Best to you also Rev,
Cheers.

It’s all good Big Al. I know….
Wishing you & Kathie a pleasant WE.
LPG

Thank you LP, we need one and it looks like it will happen.

Did you know, by the way, that our daughter Sarah will be giving birth to twin boys within the next couple of weeks?

I wasn’t Big Al.
Congratulations to her, her family, and the soon-to-be-more-busy grand-parents 🙂
Best as always,
LPG

Thanks LP, I was sure that we had talked about that.

Big Al. you shouldn’t say things like does he own the stock, keep on fishing at Scuttlebut Lodge! DT

Sorry Mr t, I do not understand your comment.

NSRPF is the largest holding of Jay Taylor and Moriarity.

Thanks Bonzo

Big Al – Congratulations to your family regarding Sarah having twin boys. Keep us posted on the big day, and get em’ stacking bullion from the get go….. All the best.

Jerryck,

When you recommend a stock and disclose that you are long the name, that’s being transparent – in my world.
When you mention ” I have participated in almost every placement the company has ever done including the just concluded one.” – that also reflects (high) transparency, in my world.

As a side note, I will point out when he writes articles, Bob’s disclosure of ownership of the stock is not in (much) small(er) prints at very very bottom of the page. Everything is in the same case as the remaining of the text. I, personally, value that.

Re: the “highly opinionated” bit you mention, I apologize I’m not sure I understand what is your point ? Wether Bob is highly opinionated or not, I couldn’t care less – but that’ me. In my world, everyone is entitled to their opinions (or lack thereof), even when I despise those.

I understand that on planet earth, there are people who think that not everyone is entitled to any opinion. In other words, there are some opinions that are not allowed, on certain matters. I totally understand that some people think that way.
For those people, I kindly point out that with these views/mindset, there will probably be a time in the future when their own opinions will not be allowed by others who simply don’t agree with them. Good luck w. that.

My 2cts world.

LPG

+1 LPG

Btw, “highly opinionated” is often a side effect of thinking.

“Thinking is the hardest work there is, which is probably the reason why so few engage in it.” – Henry Ford

LPG

The term transparency, as a see it, should apply to public companies, government, and entities that can have a direct affect on the public. Moriarty runs a website that promotes stocks that feed traffic on his website for his benefit. People can come and go as they wish. It doesn’t affect me directly one way or the other whether he’s transparent or not. If the government isn’t transparent, or a rating agency isnt transparent, that affects us all. I’m sure he’s operating legally, so that’s fine.
ive been reading his website since it started around 2002ish. So I understand the purpose of the site.

Does Bob tell you in advance when he buys or is going to sell a stock or even when he has sold a stock? I don’t think so. That’s transparency. There was a day when he use make stocks soar on his comments. I’m sure he was already in. But as long as your doing it legally that’s fine. And I’m fine with that.

No problem LPG, we just see things differently. My 2 cents. 😉

Jerryck,

I really enjoyed your follow-up comment at 3:29pm, as it touches on several interesting topics/angles. So I’ll try to address some of them.

1) The easy part: on the term “transparency”.
You think the term should APPLY to public companies, government.
I think it can a-l-s-o be applied to individuals/human beings, irrespective of wether they affect the public at large or not.
I was about to write “We see things differently. No biggy. I’ll leave it there” but then a thought crossed my mind, which I’ll share just below.

I note – stating the obvious – that a public company or a government cannot be transparent on its own/on its own will. That is because they are inanimate entities (i.e they are just legal constructs).
However, when the HUMAN BEINGS/Individuals which compose these public companies/governments decide that those legal entities need to be transparent, THEN these public companies/governments (can) become transparent.
In other words, a public company or a government is NOTHING in itself. It has no pre-determined attribute. It is just the reflection of the acts of those who head it/rule it/run it/make it work.
If you sort of see my point, then, I believe you subscribeto the logical consequence that individuals/human beings can also be characterized as “transparent”. If you are of the view that public companies/gvts can be called “transparent”, then those who make them can also be called “transparent”.

MOVING NOW TO THE NEXT POINTS 😉
On the points below, I’ll just put my thoughts/reflections, FWIW, on some of your own comments.

2) Your comment: “Moriarty runs a website that promotes stocks that feed traffic on his website for his benefit.”
Well… Wall Street is just a promotion machine. The stock market is a promotion machine. Many people just don’t realize it (don’t get me wrong: I am not saying you don’t realize it, Jerryck).
Big banks promote big/large cap stocks – coz small stocks ain’t worth it (from a revenue vs. cost perspective).

