Company Updates From Management – Tue 18 Dec, 2012

Gary Cope discusses the recently annouced friendly take-over between Orko and First Majestic

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Featuring:
Al KorelinGary Cope
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Comments:
  1. On December 18, 2012 at 10:51 am,
    James (the lesser) says:

    no bottom for gold. we can all say how this is daily noise, but lets face it, the bull market might be over. do we get out of dodge now or wait for more heavy losses?

    • On December 18, 2012 at 11:13 am,
      richard says:

      The bull market is far from over. We’re moving toward an interim low as I’ve mentioned in the past. The conventional markets are outperforming the PMs as I also mentioned they would weeks ago. We have only about one more week of this outperformance and then the PMs will outperform the conventional markets for weeks. If the conventional markets move down, the PMs will move comparatively down less; if the conventional markets move up, the PMs will move up comparatively more. If you note, many of the PM stocks have not moved comparatively down with this move down in bullion prices. The following points:

      1. The interim low in the PMs should happen in the next 11/2 weeks.
      2. In the next 11/2 weeks we’ll see an end to the conventional markets outperforming the PMs.
      3. We’ve seen the low in most of the high quality PM stocks——I might add that I”m accumulating PM stocks as the bullion prices drop. I hope to be fully invested by the middle of January in PM stocks and resource stocks.
      4. Over the next 11/2 years silver and silver stocks will outperform gold and gold stocks.

      I might want to apologize for missing the move down in the dollar—-ironic that the dollar is dropping and the PMs are dropping with it.

      • On December 18, 2012 at 11:22 am,
        JJ says:

        Richard don’t apologize for missing the trend in the US$…its doing exactly what it should be…..gold and silver are being manipulated, that even a blind man can see…and I agree with you it will end soon, just like it has a Zillion times before since $400

        • On December 18, 2012 at 12:43 pm,
          Big Al says:

          You are wrong JJ!

          It has been two zillion times!!

          Big Al

      • On December 18, 2012 at 12:41 pm,
        Big Al says:

        Thanks Doc.

        How about an interview with you tomorrow (Wednesday)?

        Big Al

        • On December 18, 2012 at 1:07 pm,
          richard says:

          Al, sounds good. Let me know the time and I’ll be available—–you have my phone number (I think). I believe you also have my e-mail.

      • On December 18, 2012 at 12:46 pm,
        Dick Tracy says:

        Two of my juniors that have made me think about bringing out the crying towel are starting to show incredible life, Their Alive!!!!!!!! MO, DT

        • On December 18, 2012 at 12:52 pm,
          Dick Tracy says:

          Once you have a diversified portfolio and no debt nothing gives a guy a zing like playing the high risk junior market, the hard part is telling your wife that you love her more than the market, Ha, Ha. DT

          • On December 18, 2012 at 2:13 pm,
            Dick Tracy says:

            The Pressssssshure in the market is building for the quality gold and silver juniors, and when tax loss ends on December 24th and they flatten out the fiscal cliff (fools) it should be up, up, and away. DT

          • On December 18, 2012 at 2:57 pm,
            Big Al says:

            What did you think about the things that Jeff had to say about the cliff situation, Machine Gun?

            Big Al

        • On December 18, 2012 at 2:54 pm,
          Big Al says:

          A lot of us have been suggesting a great junior resource market in 2013, Machine Gun!

          Big Al

    • On December 18, 2012 at 11:57 am,
      Brad H. says:

      James, my friend, stand pat if you can. Just look at a long term chart once again and all the noise around in the world. It’s just noise. This thing is very far from over. I see despiration in the commercial COT index. There is an increasing disparity between the amount of commercial shorts and longs. Looks like somebody knows it takes a lot more effort keeping it down at these prices. Any lower and physical buying will come in earnest for those in the know. For novices, they will buy when it runs up another 15-30%. Doc could probably explain a bit better than I as to why this COT variable is bullish. ie. massive short coverings at lower levels…. on the flipside, there’s no saying that the all-time highs in COT shorts couldn’t continue higher. I just don’t think they would be able to cover part of what they hold if it gets to that point. James, my suggestion is to read some more James Turk or Mike Maloney and buy if it dips some more. If you still are thinking of selling, sure take your “superficial loss” tax loss to buy it back after 30 + days. I would bet it won’t be lower. Good luck.

      • On December 18, 2012 at 12:44 pm,
        Big Al says:

        Appreciate your opinion, Brad H!

