$MISVF : Minco Silver — Independent Economic Analysis

Long-term Price Case$24/oz. Ag
Flagship ProjectFuwan
Mineral Reserves55,300,000 ozs.
Shares Outstanding60,704,748
Market Cap$27,317,137
Average Annual Production5,500,000 ozs.
LoM9.2 Years
Payable Product50,323,000 ozs.
True All-in Cost (TAIC) $19.80/oz.
Gross Revenue$1,207,752,000
Gross Income$1,159,441,920
Total Operating Costs($313,800,000)
Operating Profit$845,641,920
Total Capital Costs($73,059,822)
Net Income$211,585,336
Net Profit Margin18%
Absolute Cost Structure (ACS)82%
True Value$1.35/sh.
Cash Flow Multiple5x
Annual Cash Flow (TMRC, 30%)$23,100,000
Future Market Cap$115,500,000
Market Cap Growth323%

Notes: All Values in U.S. Dollars

$TMRC : Texas Mineral Resources — Updated Economic Analysis

Flagship ProjectRound Top
Mineral Resources (M&I)307,260,007 kg REOs
Shares Outstanding46,686,252
Market Cap$14,005,876
Average Annual Production10,754,100 kg
LoM20 Years
Payable REOs215,082,005 kg
True All-in Cost (TAIC) $21.43/kg.
Gross Revenue$7,764,424,000
Texas State Royalty($487,476,000)
Gross Income$7,276,947,000
Total Operating Costs($2,213,683,000)
Operating Profit$5,063,264,000
Total Capital Costs($845,000,000)
Income Taxes($1,063,285,440)
Net Income$3,154,978,560
Net Profit Margin41%
Absolute Cost Structure (ACS)39%
True Value (TMRC, 30%)$20.27/sh.
Cash Flow Multiple5x
Annual Cash Flow (TMRC, 30%)$47,324,678
Future Market Cap$236,623,392
Market Cap Growth1,589%

Notes: All Values in U.S. Dollars

$SSPXF : Sandspring Resources — Independent Economic Analysis

Long-Term Price Case$1,700/oz.
Flagship ProjectToroparu
Fully-Diluted Shares315,544,790
Fully-Diluted Market Cap$47,331,719
Average Annual Production198,158 AuEq ozs.
LoM24 Years
Payable Product4,755,793 ozs.
True All-in Cost (TAIC) $1,287/oz.
Gross Revenue$8,084,848,100
Transportation & Insurance($91,881,921)
Treatment Charges($50,458,964)
Refining Charges($24,302,102)
Gross Income$7,915,304,079
Guyana Au Royalty($530,984,288)
Guyana Cu Royalty($9,178,680)
One-Time Surface Owner Royalty($27,060,462)
Net Revenue$7,348,080,649
Total Operating Costs($3,127,124,129)
Operating Profit$4,220,956,520
Income Taxes($1,266,286,956)
Total Capital Costs($992,000,000)
Net Income$1,962,669,564
Net Profit Margin24%
Absolute Cost Structure (ACS)75%
True Value$6.22/sh.
Cash Flow Multiple5x
Average Annual Cash Flow$81,839,254
Future Market Cap$409,196,270
Future Market Cap Growth765%

Notes: All Values in U.S. Dollars

New Direction — Say more with a lot less.

We are taking our approach to the valuation of businesses in a new direction.

Many metrics, including those that measure resources relative to shares or market cap, have proven of exceptionally low utility, so they will be left by the wayside, as will be quick and dirty market cap valuation methodologies in which the divisor is company shares.

We will be discontinuing the Deep Value Grading System, as well, as it too easily lends itself to misinterpretation.

Basic cash flow analysis will take a back seat to a new costing methodology that leverages our experience with and passion for cost accounting: True All-in Cost (TAIC). Four additional valuation metrics extend therefrom: True Value, True Value Discount, Absolute Cost Structure (ACS) and MTQ Score.