3) Your comment: “Does Bob tell you in advance when he buys or is going to sell a stock or even when he has sold a stock? I don’t think so. That’s transparency.”
==> That was what I enjoyed the most in your post. Because I know they are people out there who feel along the lines of: “a newsletter writer should let readers/subs buy first” and “a newsletter writer should let readers/subs sell first”.
So on this, lemme say a few things:

a) it doesn’t cost anybody a dime to read Bob’s thoughts. No reader has to pay any subscription: Nothing. Nada. Nichts.
Bob is not a newsletter writer (not per my definition at least) and he doesn’t have subs. I’ll just remind ourselves of that point.
Does every person who has ever made money based on his recommendations send him a “thank you” email or a few $$$ of their own profits ?
He researches the company, spend time running numbers and doing write-ups of articles. All for free (advertisers pay the bills). On top of doing that (researching, running #, numbers), do you think/suggest he should ALSO let readers buy first, and then also let them know when he wants to sell ? Personally, I don’t need all of that. His write-ups are enough for me. If I don’t like the stock, for whatever the reason, I pass.

b) The way I see it, Bob writes stuff and doesn’t charge for it. He discloses any potential conflict of interest, by saying when he is long the name: THAT IS ENOUGH FOR ME.
I don’t need him to tell me when he buys or when he sells. If I need him to tell me, then I shouldn’t be buying stocks he writes about in the first place. [ I like to “think” for myself ].

c) Do you think Bob can buy at bottoms consistently and sell at tops consistently ?
I suspect you will respond: “Of course not !!! He ain’t that smart !”.
Although I wouldn’t be able to comment too much on the “he ain’t that smart ” bit as I don’t know him enough ( 😀 ), I would irrespectively agree you on the “Of course not !!!” bit.
Joke aside, the consequence of this is that then, IT DOESN’T MATTER where Bob buys or sells. If you are smart enough (or lucky enough), you should be able, at times, to buy below his buys, and sell above his sells. If you don’t, well… it means you ain’t lucky enough… or smart enough 😀 😀 😀

d) At least one of the stocks Bob mentions on his site was bought at much higher prices in the first place than what the shares are currently trading at.
—> This goes to illustrate my point: it doesn’t matter where he buys or sells. (maybe he ain’t that smart indeed !!! 😉 )

e) FWIW, I believe that if an investment has merits, it will go up overtime.
Conversely, if it has NO MERIT (ie ZERO…. ZERO … ZERO), it might be pumped/pimped by WHOEVER you want in the planet (ie even by the most successful investor/most widely followed newsletter writer or the hottest bird in the world – why not?), but with the passage of time, its share price price will trend toward zero.
—> Bob & others can be wrong. So in the long run, whatever Bob writes is irrelevant if the investment has no merits.
I like to think for myself, and I try to.

***************

In summary:
1) The whole stock market is a promo machine – nothing different from the gvt actually.
2) what Bob provides is for free. And as Rick Rule would say: “what is free is the best price”
3) Bob discloses conflicts of interests: that’s more than enough for me.

My longish “transparent” 2cts 🙂

Best to you,

LPG

Bob and his wife are two very intelligent people. I have known them for many years. I can’t comment on the legality of what they do because I am1 not an attorney. I would guess that it probably is legal but you all have to decide for yourselves what is more important legality or trust in what someone says. We disclose simply because we have chosen to. It is simply the way that we choose to do business. Many others take a different tact and that is their choice. If they are doing something illegal, and I am not saying that they are, they will eventually pay the price. I used to write for a publication which was the brainchild of a fellow named Jerry Wenger. He did not disclose that he was getting paid to promote companies and, I believe that he ended up in prison. We have chosen to disclose simply because that is the kind of people that we are. We get paid by our sponsors and we also discuss companies that we are not getting paid to discuss. We shall see where this whole thing ends up. I am staring at the end of a great career and Cory is just beginning. He will not change and, trust me, Mr. Fleck will do just fine because folks will be aware of exactly what he is doing. I have learned over the years that trust cannot be purchased it is much more valuable than anything that can be purchased

Good thoughts in this thread guys.

LPG

You’re way too much of an intellectual for me. I won’t even touch your feedback. It stands on its own. And I think Bob M is a big boy. I’m sure he won’t lose sleep on my comment. I hope you don’t lose sleep.

All the best, LPG

Jerryck,

Although Big Al often ask me if I ever sleep, I do, and quite well.
No intention to change 🙂

Best,

LPG

Of course, if you only look at exploration as opposed to production companies then P/E is meaningless.

By the very definition of the term profit/loss ratio!

To me, the Yhoo Finance P/E you look at encapsulates all the accounting garbage (“garbage in”) [beside from reflecting the past].

If I have no clue of what a ratio includes as far as the net income is concerned (coz each company case is different), I personally don’ t understand why I should pay attention to it.
For that reason, I find that (Yhoo Fin) P/E “filter” mostly useless, hence a waste of time. But I’m a simple mind.

Whatever makes you happy CFS.

LPG

Yes, that piece from Kerrisdale has been dissected a million ways.

Big Al if you click on that link above you’ll see that the KER weekend show got 5 thumbs up so far (you only need 4 to be considered “popular”). 🙂

Well done sir.

Thanks much Excelcior!

