Opinions
Bill Harris, CFA
Glencairn Gold
GGG-T
DON'T BUY
Aug 01, 2006
Had some labour problems but seems to have cleaned those issues up. Well-managed. Has only a few years of mine life ahead of it. Has low visibility.
$0.640
Stock price when the opinion was issued
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BUY
Expenses in mining have gone up dramatically and gold prices haven't been enough to offset them. This company has production in Nicaragua and has brought in production in Costa Rica and these 2 are barely breaking even. With a high gold price, which he expects, this stock will be a major winner. Good price.
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WATCH
Recently purchased some assets out of Yamana (YRI-T). These assets, along with management change give a constructive outlook to the company. Short-term pressure, probably due to new financing. A “Show Me” stock right now. Once they get 1 or 2 good quarters under their belt, there should be an improvement in the stock price. Would consider in the low $.50 range.
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COMMENT
Costa Rica mine had a ground shift, so had to shut the mine. Tremendous cash flow drain. Looking to change their milling operation in Nicaragua. Because of the negative cash flow, it could go bankrupt in the next 12 months. If they can make their necessary moves, the stock could quadruple, but he is not sure it is wise to Hold.
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SELL
They had to close one of their main mines, the ground was shaking. The question is if they can re-open it. They've had a cash investment of 7 million dollars which they will use to consolidate the stock. He doesn't like consolidation, so got out.
90% of consolidations the companies are down in value a year later.
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