The following key metrics will now represent the chief means by which we arrive at determinations concerning value:

True All-in Cost (TAIC)
True Value*
True Value Discount (TVD)
Absolute Cost Structure (ACS)
MTQ Score

Although we have devoted a great deal of time to the development of our acquisition formulas (TAC), they too have proven of too little essential everyday value to support unless we find ourselves in a situation that requires the valuation peculiarities that set them apart, including their spot price independence.

*True Value shouldn’t be misconstrued as a Price Target. Our targets are based upon projected annual cash flows to which a multiple is assigned; the multiple is determined by analyzing Net Profit Margin and Absolute Cost Structure.

Occasionally, at our discretion, we will publish a Target in addition to True Value.

Final Thoughts (They are never final.)

Historically, our valuation methodologies have utilized fully-diluted shares. We are actively considering transitioning to a Free-Float methodology in order to better anticipate future tendencies of price.

$TSRMF : Treasury Metals — An Independent Economic Analysis, Wherein is Introduced a New Metric: Absolute Cost Structure

Long-Term Price Case$1,700/oz. Au & $24/oz. Ag $1,600/oz. Au & $22/oz. Ag $1,500/oz. Au & $20/oz. Ag $1,400/oz. Au & $18/oz. Ag
Flagship ProjectGoliath Goliath Goliath Goliath
Ownership100% 100% 100% 100%
Mineral Resources (Measured & Indicated)1,174,668 AuEq ozs.1,173,099 AuEq ozs.1,171,320 AuEq ozs.1,169,287 AuEq ozs.
Fully-Diluted Shares192,845,004 192,845,004 192,845,004 192,845,004
Fully-Diluted Market Cap$34,712,101 $34,712,101 $34,712,101 $34,712,101
Average Annual Production90,100 AuEq ozs.90,041 AuEq ozs.89,974 AuEq ozs.89,898 AuEq ozs.
Recovery95.5% 95.5% 95.5% 95.5%
Payable Product1,171,294 AuEq ozs.1,170,531 AuEq ozs.1,169,667 AuEq ozs.1,168,679 AuEq ozs.
LoM13 years 13 years 13 years 13 years
True All-in Cost (TAIC) $1,006/oz.$979/oz.$953/oz.$927/oz.
Gross Revenue$1,991,199,800$1,872,849,600$1,754,500,500$1,636,150,600
Smelting & Refining($5,890,560)(5,618,549)(5,263,502)($4,908,452)
Total Operating Costs($613,751,040) ($613,751,040) ($613,751,040) ($613,751,040)
Operating Profit$1,376,859,200$1,253,480,011$1,135,485,958$1,017,491,108
Total Government Taxes and Royalties($357,983,392)($325,904,803)(295,226,349)($264,547,688)
Total Capital Costs ($200,675,520) ($200,675,520) ($200,675,520) ($200,675,520)
Net Income$818,200,288$726,899,687$639,584,089$552,267,900
Net Profit Margin41%39%36%34%
Absolute Cost Structure (ACS)59%61%64%66%
True Value $4.24/sh.$3.77/sh.$3.32/sh.$2.86/sh.

Notes: All Values in U.S. Dollars

Were Goliath in production at $1,400/oz. Au, it would earn roughly 34 cents on every dollar it collects. From there, Net Profit Margins improve incrementally as the fundamental gold picture improves. An Absolute Cost Structure (ACS) of 66%* makes this possible. What is more, the ACS declines by ~11% as gold prices move from $1,400 to $1,700. It is this factor which underpins the improvement in Net Profit Margins.

We have learned to shy away from enterprises (catastrophes?) that cannot manage to rein in their ACS, but Treasury Metals is an example of a future gold producer that makes the cut.

*You’ll see plenty of ballyhooed Before-Tax Cost Structures below 50%, but they aren’t an accurate representation of reality. If you can find a gold producer with an ACS under 70%, you may have stumbled upon a real gem, though abiding by non-GAAP in your analysis won’t help you find gems. Which is to say, one must find new methodologies that enable one to push beyond AISC & All-in Costs in pursuit of extended valuation factors such as Absolute Cost Structure.