        Big Al

      • On February 1, 2014 at 5:20 am,
        Maxwell says:

        Huzzah, you’ve come back! I was worried for a mnmeot. There was actually a week or so where I was getting pageload errors and I was concerned the blog ended up going the way of the Dodo.In any case, it’s good to have you back!

    • On December 18, 2012 at 12:02 pm,
      JJ says:

      james, ya know you could sell 1/3 or 1/2 and sleep better. or you could take advantage and buy more since your in waaaay below todays “raid” level

      Your concern is timed perfectly as Sinclair just sent out an email to his followers….this man has called correctly golds trend for 12 years!!….perhaps you should follow his advice???

      My Dear Extended Family,

      Hi Jim,

      How should I read the negative pressure over gold and gold stocks? What’s going to change this negative scenario?

      Respectfully,
      Arlen

      Dear CIGA Arlen,

      This is capitulation everywhere. This event has been a manufactured market move since $1800, with clearly planned and executed intervention. The gold price take downs during low volume periods internationally is a known price moving only tactic.

      I simply shut off the machine because all the regular causes for the gold price will make themselves effective with time. A manufactured market event will not change the trend. Even the most professional can be reduced to sheeple by their emotions.

      I refuse emotions and emotional people in a market context. To save yourself from all this that has happened and will continue to happen requires commitment and courage.

      You have it or you do not. Admit who you are and act accordingly.

      Like every mistake made by Westerners, what you see today is simply driving gold into Asian control.

      Jim
      …..jsmineset.com

      • On December 18, 2012 at 12:08 pm,
        Brad H. says:

        Hey thx for that note JJ! It is very true.

    • On December 18, 2012 at 12:40 pm,
      Big Al says:

      Afternoon the Greater,

      Will be putting up Rick’s opinion in about 15 minutes!

      Big Al

  2. On December 18, 2012 at 11:19 am,
    JJ says:

    Al good interview with Gary

    Giving his opinion to Matthew’s comment suggests an apology is due regarding my comment, I’m sorry but Mr Cope is wrong aswell….I find it odd that he thinks its an all round good deal but FR’s shareholders dont and agrees thats why FR is trading lower???? based on Matt’s comment??? why would shareholders be unhappy buying your company Mr Cope, interesting???

    FACTS:

    FR is issuing 17mill shares which increase’s the O/S shares by ruffly 14% so with Fri close of $22.64 the simple math implies a revaluation to $19.47 from dilution….anyone who was excited (a happy shareholder) with the news release who bought Mon am doesn’t understand the process….the market “pro’s” are making a stand at the low $20’s and in the background Silver is diving!! and so are the silver shares….thats why I bought at $20.11

    Anyone who thought FR was going to be revalued higher is clueless…its simple math that has FR lower not unhappy shareholders as that measure is yet to be determined, imo…………and if Silver heads back towards $35 and general silver stocks take out their recent highs while FR is left sub $20 I will be here apologizing!!!….for now I’m putting my money where my mouth is and buying the dip created by the increased shares outstanding………..

    • On December 18, 2012 at 12:03 pm,
      Matthew says:

      JJ, reread what I wrote. I did not say that the consensus view is net negative unless the shares level off BELOW 15% down. That still has not occurred. The action could have been better, but it hasn’t been bad. My point was that trading activity is always a reflection of traders’ beliefs. Let’s say that Orko was picked up for 25% of its book value (instead of a multiple of it), don’t you think that First Majestic would have likely traded higher on the news despite any dilution?
      So, again, I’m not knocking the deal or First Majestic and post-news trading DOES matter and does contain information about market sentiment.

      • On December 18, 2012 at 12:14 pm,
        JJ says:

        Matthew I guess I’m getting thick in the head and only saw your comment and Al’s question to Mr Cope….the current sell off in FR shares is unhappy FR shareholders which has nothing to do with the increased O/Shares, just shareholders reacting.

        If FR issues any new common shares a revaluation will take place

        I never suggested you didn’t like the deal, its the reason why its $20 thats where we disagree….I’m not ticked off FR is $20 I’m thrilled!! I buy it cheaper and we get Orko that Matt is going to show up big time when silver turns north again…

        CHEER$! Matthew

        Retail reaction to most stock news is rarely correct, its the pro’s who move these stocks and they play the sheeple time and time again.

