Charles Oliver, HBSc CFA McEwen Mining MUX-T TOP PICK Sep 29, 2010

(Market Call Minute.) The owner is a legend and he intends to create the next legend.

Has known Rob McEwen for many years and he suspects that his commercial and promotional acumen will make him one of the big winners in this cycle. He has a decent balance sheet and is very smart. Also, he is enormously tenacious.

One of the principle founders of Gold Corp. He has real issues with Argentina. Gov’t has announced a lot of restrictions on cash flows. It is difficult to get US dollars out of the country. Probably won’t always be the case. There are better alternatives to gold equities with free cash flow and they are more silver.

There have been some operational mistakes, but the CEO has had the courage to fix them. In turnaround situations like this, you need to exhibit some patience. He will be helped in a couple of years by an increase in the price of copper. The latent value is not so much in the gold exposure, but in the copper.

(Market Call Minute) A smart entrepreneur. They can start spinning out a lot of cash from his projects that he has assembled in this new company. Sometimes it is as smart to stick with the smart investor as with the project.

He would like to see what Rob McEwen does with the treasury. This may be another one where he would like to pay up, i.e., more for better information, rather than buying in anticipation of the information.

MUX is a 'love it or hate it' stock. Mr. McEwen has his fans, and his not fans. He is an aggressive CEO, and has grown via acquisition. He had good success decades ago, not so much since. He owns 15% of the stock. But, the stock is down 34% in the past 10 years. It is small at $626M. It has $12M net debt. Cash flow was negative for the past four years, but positive $47M in the most recent rolling 12 month period. It has lost money every year since 2016. It needs lots of capital for its Argentina copper mine, and of course the country carries some risks as well. It produced 35,000 ounces of gold last quarter. All-in per ounce production costs are still fairly high, and we would like to see some improvements in this metric. All in, we would consider it one of the riskier mid-cap producers, and not hugely attractive. 
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