012 at 3:51 pm,
          Max says:

          Big Al, Why are you so bullish?!

          • On June 20, 2012 at 2:41 pm,
            Big Al says:

            HI Max,

            Bullish on what?

            Thanks,

            Big Al

          • On June 22, 2012 at 6:54 am,
            Max says:

            On Premium!!
            ”am I selling? Not on your life!”

  5. On June 18, 2012 at 11:02 am,
    Marc says:

    Big Al,
    Your above comment at the very top of the page really speaks volumes for the people you associate with. Yale took the bad and the good – and did the best he could. Congrats to him for putting character/loyalty above personal profits.
    Marc

    • On June 18, 2012 at 2:45 pm,
      Big Al says:

      Thanks Marc,

      I learned a long time ago that you are known by the company you keep and I try really hard to keep good company. (Even Aztecs!)

      Big Al

  6. On June 18, 2012 at 11:04 am,
    Stephan B. Feibish says:

    Congratulations Mr. Korelin. I see another sponsor “International Tower Hill Mines” up almost 18%.

    • On June 18, 2012 at 2:46 pm,
      Big Al says:

      Hi Stephan,

      Thanks for the kind words.

      Big Al

  7. On June 18, 2012 at 11:25 am,
    going down fast says:

    I think Yale did a good job of assessing the alternatives and preserving some value. The high inflation in Argentina, the degradation of Argentina as a jurisdiction conducive to a development such as Extorre’s project, the slippage of precious metals pricing over the last year and the drying up of capital sources to develop projects such as this one all led to a steeply declining share price that did not have too many near-term price catalysts.

    • On June 18, 2012 at 11:51 am,
      Marc says:

      GDF,
      I completely agree – very well summed up.
      Marc

  8. On June 18, 2012 at 1:02 pm,
    Bobby says:

    Al,
    Ok, here is goes from my heart. First of all, the only winners here are investors who got in on the spin off, the 1st 8 months (prior to Sept 2010) or in the last month. The small, individual invester got burned, and took in some cases a bath. I am in @$11.30 for the record, this stock was recommended to me by a friend and mutual investor, not becaues it was one of your sponcers. Unfortunately the company ran into some big trouble in Argentina, hense, the big drop in price, actually my friend sold and told me to sell around $3.00 because it was going to $.00. That was not my game-plan, so i held to the end. Yale did good for the insiders and origional investors by providing them (and himself) with a double. Guys….this is the junior market, only 1 in 5000 make it. I do not think it much matters how the “little guy” wants to vote, the insiders who own the bulk of the stock are getting out of trouble smelling like a rose. So for me it is like a “surrender” in blackjack, take 1/2 my money back and live for another day.
    Bobby

    • On June 18, 2012 at 3:32 pm,
      Big Al says:

      Bobby,

      I think that the wild card here is the completely unpredictable situation that evolved in Argentina.

      Yes this is the junior resource industry. As I have said many times over, I am not a technician and I bet on people. I will continue to bet on Yale and his team.

      Big Al

    • On June 18, 2012 at 8:47 pm,
      Austin says:

      Same situation here. Bought last September in the $11 range so we’re talking 60-65% loss . Buyout price is like 15% over 200 day moving average. In the past with other companies I have voted as management suggested. I’ll have to give this one some thought

      • On June 19, 2012 at 10:14 am,
        Big Al says:

        And that Austin is what everyone has to do. Think for themselves!

        Thanks for bringing that up,

        Big Al

  9. On June 18, 2012 at 3:49 pm,
    Bobby says:

    I agree in full, Al. I admire Yale for not selling, as he must have known trouble was brewing. I reviewed all the interviews in your archives and found them informative.

    • On June 19, 2012 at 10:34 am,
      Big Al says:

      Thanks for your comments Bobby.

      Big Al

  10. On June 18, 2012 at 5:06 pm,
    Michael says:

    What happens when the market is taken to such cheap levels. The majors and mini-majors (Yamana) start to buy.

  11. On June 18, 2012 at 6:47 pm,
    Danny says:

    Bobby I feel your pain. I am getting burned by the junior market. My portfolio is down 60%. I hope things get better soon.