$ABBRF : AbraPlata — Updated Independent Economic Analysis

Long-term Price Case $24/oz. Ag & $1,700/oz. Au
Flagship Project Diablillos
Ownership 50%
Mineral Resources66,425,000 AgEq ozs.
Shares Outstanding82M
Market Cap$3,599,800
Average Annual Production4,919,765 AgEq ozs.
Payable Product39,358,121 AgEq ozs.
LoM8 Years
True All-in Cost (TAIC) $17.59/oz.
Gross Revenue$944,594,904
Total Charges ($28,337,847 )
Royalty NSR ($9,445,949)
Net Revenue$906,811,108
Total Operating Costs($279,674,860)
Operating Profit $627,136,248
Income Taxes ($219,497,687)
Total Capital Costs($155,479,000)
Net Income$252,159,561
Net Profit Margin27%
Absolute Cost Structure (ACS)73%
MTQ Score (Higher is Better) 0.4
True Value$3.08/sh.
True Value Discount (TVD)99%
Cash Flow Multiple5x
Net Annual Cash Flow$31,535,694
Future Market Cap$157,678,470
Future Market Cap Growth4,280%

Notes: All Values in U.S. Dollars

According to our calculations, the AbraPlata story gets interesting above $17/oz. Ag. If Aethon has a breakthrough and is able to demonstrate that recoveries above 80% may be achieved, the AbraPlata story could get interesting below $17/oz. It’s a wait-see.

The Net Profit Margin and Absolute Cost Structure are middling, so we have assigned AbraPlata a 5x Cash Flow Multiple and Future Market Cap Growth up to 4,280%.

Merger Update: 30 July 2019 — Jane pays John to take her to prom…

On a fully-diluted in-the-money basis, AbraPlata shareholders will own ~48% of Diablillos following a business combination with Aethon.

As our assumptions were within a +/- 5% margin of error (+4%) regarding future ownership, our existing valuation dated 20 June 2019 remains valid, for all intents and purposes.

$SBGL : Shrewd Moves from Froneman

Sibanye-Stillwater to mothball, close four gold shafts, but limits job cuts to 3,450…

Shafts that didn’t escape the cull were Beatrix 1 shaft in the Free State, which will be placed on care and maintenance, and plant facilities at Beatrix 2 which will be closed. The Driefontein shafts 6 and 7 will also be closed, while Driefontein 2 shaft will be placed on care and maintenance. [LINK]

See Fahy Capital Management’s Notes and Recommendations for Driefontein and Beatrix from 22 June 2018 for more details: If We Had an Audience with Froneman, This is What We Would Say

Powerlifting: Is Volume Training the Enemy?

Age: 41
Height: 5’10”
Weight: 200 lbs (Starting Weight: 165 lbs) ; 210 lbs (28 March)
Status: Drug-free
Duration of training: 8 Months
Supplementation: 20-40,000 IU D3 + 5g Creatine Daily

Present Lifts

Deadlift: 415 lbs; 420 lbs (13 March); 425 lbs (17 March); 430 lbs (21 March); 435 lbs (26 March)
Squat: 375 lbs; 380 lbs (15 March); 385 lbs (19 March); 390 lbs (24 March); 395 lbs (28 March); 405 lbs (2 April); 410 lbs (7 April)
Bench Press: 265 lbs; 280 lbs (7 April)

6 Month Goals

Deadlift: 460 lbs
Squat: 430 lbs
Bench: 285 lbs

Volume may not be everyone’s enemy. It proved to be mine, however.

I have come to believe that drug-free powerlifters must lift differently, with an elevated sense of humility and a commitment to heavy, progressive poundages, core lifts, low reps, brief workouts, rest, realistic goals, and finally, enough calories to support growth.

The drug-free powerlifter will break down faster than his enhanced counterpart; one simply is not able to assimilate protein as efficiently as one who is enhanced. But I don’t subscribe to the belief that the drug-free powerlifter cannot make the same spectacular gains as the enhanced powerlifter. Those gains may simply take longer to achieve.

To the drug-free powerlifter, rest, recovery and a commitment to regular, calorie-dense feedings are all-important.