        • On December 18, 2012 at 12:33 pm,
          Matthew says:

          You’re right about the pro’s and the sheeple. Consider that the C$387 million deal equals 15% dilution to First Majestic, and that the shares are currently reflecting 10% dilution. This shows that the market is valuing the deal at only C$129 million (the one-third of the 15% dilution that is not reflected in the share price). That does indeed look like a bargain for you FR shareholders. Anyone who likes FR and believes that Orko is worth more than $129M, should buy FR shares now!
          I have no interest, long or short, in either, by the way.

          • On December 18, 2012 at 12:42 pm,
            JJ says:

            Now your talking my kind of math, Matthew…..I have a very BIG interest in FR with a long position, by the way…..and an even bigger long interest in silver bullion….and I love the fact that KN running FR has the same interest…..many jr companies are run by bandits looking to line their pockets promoting a hole in the ground….as Pete Grandich says the jr space is for gamblers not investors

            CHEER$!

    • On December 18, 2012 at 12:42 pm,
      Big Al says:

      Thanks for the input, JJ!

      Big Al

  3. On December 18, 2012 at 11:59 am,
    Sandy says:

    The gold and silver companies better find a way to stop the manipulation or these guys will just keep pounding the metals and the crushing their stocks. This has been going on now far too long.

    • On December 18, 2012 at 12:05 pm,
      JJ says:

      Sandy the beauty fo short positions is they have to cover, lol…and they will…..is there crying in the streets, is there blood in the pm’s pits….sniff, sniff smells like it…I love a good panic………..

    • On December 18, 2012 at 12:13 pm,
      Brad H. says:

      Sandy, quick note to your point on manipulation. Absolutely, it happening ALL over. I ask myself whether I see the SEC asserting itself in a meaningful way and the answer is no. No one is going to jail and they either can’t “prove” with hard evidence that it is happening, or they know who runs the show and won’t do anything about it. Just look across the pond at the HSBC’s mere 1.2 billion slap on the wrist for libor involvment. Drop in the bucket fine for one of the biggest manipulations in our history.

    • On December 18, 2012 at 12:44 pm,
      Big Al says:

      Yep, Sandy, I am with you.

      Big Al

    • On December 18, 2012 at 1:25 pm,
      Jimmy says:

      The producers need to institute a gold price linked dividend policy similar to NEM or pay out dividends in gold or silver similar to GORO. IMHO, they need to raise their payouts even more. A lot of companies are really stingy when it comes to paying out dividends – most still pay less than 1 or 2% even during this wave down. That’s totally unacceptable. How are they going to attract capital when utilities are at a 4-5% yield, REITs are at double digit percentages, investment grade bonds are paying around 3-4%, and even the DJIA is at a 2.4% yield?

  4. On December 18, 2012 at 12:21 pm,
    James (the lesser) says:

    gold didnt go up when we were going over the so called fiscal cliff, funny though it is going down on news there might be a deal. right now with all the cross winds gold cannot win for losing

  5. On December 18, 2012 at 12:32 pm,
    richard says:

    I have a feeling that when “the deal” is reached, it’ll be obvious that the deficits will continue as far as the eye can see and that money printing will continue at a torrid pace for a long time. Then the PMs can once again settle down and we can move sideways to higher over the next year—–in fact, for those bullion buyers, you’ll get a chance to buy the PMs again in the next week for prices you won’t see again in your lifetime.

  6. On December 18, 2012 at 12:50 pm,
    James (the lesser) says:

    yes the money printing will continue and bernanke will force people to take on risk and that is why the stock market is going up. gold should be also but it isnt. call it manipulation, fact is price dictates. it looked like $1680 was going to hold and they took it out. could see $1620, even $1550, this isnt investing anymore. it is speculating

    • On December 18, 2012 at 2:54 pm,
      Big Al says:

      At this point in time I would also add the word “luck”!

      Big Al

  7. On December 18, 2012 at 1:04 pm,
    reo says:

    Your right James it is speculating..All these experts have no idea WHERE GOLD AND SILVER are going..they are guessing. As for Orko I started investing in it in 2004 at .13 cents…and have been buying and selling all the way through the up and downs…End of the Road for this STock…MADE A LOT OF MONEY. And I didn’t listen to ANY SO CALLED EXPERTS. They don’t no more then anyone else…the few times I did listen to OTHER PEOPLES expertise I lost money.

    • On December 18, 2012 at 2:55 pm,
      marc says:

      The LONG TERM trend for the PM’s is up. Everything else is noise. The CRITICAL question becomes do you have the cash flow and/or staying power to hang on. That is really the only question that REALLY matters.