Eric Coffin just has some interesting insights on it in that room:

“@HRA-Coffin I skimmed the $FR article too. He’s partially right. There is little doubt $FR has spend money on email blasts, etc. to draw in retail and $FF does that pretty much constantly. That said, I think its mainly guys you tip scotches with in Manhattan that drove $FR to it heights @90bigpicture NOT retail. The same hedgies who took the silver spec long positon to all time highs. I agree that Keith can be a blowhard (and the whole “I founded First Quantum” thing is a load – he’s the promoter who owned the shell, not the same thing at all) but he’s done an excellent job of positioning $FR, until this short report anyway, as the “go to” name in the silver space, much the same as Ross did a similar job making Pan American the name in past cycles. You can diss retail bro but don’t kid yourself, its your buddies that took $FR to 25 bucks.”

Excdlsirior,

I could not find any rating of our Show. Please provide me with a specific link.

Thanks, my friend!

https://www.ceo.ca/fr

Scan up up and look for this comment:

@racker Good lineup on #Korelin weekend show. Auryn Resources chair Ivan Bebek, First Majestic CEO Keith Neumeyer, Novo Resources CEO Quinton Hennigh and portfolio manager and newsletter writer Adrian Day. Link here $aug $fr $ag $nvo 5 from #index, about 4 hours ago

And there was this positive follow up comment:

@Leon Keith Neumeyer interview on #Korelin weekend show. $FF actively managing its portfolio, incl. building roads to the projects et cetera $FR $AG http://www.kereport.com/wp-content/uploads/0903-2-2-1.mp3

https://www.ceo.ca/fr

Scan up up and look for this comment:

@racker Good lineup on #Korelin weekend show. Auryn Resources chair Ivan Bebek, First Majestic CEO Keith Neumeyer, Novo Resources CEO Quinton Hennigh and portfolio manager and newsletter writer Adrian Day. Link here $aug $fr $ag $nvo 5 from #index, about 4 hours ago
And there was this positive follow up comment:

@Leon Keith Neumeyer interview on #Korelin weekend show. $FF actively managing its portfolio, incl. building roads to the projects et cetera $FR $AG

The KER Show is up to 6 likes…. It is a show that is so likable.

Many thanks for letting us know, Excelcior!

Great comment as usual, Bird

Hey thanks Al….I was just getting warmed up.

But I won’t get into the muck of it too much today. The Canadian real estate market is just so preposterous that only a fool would believe someone was not going to get hurt eventually. It is the sounds of a broken record repeating it all the time though and bleating at the sheep to steer clear.

Oh well, they get what they deserve.

Here is a little comedy for you though. Did you know that Real Estate is now the countries biggest industry? Yup, that’s a fact according to Statistics Canada. Its not oil or agriculture or manufacturing or knitting bees held by little old ladies on Vancouver Island that are the real grease that run this fine nation.

It’s freaking real estate and construction. Bigger even than banking and financial services. Bigger than all the public sector employment put together…..and a whole lot bigger than a beaver dam.

That’s how retarded it has gotten. And it means this bubble bursting will really be one for the record books when its all said and done because EVERYONE is involved either directly or indirectly.

It does not matter if you are in the insurance business, lending, building trades, retail, trucking or even dentistry. You are involved in the Canadian housing market one way or another and there will be a lot of jobs lost if this thing winds down to a hard landing (care of our bubblicious friends over in China who were practically behind the worst aspects of it in the first place with all their wanton credit growth and global buying splurge).

Whats happening is a little reminiscent of living in a one-horse-town where the old nag breaks a leg or just up and dies and everyone has to go back to trudging to the shops in their old snow shoes again.

Actually, its more like the last salmon cannery shutting down in a small town on the Island leaving the village with no primary source of income to keep the remaining stores open. Except its worse than that because this real estate fantasy everyone has been living is a national bonanza that went coast to coast.

Big bubbles like Vancouver don’t bust in isolation either. Don’t we wish it was that simple? Unfortunately these kinds of events are infectious as the bug jumps from town to town like a malevolent pestilence creeping into everyone’s lungs. The mood can turn sour everywhere at once and the knee-jerk retrenchment in buyer psychology just makes it all that much worse.

Not that much could be done anyway. Canada is another of the countries with a terrible demographic profile of aging boomers and a shortage of fresh young faces willing or able to step up to the plate and pay the nosebleed prices the previous generation demands.

So sorry to say, we saw the top and now it is a long road back to the mean as price regression will be dictated as much by the hormones that drive family formation as they are by the sheer will of childless couples to own their own little plot of land at any cost demanded.

I will save the muck for another day. Got to run!!

Canada’s a real estate nation, just waiting for a crash — Globe and Mail
http://www.theglobeandmail.com/report-on-business/rob-commentary/canadas-a-real-estate-country-just-waiting-for-a-crash/article31457558/

Really great comment Bird. The question, in my mind, is do the Asians really care? The real estate market will go down, but the question is: “Will it go down far enough to really hurt them? Or have they, in fact, accomplished just what they wanted to accomplish which was to get money out of China? Having worked at a pretty high level with some very astute Asian business people, I can tell you that they know exactly what they are doing at all times. The folks who could really get hurt are the Canadians who used excessive leverage.
What do you think?