The drug-free powerlifter must be humble and a commitment to realistic goals will ensure that one’s humility is not prematurely slayed by impatience.

What is a realistic goal?

I think the addition of 2.5-5 lbs to each core lift per week is not only realistic but attainable. Plateaus will come and they must not be met with discouragement; they must be embraced. The plateau isn’t the point at which one’s regimen should be altered, but the point at which each lift is met with additional vigor and patience. Why? The plateau is the point at which one’s body is preparing to grow and potentiate the next landmark lift. It will come. Sooner, probably, than you think.

It is the plateau at which I have witnessed my body grow the fastest. It is also the point at which, especially for the drug-free powerlifter, to reduce sets and reps, while ensuring that maximal effort remains devoted to each core lift.

Why reduce sets and reps?

If your poundages have been increasing, so has the intensity of your lifts. Your body has come under considerably more stress over a shorter period of time than when you first began, when weights were relatively light and neural adaptations came quickly. Reduce the number of warm-up reps at lighter poundages in order to preserve power for maximal lifts at target weights. If you’ve hit your goal for your workout, swallow your pride, quit and re-rack your weights. Go home, eat and rest. Otherwise, you will be making inroads into recovery potential and increase the odds of injury.

How many reps?

The path to one’s one-rep max in any given workout is the sum of several reps at various poundages. It will vary from person to person, but there is unquestionably a point at which that sum is too high to ensure that one is able to perform at one’s best at target weights with excellent form. It’s up to you to determine how many warm-up reps at each weight is too many. In order to ensure that I achieve regular increases in strength at progressive poundages, I pared squat sessions down from between 8-12 reps at each warm-up weight to the following:

5 x 135 lbs
5 x 225 lbs
3 x 315 lbs
3 x 365 lbs
2 x 375 lbs (PR)

If I lifted 370 lbs last week and was able to add 5 lbs this week, I WILL grow stronger. As a drug-free lifter, muscle may not appear immediately, but it WILL come, given adequate rest and caloric intake.

If I were to plateau at 375 lbs for an extended period, for instance, I would make an attempt to break through that plateau by eliminating the set of 3 x 365 in order to preserve power for maximal lifts at target weights. A mere breakthrough of between 2.5-5 lbs following a short plateau is often enough to both psychologically and bodily propel one to one’s next PR. Over time, one finds how much is in one’s personal fuel tank, on average, per session. Sip through reserves during warm-up sets; leave the vast majority of fuel for your maximal lifts then get the hell out of the gym and refuel.

What did my last deadlift workout look like?

5 x 135 lbs
3 x 225 lbs
2 x 315 lbs
1 x 405 lbs
1 x 415 lbs (PR)

On both squat and deadlift day, I also do one of two pressing activities: seated presses with a narrow grip, or landmine presses. Due to surfing injuries 20 years ago, I do not perform traditional bench presses, which is not to say that I won’t develop sufficient strength to eventually return to the bench with a spotter that may assist with liftoff in order to avoid rotator cuff pain. In fact, I am certain this day will soon come.

Why drug-free?

I can’t imagine never knowing of what one is truly capable under one’s own power, backed by Faith. I cannot imagine not knowing where one’s own grit ends and performance enhancement drugs begin. We are capable of dramatically more than we think. Impatience is our worst enemy. To be drug-free is to be intellectually honest. Were we all drug-free powerlifters, global records would unquestionably be a little lower, but damn, we’d certainly know who possessed true genetic mettle.

Fahy Capital Management Uranium Book

Updated 28 June 2019

NuChem International Catalyst Fund Group: URANIUM
DNNDENISON MINES3.40%$0.51$3.35
NXENEXGEN ENERGY4.54%$1.90$21.64

We have reclassified Texas Mineral Resources as a pure Rare Earth play; it is no longer considered a component of the uranium book.

We exited Energy Fuels for a 90% profit on 28 June 2019.

Our stake in NexGen Energy has risen to 4.54% of the NuChem International Catalyst Fund, as we consider it the best means by which to capitalize on a future uranium bull market.