  12. On June 18, 2012 at 7:43 pm,
    tony says:

    Phew! It was somewhat of a relief this morning to wake up to the news that Extorre will be taken over by Yamana. No Bobby, we were not ones that got in on the ground floor, but recently, having some of doubts regarding Argentina dispelled, we took a chance and averaged down. Despite the considerable loss, there is a lot of hope in that the acquirer Yamana is indeed a class act. I believe Peter Morrone and his crew are top drawer.
    So much depends on management and it is our personal opinion that this management..well stinks. I have referred to the proposed bought deal of 50m Jan 30th of this year and its withdrawal a short time later. I believe the SP to have been over $7 per share in the bought deal, and then later $25m bought deal sometime later. Coincidentally, the links to those items on the XG website no longer work. It is my understanding that even bought deals are dilutive, but one does understand that juniors do have to raise money. What does gall us (is this unreasonable?) is that Mr. Grey should so blatantly deny it, even though it is part of their own record. Yes, it is a bad market for the juniors but if you will take a look at the dive in Extorre share price, it also coincided with the withdrawal of the prospectus. And Mr. Grey, has publicly denied this. I wonder if Eric Roth became the fall guy. Anyway, enter Mr. Mulroney!
    We believe when one loses faith in management, it is time to get out. And for most ordinary shareholders, Yamana offers as painless a release as can reasonably be expected. But all of this happened on Yale Simpson’s watch. We have certainly taken him and the others off our Christmas Card list and taken note lest they turn up again in another life.
    On a similar, but different not, on Mr. Simpson’s outlining the difficulties in Argentina, we are reminded (and Argentina is probably extreme) the currency controls that most countries now have. When we cross the 49th parallel the greatest terror is that we might win more than $10,000 grand at the casino and would be able to take it back  into Canada. Once very recently we were asked about $5,000. 10G is not a great deal of moolah.
    Trivialities aside, there are many great sources who are familiar with the situation in Argentina. Ron Hera for one, and at the WRIC we had the privilege of talking to Mary Little of Mirasol Resources (for the record we do not hold any Mirasol) and if I may dare to summarize what she says is “If you are a good corporate citizen you have nothing to worry about in Argentina, except inflation and inflation is a problem.”
    To those who are discouraged …or downright p*ed off with this deal, consider that it could be a whole lot worse, if for example Barrick had stepped. We believe that Barrick are in deep trouble at the big Pascua Lama project in Argentina and by no stretch of the imagination are Barrick good corporate citizens.
    Sorry for the length of this missive
    Regards as always
    Tony and Marianne.
    PS there are so many tonys on your site that from now on will be reverting to my older moniker “seabhac”

    • On June 19, 2012 at 4:28 am,
      Bobby says:

      seabhac,
      thanks for the informative post.
      Bobby

    • On June 19, 2012 at 10:21 am,
      Big Al says:

      HI “seabhac” my friend,

      Many thanks for your comments.

      They are a whole lot of ways to look at every situation and I listen to each and every one as you and Marianne know.

      You two are examples of what make this industry such a joy to be part of.

      Best as always,

      Big Al

  13. On June 18, 2012 at 11:19 pm,
    Eric Dubin says:

    Yale Simpson is easily among the top ten best precious metals executives and company builders. However, this deal was done at too cheap of a valuation. Yes, there’s elevated risk in Argentina now. But I don’t think we’re going to see wide-spread nationalizations there – just for the symbolic operations like YPF. Instead, we’ll most likely see very repressive taxation. But even with that taxation, if one assumes that the price of gold is not going to go down overall in the next few years (never mind rise), a $600 million valuation would have been more reasonable. Toss on expectations for gold north of $2,000 and $800 million should be seen as reasonable. Just look at how the shares were valued back in Aug. and Sept. of 2011, hitting a high of $15 and change with gold ONLY at $1900 and change. Of course, many things have changed and in a negative direction (e.g., sentiment for the sector, fear of nationalization, etc.). But the excessive discounting of these risks in the stock has essentially given Yamana an astounding bargain.

    Again, don’t misunderstand. I’m not knocking the company nor Yale Simpson. In fact, I’ve been in these shares longer than even Big Al and Yale made me a lot of money. But I’m sad to say that I think he should have held off for another six months because this entire sector is going to turn around like a bat out of hell. Another $200 million would have been easily had in my humble opinion, if not another $400 million.

    Oh well. It’s good for the sector overall. We’re going to see M&A activity go absolutely bonkers in the next 18 months.

    Al – thanks once again for all the years of superbly insightful radio.

    Eric Dubin
    Independent buy-side analyst and manager

    • On June 19, 2012 at 10:10 am,
      Big Al says:

      Morning Eric,

      Please call when you have a moment or send your number to alkorelin@gmail.com

      Thanks,

      Big Al

    • On June 19, 2012 at 10:39 am,
      John W. Robertson says:

      Remember, it’s not a done deal until shareholders vote. I know there’s a lot of big holders out there, but I’m not sure how it’s going to be received.