Well I agree Al that most of the people getting hurt here are typical Canadians. Foreign buyers by and large are not blue collar salary men. Those coming in with suitcases of cash are generally quite wealthy and looking for a place to store some of that wealth outside of China and out of harms way. We often read on this site about Americans distrusting their own government but the Asians take it to a whole new level. Those guys take the second passport and offshore banking / investment ideas very seriously. Its why millions have given up their own citizenship and emigrated to every major industrialized country in the world. Favoured countries are Canada, the US and Australia of course but they seem willing to go just about anywhere welcoming. I suppose history should explain why they are so paranoid of their own country. In the process of moving though they have blown housing bubbles just about everywhere that caught their attention. But its not deliberate or anything. Its just that there are so many of them who seem to want economic safety abroad.

Just in case………

For what it is worth Bird, I personally would take their example if I had suitcases full of money.

Bird, Yes the bubble in Canadaian real eastate is insane!!! Having said that, you seem to be inferring that Chinese are a major part of the bubble? I’ve been reading that Chinese+foreign buying in Vancouver is at %10. I’m thinking this is more a home-grown greed story enabled by the Fed and stupid Canadian central bank and government policies. See Sweden, London, San Francisco, New York etc and dozens of other western countries for similar property bubbles. Yes Van is the pinnacle of insanity, but the Fed is also a massive part of this craziness.

Agreed Big Al. I visited Vancouver earlier this year and my girl and I just loved it out there. Multiple mountain ranges, Natural parks, salt water adventures, fresh water adventures, Victoria near by, volcanoes in the distance, great food from around the planet, interesting architecture, a vibrant night-life, reasonable mass transit, multi-cultural influences, and overall Vancouver is a very cosmopolitan city with many perks.

Having said all that, the real estate bubble got waaaayyy ahead of itself, mostly due to the influx of Asian buyers paying any price (or getting into bidding wars) on houses which drove up pricing to nosebleed levels. It is the same thing in Seattle and to a lessor extent Portland. When gravity sets in and they return to reality, it is going to cause quite a stir from those that purchased homes over the last few years.

What goes up also comes back down….

I can kind of see the logic in Vancouver (see my comment to Bird).

Seattle is insane. If salaries ever return to sanity, that picture will change.

Honestly, I simply do not understand the Portland market and we used to be a part of it.

Thanks Big Al.

Yes, I agree on diversifying the risk, within miners and outside of miners. Within miners my interest is in the Small Producers, Development stage companies, Prospect Generators & Royalty companies, and true Exploration companies, but occasionally I’ll hold Mid-Tiers or ETFs for short periods if I see the right set up.

Personally, I don’t put all my eggs in one basket, and I do invest in other resource companies beyond just precious metals, and number of sectors within the Energy space, and some asset classes that are in completely unrelated sectors to resources and energy (Tech, Healthcare, Emerging Markets). In addition I have a retirement account packed with the standard mutual funds, bonds, and stocks like most investors. I don’t discuss those in here because they are not what I focus on in my trading account and they don’t relate to this site’s focus (and honestly those are just set it and forget assets in my portfolio that I let others manage).

Good luck to you Brian in your investing strategy, and from everything you’ve written about and the stocks you’ve mentioned you hold – I think you’ll make some cake over the next few years. All the best !

I pretty much share your thoughts, Brian.

FWIW, I looked at Silver Bear a few weeks back as I didn’t mind the jurisdiction per se.

But I did mind the convert, and the implied valuation on some multiples.
Ultimately, I took the view that one could own other assets (1) w. high grade TOO, (2) on cheaper valuation, and (3) located on safer jurisdictions. So it was a relatively “no-brainer”.

Maybe I missed something in the investment case on that one, but to get me REALLY excited, these guys would have to find a boat load of new mineral reserves/resources.

My 1.3 ruble. 🙂

LPG

LPG – I feel confident based on the fact that they increased mineral reserves by 30% this year, and continue to find very high grade ore that they will continue to fine a “boat load” and possibly several boat loads of new Mineral Resources. 😉

In 2016 Silver Bear has done their capital raising and also they have been issued the permits to go into construction – which they are making good progress with. The catalysts are there for near-term production and if you look at the their timeline for development into production on their presentation above on (page 6), their very high grade 20 million ounce Silver reserves on (page 7), and (page 8) which highlights their very low capex to get production underway ($48.6 million) & IRR pre-tax of 43.6% and IRR post-tax of 40.2% then I’d say there are few “other assets” in the silver development space that offer those kinds of upsides.

My 1.29999999 ruble. 🙂

Cheers!

