On Thursday, April 10, I will be attending a presentation by Mongolia Growth Group. I am taking my video camera with me to conduct two interviews. One will be with the new CEO and the other one will be with Harris Kupperman. I am currently preparing some questions. If you want me to ask them a particular question or questions, please leave them in the comment section.
Many mining operations face oppositions from various individuals or groups. Goldgroup Mining owns a large-scale gold mining project called Caballo Blanco. Because the company struggled for several years to get a proper permit, investors completely gave up. While the company has been quiet about the permit situation, things appear to be turning in favor of the project. On March 30, 2014, archbishop Hipolito Reyes Larios publicly stated that developing Caballo Blanco would bring benefits to the local community.
FYI. The article is in Spanish.
I find it very interesting that someone like the archbishop would be in favor of the project because it is very easy from a religious point of view to criticize mining projects for their environmental impacts. It is no secret that the local economy where the project is located is struggling, but to have an archbishop’s support cannot be understated. This is a big deal for Caballo Blanco and Goldgroup.
Disclosure: Long Goldgroup
Investment Opportunity 1 – Yes, You Can Buy a Good Business at a Cheap Price in a Wonderful (Expensive) Market
How would you like to own a business that has huge profit margins and customers that love it, can’t live without it, never switch, and tell other about it? Because owning such a business would be a dream come true for everybody, it is rare to buy something like this at a decent price. Yes, you could get a business like this during the 2008/2009 financial crisis, when everybody hated stocks, but right now when stocks are in fashion, forget about it.
Well, even in this market, an opportunity to buy an excellent business at a cheap price exists today. I would like to introduce you to Investment Opportunity 1, which is a wonderful business at a decent price. There must be a catch, right? Of course there is, but I won’t tell you now. Just keep reading.
Investment Opportunity 2 – Can You See that It is Growing Again?
Many times when you want positive results such as growing revenues, you have to do something about it. You have to have a plan. However, just because your plan is working out does not mean that others will automatically notice. It usually has to be blatantly obvious for others to finally wake up to it.
This is the story with Company 2. For many years, the company was in continual decline. Both revenues and profits were dwindling. To address this problem, a new CEO was hired. He made a lot of changes, and as a result, reignited the growth again. However, in order to actually see the growth, you have to look under the hood because the market is still not paying attention. Yes, the stock is up a bit but I don’t believe that investors are fully aware of the fact that the plan is working and sooner or later the growth will show up in the bottom line in a big way. When that happens, the stock price will have to adjust to the new reality.
Investment Opportunity 3 – Turnaround in Full Force
If you have been a subscriber to Ultimate Value Finder for six months or more, you know that I previously wrote about Company 3 in the October 2013 Issue. You should read that issue because I will not be repeating everything about the company in this report. Back then, the stock price was at $6 per share and by March 2014, the stock almost doubled. It retracted a bit, and now, it is trading for approximately $10 per share. In other words, it is up more than 60 percent. If you bought it for $6 per share, then you must be very happy. If you did not buy it, don’t worry, the party is just getting started.
When I first wrote about it, the turnaround was just beginning and the results were nothing but a bunch of promises. As a result, investors were skeptical. However, now that there are visible signs that the turnaround efforts are starting to work, people are getting excited and bidding up the stock price. It is possible that by driving the stock price to almost $12 per share from $6 per share, investors got ahead of themselves, and consequently, a pullback was necessary.
From now on, as long as the turnaround continues to deliver positive results, there is plenty of upside left. And I mean PLENTY. Considering the kind of growth opportunities that lie ahead for this company, the stock could still be a multi-bagger from here.
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Paul J. Byrne has moved from a global financial center with first world comforts and warm weather temperatures during winter months to an infrastructure needy country with winter temperatures that go down to minus 40. As a longtime shareholder of Mongolia Growth Group – a Mongolia real estate investment and development company based in Canada – it is good to have an experienced real estate CEO with Harvard, Los Angeles, New York, Hong Kong, Dubai and Sydney among his pedigree as the company’s new CEO. Mongolia has had few triumphs and major missteps for the last three years. Mr. Byrne believes that Mongolia is ready to turnaround and sees a lot of good real estate work to be done to repaint the urban palette of Mongolia’s capital Ulaanbaatar.
MONUMENT Mining has proved its credentials with the Selinsing Gold Project in Malaysia and is now set to reap the benefits at other projects. Selinsing served as an anchor for the company’s expansion and the successful management team is using this experience as a springboard for development of the Mengapur Polymetallic Project in Malaysia and Murchison Gold Project in Australia.
The Canadian-based company acquired the Selinsing project in June 2007 and in just 30 months designed, funded, and built an open-pit gold mine and treatment plant which began commercial production in September 2010. Expansion of the processing plant to an annual capacity of 1 million tonnes was completed in June 2012 while the tailings storage facility was also enlarged during fiscal 2012 to accommodate 1 million tonnes annually for 10 years.
Disclosures: Long Monument Mining
The price of Aurcana is getting absurd again. It has a market cap of $42 million.
Disclosure: Long Aurcana
Instead of waiting for hundreds of emails about what is going on with Goldgroup since it is down about 40 percent in minutes, I decided to make a short post.
I did not hear of any news, but you have to understand one thing. The majority of the gold and silver mining investors are the biggest idiots on the planet earth. Why did they sell off Goldgroup for $0.04 per share in November 2013? Go and ask them. Why did they buy Goldgroup for $0.31 per share a few weeks ago to sell it off so hard today? Don’t ask me, ask them.
Disclosure: Long Goldgroup
Many people are surprised that the stock of Goldgroup went up so significantly over the last two weeks. I might have a reason for this which is based on a communication that I received from a particular shareholder who does not wish to be identified. Consequently, this might be just a rumor but I would like to talk about it anyway.
As you know, the PDAC which is a big mining conference took place in Canada last week. Apparently, some investors saw that K.D. Kiepholz, CEO of DynaResource and Keith Piggott, CEO of Goldgroup, were talking together at a table. Some even took pictures of this conversation. Those who understand the story of Goldgroup realize that this conversation might mean some kind of resolution to the disagreement over San Jose de Gracia which is owned 50 percent by Goldgroup and 50 percent by DynaResource. This would obviously be very bullish for both companies and this is probably why a few buyers bid up the stock price of Goldgroup so much so quickly.
Then, today, Goldgroup came out with a press release saying that DynaResource retracted a lawsuit filed against Goldgroup.
It will be interesting over the next month or so to watch how this whole thing gets resolved. One thing is for certain. It does not benefit anyone to stay in the disagreement over San Jose de Gracia because non-producing property is nothing but a liability.
Disclosure: Long Goldgroup