      • On June 19, 2012 at 11:39 am,
        Big Al says:

        Hi John W,

        It’s not over until the Fat Lady sings!

        Big Al

  14. On June 19, 2012 at 4:08 am,
    nancy says:

    I think Yale did the right thing by not selling out but I think a lot of shareholders
    are getting f___ed! I am a former share holder and had contacted Extore,
    Rob Grey on several occasions about what was going on with the company
    as the shares continued to slide big time. Never once was there any mention
    about the “operational issues” as Yale puts it. Extorre was very irresponsible
    as a company to it’s shareholders by not disclosing any of these concerns
    to protect it’s shareholders from these operational issues. I am totally disgusted
    with Extorre as a shareholder and they should be ashamed of themselves for
    not being more honest about the situation as the shares crashed. I am not going
    to sugarcoat this “sell out” this is a raw deal for most shareholders and a panic
    sell that demonstrates how deceitful Extorre has been to their shareholders.
    Rob Grey you should be ashamed of yourself. You wondered why Yale had not
    made any interviews for the longest time while the shares went down, he certainly
    was out there when times were good and Extorre was trading well above $11-12 dollar range. Even the so called good guys like Yale Simpson can
    coward and say oh well they should have sold out at $15. Well Yale you should
    have held out as well!!

  15. On June 19, 2012 at 4:35 am,
    Bobby says:

    nancy,
    I believe that your opinion is right on.
    Bobby

  16. On June 19, 2012 at 5:32 am,
    nancy says:

    Hey AL,
    You are right about the unpredictability of politics impacting the mining industry
    in whatever country that may occur, however Extorre did know about these operational issues in Argentina that were not disclosed to shareholders. Yale Simpson owed it
    to his shareholders to disclose any information regarding how it might have
    impacted outlook of the company. Company’s certainly do not hesitate to
    proclaim the potential of discovering a new vein do they? Well consequently
    when a situation that reflects the truth about the company that is not so “forward looking” from a positive standpoint, the company has the same obligation to notify the shareholders. I think Rob McEwen of McEwen Mining demonstrated good policy towards informing shareholders what maybe to expect in Argentina!
    Yale and Rob Grey tear out a page from a real pro Rob McEwen!

    • On June 19, 2012 at 8:56 am,
      seabhac says:

      Nancy,
      I totally agree with you
      seabhac

    • On June 19, 2012 at 9:58 am,
      Big Al says:

      Morning Nancy,

      I have to respectfully disagree.

      One could make the same argument about mining in the U.S. if more governmental negative regulation comes into effect.

      I mean, anything is possible.

      Big Al

  17. On June 19, 2012 at 5:34 am,
    Jerry O^OTB says:

    I love this site……really some great comment by all participant…..
    Thanks to Al for having Yale on…and doing the follow up to our request…
    ootb….

  18. On June 19, 2012 at 6:38 am,
    Tex says:
  19. On June 20, 2012 at 6:59 am,
    Bobby says:
    • On June 20, 2012 at 12:25 pm,
      Big Al says:

      Thanks Bobby, I just finished reading it.

      Many of the investors who purchased Extorre did really well and many did not. Those who purchased during the mania period of $15/share obviously did not.

      I have a policy whenever a stock that I have purchased runs up as high as Extorre did I will sell. I don’t believe that any exploration stage company is worth anywhere near that much.

      I have all the time in the world for the management of this company and I will continue to support it.

      Big Al

      • On June 20, 2012 at 2:36 pm,
        Bobby says:

        Al,’

        So you sold the stock?
        If you look at the chart, only the only opportunity to purchase shares at a profit was in the first 8 months, AL anyone who bought from Sept 2010 to May 2012 was a loser in this stock. Are you calling this a mania phase….I am confused>

        Bobby

        • On June 20, 2012 at 2:48 pm,
          Big Al says:

          HI Bobby,

          As I have said in the past I owned Extorre through an investment in The Encompass Fund.

          I believe that anyone who sold their stock prior to $15/share and more than whatever they paid for it realized a profit.

          Big Al

  20. On June 20, 2012 at 7:52 am,
    Bobby says:

    Anyone think that Yale should go back to the table and get the shareholders who were not insiders a better deal? Each time i look at the long term chart, I see little opportunity for the retail investor to have made a profit here.
    How are you voting?