Silver Bear Approves Facilities Agreement For Final Development And Construction Of Mangazeisky Silver Project
August 5, 2016 – Toronto, Ontario

Silver Bear’s CEO, Graham Hill commented: “It is with great pleasure we announce the securing of the last element in the project financing package which ensures that the project’s accelerated timeline remains on-track. I would like to extend our appreciation to our major shareholders, Inflection and Aterra, for their unwavering support during 2015 and 2016 in helping the team realize the development of this unique and robust asset. Finalizing this agreement is a significant milestone for the Company and major catalyst in providing the financial support to advance Vertikalny towards commissioning in the fourth quarter of this year.”

https://www.silverbearresources.com/news-and-events/news/2016/08/05/silver-bear-approves-facilities-agreement-for-final-development-and-construction-of-mangazeisky-silver-project

I stand corrected it was a 35% increase in resources not just a 30% increase…..

Not to shabby…..and why I feel very confident the future exploration upside is in the cards.

___________________________________________________________________________

Silver Bear Announces Ni 43-101 Mineral Resource Update for the Vertikalny Deposit, Mangazeisky Silver Project, Russia
August 8, 2016 – Toronto, Ontario

Silver Bear Resources Inc. (TSX: SBR) is pleased to announce a National Instrument 43-101 mineral resource update for Vertikalny deposit within the Mangazeisky silver project, Republic of Sakha Russia. The NI 43-101 Technical Report prepared by Tetra Tech will be filed on SEDAR within 45 days of this release.

Highlights:

> Infill drilling and trenching have converted an additional 4.3 Moz of silver resource to the Indicated from the Inferred category.
>Additional data and updated geological modelling have also resulted in a 35% increase in the Indicated resource grade, from 909 g/t to 1,227 g/t silver.
>It is expected that the resource update will significantly improve the IRR and NPV for the project with minimal change to the CAPEX.

https://www.silverbearresources.com/news-and-events/news/2016/08/08/silver-bear-announces-ni-43-101-mineral-resource-update-for-the-vertikalny-deposit-mangazeisky-silver-project-russia

Shad,
Thanks for your input on Silver Bear.
How many shares do you have/get, on a fully diluted basis ?
LPG

I have only just started to build a small position at this point, but will be adding to it over time.

I believe these figures are correct after checking a few different sources:

Shares Outstanding 161.33M
Float 76.3M

Shad,

Re: Silver Bear.

2 Things:
1) FWIW, the # I had run previously already included the Aug. 8 resource update.
2) You mentioned shares outstanding, but my question was about the number of shares on a fully diluted basis – I asked that question w. something specific in mind.

So FWIW, let me share what I have on the matter:
According to my calculations , there is about CAD24mn of convertible debt, which will convert at CAD4.5cts. This will translate into an additional 534mn shares.

So here’s what I have, (give or take a few millions):
Outstanding shares: 161.3mn (this number was as of Q1 16 end)
Options: 8.75mn, average strike of CAD37cts (as of Q1 16 end)
Warrants: 3.52mn, avge strike of CAD33cts (as of Q1 16 end)
Convert: 534mn
Total, fully diluted: 708mn.

AS A SIDE NOTE…
I understand the IRR you mentioned on the project. I had seen it ( 😉 ). Just one thing though…
The indicated NPV of the project is calculated by using a 5% discount factor (NPV5%). When I saw that, I couldn’t help but smile…. Really, for a silver miner in RUSSIA, we should rely on a weighted average cost of capital of 5% ?????
Just on their latest debt financing (news in Aug.) the company is paying 15% interest. Funny. To their credit, the project NPV is using super conservative silver assumptions, IMHO.

If I am correct, 708mn shares is the number to broadly work with when running valuation numbers…. Not c.170mn.
If the convert holders decide to NOT convert, that’s a different story (the note holders are the already large owners of the company…).
Otherwise, you need to use broadly 700mn shares as your basis. And stating the obvious, there’s a “little difference” between 170mn shares and c.700mn.

As mentioned initially,
“Ultimately, I took the view that one could own other assets (1) w. high grade TOO, (2) on cheaper valuation, and (3) located on safer jurisdictions.”. The view I took was predicated on running numbers based on these potential 700mn shares.

My 1.3 ruble, part II.

LPG

BTW… re: the convert, my calculations are based on Note 10 of Q1 16 Financials.

This thing was so “messy” that I had to do a line-by-line breakdown of what was converting, and what wasn’t.

If you or anyone on KER has also run the numbers and came up w. a different figure – esp. a MUCH lower one than the 534mn I calculated – I’m all ears.

Spacibo !

LPG

Yes I agree that there is a difference in 170M vs 700M shares fully dilluted, but I’m not sure I’m following you on the Covertible debt, but I couldn’t find where all of the debt converted at $.045 cts CAD.

You had mentioned ” According to my calculations , there is about CAD24mn of convertible debt, which will convert at CAD4.5cts. This will translate into an additional 534mn shares.” I didn’t see that in their 2nd quarter release or the recent release, but I may have missed it. If you could direct me to that info it would be appreciated. Sometimes if you miss a column or sentence it can be very impactful 🙂

I do follow you on these numbers from pages 16 & 17 of their March 31st, 2016 #s:

Outstanding shares: 161.3mn (this number was as of Q1 16 end)
Options: 8.75mn, average strike of CAD37cts (as of Q1 16 end)

https://www.silverbearresources.com/assets/docs/financials/2016-Q1-FS.pdf

– As for the 5% Net Present Value calculation being on a developing Silver mine in a country like Russia, desperate to exploit its resources and mineral reserves, and with the very high grade nature of their resource, the low capex required to build out the mine, and the above average IRR % at 43-40% , then it really doesn’t seem unreasonable.