      • On December 18, 2012 at 2:57 pm,
        marc says:

        BTW, everything Doc has indicated and reiterated several times on this site is, I believe, spot on! IMO.

    • On December 18, 2012 at 2:56 pm,
      Big Al says:

      Believe me, reo, I am completely on your side!

      Big Al

  8. On December 18, 2012 at 4:40 pm,
    SB says:

    Anyone investors second guessing the FR/Orko deal should consider the silver resource base ORKO will bring to the table. How much would FR have to spend on greenfields exploration to identify a resource base like that? Anyone who has followed FR for the past 6 years should have well founded confidence in their ability to develop a property and bring it to production. KN and the FR team know exactly what they are doing. Think ahead to 2015 when FR is producing 15 million ozs Ag per year @ $90/oz. Relax and be long FR.

    • On December 19, 2012 at 1:00 pm,
      Big Al says:

      Good point, SB

      Big Al

  9. On December 18, 2012 at 11:36 pm,
    Lore says:

    Good discussion. Cheers.

  10. On December 19, 2012 at 9:38 am,
    Nigel says:

    I know a lot of Orko shareholders who have held shares for a number of years and have invested all the way up to the high of $3.25 that are far from happy with the price achieved. Can understand FR shareholders concerns about dilution but from an OK shareholder perspective management of OK less than a year ago was saying they would not accept an offer less than $4 as it would not reflect the underlying value of the resource?? The bids prove that the resource has real merit and many shareholders are extremely unhappy about the timing of the sale, 1) new PEA due in two months, 2) share price yet to fully recover from the PAAS exit and OK bashing that OK allowed PAAS include in the press release 3) the general market conditions so poor for any sale. (You don’t sell your house at the bottom of the market unless you absolutely have to.) In a buyers market it is impossible to get fair value for any resourse. The premium achieved is on a beaten down share price and given the dilution in FR stock that premium won’t be fully realised, hardly a reason for shareholder celebration. Many shareholders are disappointed Orko did not have the courage to wait for the PEA and delay a sale until the market improved, especially with $11m still in the bank, could have easily waited until mid 2013 and tipped their toes back in the water. Thats of course if you believe silver is going up in 2013. FR’s CEO comment that this was almost a ‘must do deal’, says it all. They have gotten a great resourse at a knock down price at a time when OK should not be selling. JMHO. I would prefer for us to wait for the PEA and better market conditions, I will be voting No as will many small shareholders who have remained loyal to management over the years.

    • On December 19, 2012 at 1:43 pm,
      Big Al says:

      Thanks for the comment Nigel,

      Big Al

  11. On December 19, 2012 at 10:42 am,
    JJ says:

    Nigel, the Greedy become the Needy

    You’d be happier if OK was trading at $1.55 vs $2.55, hello!

    You can guesstimate till the cows fly the value of OK going it on its own a year from now.

    Your CEO did his job as he got shareholders a 60%+ premium over what the STREET valued OK at just last week

    Imo only shareholders voting no are those long above $2.55

    • On December 19, 2012 at 11:27 am,
      Matthew says:

      Right JJ, and unhappy OK shareholders should also consider that while OK is still below much of its 2011 dollar price, it is now up dramatically when priced in terms of many of its peers. There are a lot of quality, cashed-up juniors that are still trading at 20-30% of their 2011 highs. You could take the money and buy a lot more of something else.

      • On December 19, 2012 at 1:45 pm,
        Big Al says:

        And yet another good point, Matthew!

        Big Al

    • On December 19, 2012 at 1:44 pm,
      Big Al says:

      Good point JJ

      Big Al

  12. On December 19, 2012 at 12:06 pm,
    JJ says:

    Hey Matthew, if I was an OK shareholder I’d thank the market God’s for my 60%+ premium vs street value and buy physical silver bullion…its a full win-win as the premium is your investments CEO doing his job and the timing is perfect as silver trades at a 11% discount of its recent $35 high.

    I’d be singing Tis the Season to be Jolly!!!!!!!!!

    • On December 19, 2012 at 12:33 pm,
      Matthew says:

      That’s an excellent idea. When OK first hit $3.20, silver was near $50. So silver was 15.6X the price of OK. As I type, silver is $31.12 and OK is $2.42, which puts silver at just 12.8X the price of OK. So, in terms of silver, OK is worth roughly 20% more now than it was at $3.20 in early 2011! Not bad.