As for “other assets (1) w. high grade TOO,”

If you have a bunch of Silver companies that found a 35% increase in the Indicated resource grade, from 909 g/t to 1,227 g/t silver, then please don’t keep them a secret. 😮
I can think of Alexco and Impact with those kinds of high grade, but not many….

While high grade is very important to keep the mining more simple, and the capex down, it ultimately comes down to the economics of a project. The IRR is impressive by any metrics, but of course we’ll have more solid numbers once they do go into the production at the end of 2016, ramping up into the first half of 2017.

I’d just rather get positioned before they hit those milestones, but hey if you don’t like it don’t buy it. (LOL). I remember people voicing concerns of the valuations on Silvercorp, Americas Silver Corp, Avino Silver & Gold, and even Defiance Silver earlier in the year, and they’ve had quite a run despite the number crunching because investors see the rising metals prices continually improving the economic situations.

I for one don’t expect Silver to stay at $18-$20 forever, and am investing based on a $24-$28 by the end of 2017, and a $35 Silver price by 2018 as a rough guideline.

With those numbers in place, all the valuations being done are rather meaningless IMO.

My 1.29999999 ruble, part II

I just saw your other comment pop up about Note 10 – Thanks, now I’m on the same page with you regarding this convertible debt, but I come up with
$5,669,807 + $12,350,770 = $18,020,577 convertible at $.045 = 400,457,000 shares (if they are converted).

Inflection also paid C$3,300,000 in convertible debt, but it didn’t specify at what share rate, so I’ll have to do more homework on that.

10. SHORT-TERM LOANS

On March 2, 2015, the Company entered into unsecured non-convertible promissory notes with FrontDeal Limited and with Inflection Management Corporation, pursuant to which FrontDeal and Inflection have each agreed to lend the Company US$3,500,000 respectively for a total of US$7,000,000. The promissory notes bear interest at a rate of 15% per year and the principal and accrued interest are payable on the maturity date which was initially agreed as June 27, 2015. Subsequently, the maturity date was extended from June 27, 2015 to June 30,
2016.

In October 2015, A.B. Aterra Resources Ltd. (“Aterra”) and Inflection provided additional loans to the Company of C$2,310,000 and C$3,300,000 respectively. These additional loans were made under contingent convertible promissory notes that bore interest at 15% per year and had a maturity date of December 31, 2015 and were contingently convertible into Common Shares of the Company at a price of C$0.075 per Common Share. In November 2015, Inflection advanced a further C$5,610,000 under convertible promissory note with a maturity date of December
31, 2015 and which was convertible into Common Shares at a price of C$0.045 per Common Share, subject to an upward ratchet on the conversion price. This note also bore interest at 15% per year.

In December 2015 loan notes from Aterra and accrued interest thereon were consolidated into a new convertible loan note for C$5,669,807 in favor of FrontDeal.
In December 2015 all loan notes from Inflection and accrued interest thereon were also consolidated into a new convertible loan note with a value of C$12,350,770.
Both these convertible loan notes bear interest at 15% per year, mature on December 31, 2016 and give the holder the right to convert the principal and any accrued interest into fully paid Common share of the Company at conversion
price of C$0.045 per Common Share. Management considers 15% per year to be the prevailing market rate on loans that do not have an associated equity conversion option; accordingly, all of the principal is recognized as a liability.

In December 2015, Inflection also paid C$3,300,000 as partial consideration for the Company issuing a contingent convertible loan note bearing interest at 15% and maturing on December 31, 2016; the loan note was issued on January 11, 2016.

In March 2016, A.B. Aterra Resources Ltd. (“Aterra”) and Inflection provided additional loans to the Company of US$5,500,000 and US$14,500,000 respectively. These additional loans were made under unsecured contingent nonconvertible
promissory notes that bore interest at 15% per year and have a maturity date of December 31, 2016.

Regardless, the shares & float posted now don’t take those into account so your overall point about the valuation using a higher diluted amount is worth noting. However, that’s the price to play ball and get the mine built and commissioned for production. Who knows, maybe they’ll need to consolidate all the shares after all that is completed?

I’m not too concerned about it, as mentioned in the previous post, with rising Silver prices in 2017 and 2018 when they are producing from their high grade mine, then the economics, margins, and payback will be accelerated so that is not factored in correctly if just using Silver prices at today’s prices. We’ll have to cross all these bridges when we get to them.

Cheers!

Silver Bear Announces Entering Into Non-Binding Term Sheet for Mangazeisky Silver Project Debt Funding Package
TORONTO, ONTARIO–(Marketwired – April 28, 2016)

“It is anticipated that the Company’s wholly-owned Russian subsidiary, ZAO Prognoz, will be the ultimate borrower under the Debt Funding Package which will consist of a US$42.85 million secured loan, a working capital facility of US$3.5 million and a contingency facility of US$2 million, for total funding of US$48.35 million. Pursuant to the Term Sheet, a portion of the Secured Loan Facility will be used to repay the principal and accrued interest on certain outstanding promissory notes previously issued by the Company to the Lenders. The Company anticipates that the Debt Funding Package will result in net new funding to the Company of approximately US$17 million following the repayment of such outstanding promissory notes.”

https://www.silverbearresources.com/news-and-events/news/2016/04/28/silver-bear-announces-entering-into-non-binding-term-sheet-for-mangazeisky-silver-project-debt-funding-package

August 5, 2016 – Toronto, Ontario

Material Terms of the Facilities Agreement

“Pursuant to the Facilities Agreement, the Lenders will make available to the Company and Prognoz secured loans in the aggregate principal amount of US$55.2 million comprising three tranches. Tranche A will consist of a term loan facility of US$43.2 million, of which Inflection will provide US$30.6 million and Aterra will provide US$12.6 million (the “Term Loan Facility”). Of the US$43.2 million total Tranche A commitment, US$33.2 million will be made available to the Company with the remaining US$10.0 million being made available to Prognoz (collectively “Tranche A”). The Lenders will also make available to Prognoz, subject to the terms and conditions of the Facilities Agreement, a Tranche B working capital facility of US$10.0 million (the “Working Capital Facility”) and a Tranche C contingent facility of US$2.0 million (the “Contingent Facility”, and together with the Working Capital Facility, the “Additional Facilities”). The Working Capital Facility will consist of US$7.1 million from Inflection and US$2.9 million from Aterra. The Contingent Facility will consist of US$1.42 million from Inflection and US$0.58 million from Aterra. The Term Loan Facility, together with the Additional Facilities, are collectively referred to as the “Secured Loan Funding”.

Pursuant to the Facilities Agreement, a portion of the Term Loan Facility will be used by the Company to repay the principal and accrued interest on certain outstanding promissory notes previously issued by the Company to the Lenders. The Company anticipates that the Secured Loan Funding will result in net new funding to the Company and Prognoz of approximately US$22 million following the repayment of such outstanding promissory notes.

The Secured Loan Funding will accrue interest at a rate of 15% per annum, calculated and accrued quarterly, and will be payable on January 1, April 1, July 1 and October 1 in each calendar year and on the maturity date, being the date that is forty-eight months following the date on which the Term Loan Facility has been drawn in full. Pursuant to the terms of the Facilities Agreement, all interest accrued before July 1, 2017 will be capitalized and added to the principal amount of the Term Loan Facility such that the first interest payment under the Facilities Agreement would therefore be in respect of the quarterly period ending October 1, 2017.”

https://www.silverbearresources.com/news-and-events/news/2016/08/05/silver-bear-approves-facilities-agreement-for-final-development-and-construction-of-mangazeisky-silver-project

Shad,
OK… quick update on the calculations for the convert:
1) the 2 loans you mention also have accrued interest converting at 4.5cts. So I added 15% of the combined loans (ie. CAD2.7mn total) as also converting.

2) Re: Conversion’s CAD3.3 mn of convertible, here’s the tricky part – which I’ve just “discovered.”
a) based on Q1 16 Results Note 10, I initially ASSUMED this CAD3.3mn note would convert at 4.5cts (as yourself, I realized there was no mention of convo price, so I had assume the same as the others, due to their time proximity)…
however
b) there’s a press release on 13 Jan., 2016 which states that this note is NOT convertible (I had a “wtf” moment).
https://www.silverbearresources.com/news-and-events/news/2016/01/13/silver-bear-announces-closing-of-private-placement-of-non-convertible-note-and-provides-corporate-update
So going forward, I’ll just assume that this CAD3.3mn note is NOT convertible, at that the “Note 10” of Q1 16 Res contained a typo in this regard.

Based on all of this, the new total i get for the convos are:
CAD18mn +15% of CAD18mn = 20.7mn converting at 4.5cts, hence 461mn shares to be issued.

So my “new” total, fully diluted count is, fwiw, 634mn.

Cheers,

LPG

Ha – Well good the overall amount of shares is coming down then. Thanks for explaining that you added 15% as that makes more sense now. Yes, as far as I can tell the $3.3 M may not be converted and may just be at 15%.

OK, since we’ve been looking at the January-March data, I thought that posting the updates from April and August were relevant because it looks like they’ve restructured the debt again anyway.

Is that you interpret that August 5th update?

Shad,

The way I understand the Aug 5. release is that they get debt to repay the debt, and some more for upcoming Wking Cap requirements.
But it seems they are shifting (lengthening) maturities – which make sense coz most of the debt pre-announcement was ST.

Look, putting aside (1) anything stupid out of Russia and (2) serious operational hick-ups, this thing will be higher when Silver hits $30. No doubt.

My INITIAL point in this whole convo was to draw your attention to the convos (pun intended).
I suspected you probably looked at the name, the grade, the resource, the mket cap (based on outstanding shares and the relatively benign amount of warrants and options) and thought: “Greaaaaat, this thing is reaaaaally cheap. It’s Russia, nobody wants to touch it. That’s why it’s cheap. I found a gem”. 😉
If you thought this way, I understand you. I felt the same the way when I looked at it the first time. 🙂
BUT it’s just that after this thought, I just told myself: “it C-A-N-N-O-T BE THAAAAAT cheap now. There’s just too much focus on the sector”. So I tried to found out what I was missing… and that’s how I found about the convos. And it this where the supa cheap valuation became not supa cheap anymore. 😉
FWIW and as a final side note, when I first saw that the debt amount was not that big, I was almost sure there was convo paper hanging around…. 😉

Best as always,

LPG

LPG – Thanks for the analysis. Yes, I did think I found something very cheap, as another investor had tipped me off to it, but they clearly didn’t take into consideration the convertible debt either. I was just wondering if that August update on the financials was going to take care of some of that so that so many shares weren’t issued.

I guess my dreams of good value have been dashed once again….

Anyway – good convo on the convos. Much appreciated.

Thank you,Excelsior and LPG,for the great discussion.
Great Points from both.

https://memegenerator.net/instance/23677086

IMF Concedes Central Banks Are Doomed

https://www.armstrongeconomics.com/uncategorized/imf-concedes-central-banks-are-doomed/

Merkel Suffers Major Defeat in Elections

CHANCELOR ANGELA MERKEL has suffer a major defeat with her party coming in third place in her homes state of Mecklenburg-Vorpommern on Sunday. The signs of a major anti-immigration movement in Germany assures Merkel’s days are clearly numbered. The growing discontent with the Chancellor is all we hear from our direct sources in Germany. Only one year after she announced her open borders policy, Merkel’s CDU party was beaten so badly coming in only in 3rd place behind Germany’s Alternative for Deutschland party (AfD) who secured 21% of the vote in her home state no less.

Merkel’s Christian Democrat Union (CDU) is going down for a resounding defeat and all the polls rigging and press rigging will not matter, Mainstream press has been supporting Merkel in Germany and they have lost respect of the German population. We are watching the demise of both career politicians and mainstream media.

The handwriting is on the wall. Merkel’s open borders has been a total disaster for all of Europe. This entire mess was only to boost her personal polls when they were collapsing because of her hard-line tactics with Greece. This is a sign of the times. The end of politics as we have known it since World War II. As we have warned, 2015.75 was the peak in government. The further we move from that point in time, the more clear that turning point will come into focus.

https://www.armstrongeconomics.com/international-news/europes-current-economy/merkel-suffers-major-defeat-in-elections/

The big question now, in my mind Market, is will this philosophy move to the U.S. in November. I think that the jury is still out on that question, but the odds for a non-politician now winning here, are greater in my mind.

And the plot certainly thickens, Market.

Points about the U.S at the meeting are certainly interesting to me. I am pretty convinced that the U.S. has lost a lot of traction in the international community during the last 16 years. My opinion is that the current administrations’ attitude has been devastating to others’ opinions about the U.S.

get a shotgun AL. Just point it and squeeze.

Funny you should say that Bonzo, I was seriously thinking about just that the other day along with joining a Skeet Club. Talked with a good friend about that and it looks like we are going to do just that. He is willing to give me one of his to start.

AL, be sure to get some #4 buckshot for your shotgun for defensive purposes.

Sounds like you know a bit about shotguns. In your opinion, should I use a 12 or a 20 gauge?

AL, the 12 ga. has quite a kick and can hurt your shoulder unless you fire from the hip. I think you might prefer a 20 ga or a 16 gauge. And your wife would surely prefer a 20 ga.

Have not convinced her yet. I will have something within a couple of weeks. Am going to Bellingham Skeet Shooting Club first and then will purchase.
Talk with you all on Tuesday.

Al, I think idealism is on the ebb, we need to get away from what jealous European politicians can get for themselves. DT

Politics has evolved into a great situation to potentially make a whack of money. No question about it. But realistically how could it go in any other direction. People being what they are.

Oh well, off into Bellingham to have dinner with Mom and Steph.

Erdene Commences Q3-Q4 Drilling Campaign on Its 100%-Owned High-Grade Gold Projects in Southwest Mongolia
HALIFAX, NOVA SCOTIA–(Marketwired – Sept. 6, 2016)

http://www.marketwired.com/press-release/erdene-commences-q3-q4-drilling-campaign-on-its-100-owned-high-grade-gold-projects-southwest-tsx-erd-2155767.htm

Between Constantine’s results and Dowa’s continued and growing interest in the Palmer project, it seems like a relatively low risk bet at 7 cents (about 9 cents Canadian). That’s nearly 40% off from the July high.

I own quite a few shares.

Twilight Zone……zerohedge…

Correction…Usawatchdog not zh