Belo Sun Mining reports that a three judge panel decision by the Court of Appeals of the Federal Justice in Brazil has ruled unanimously that SEMAS remains the competent authority for the environmental permitting of the Volta Grande Gold Project.
The ruling confirms that the Construction and Environmental Licenses granted by SEMAS for the Volta Grande Gold Project remain valid, subject to the completion of the Indigenous Study. [LINK]
$VNNHF : Belo Sun Mining — Independent Economic Analysis
The Fenix Project is on the high end of the TAIC curve. It will need higher gold prices to be viable. Above $1,700, Net Profit Margin becomes sustainable. It is important to note that social investment costs will be much higher than envisioned by Atacama Pacific and that will have a further deleterious impact on margins, as has the 35% increase in Chilean Corporate Taxes since 2014.
In Q2, we reduced our exposure to uranium and increased our exposure to gold, silver and agriculture; our allocations to platinum and rare earths remain unchanged.
At Fahy Capital Management, our investment decisions are based upon quantitative data. Analysis of that data enables us to execute in what we perceive to be a timely and prudent manner. When our data suggest the gap between price and value has closed, we sell. This approach ensures that we do not fall in love with a particular idea or stock. We perceive stocks as inventory and we like to see that inventory get worked off.
Over the course of a 12-month time frame, we typically expect inventory to be reduced by as many as 2 or 3 names, and this has proven a rate that allows us to reinvest and grow.
We remain committed to the value proposition, but how we arrive at determinations of value is changing. We have developed new formulas and new ratios that we believe better reveal the merits and shortcomings of businesses under investigation, while conferring to us an edge on the hairy margins.
We are looking forward to sharing some of our results here in our blog. Those results, however, don’t constitute a recommendation to buy or sell; it’s just food-for-thought.
As expected, broadly speaking, lowAbsolute Cost Structures (ACS) are associated with highFuture Market Cap Growth (FMG) and substantially higherNet Profit Margins (NPM). One anomaly is Alio Gold, which has a study group-beating Future Market Cap Growth projection in spite of average-to-high ACS, as capital and operating costs are fairly low while share structure is tight.
When selecting stocks, the criteria on which we base overall investment decisions and weightings has grown stricter. We look for companies with True All-in Cost (TAIC)* on the lower end of the curve.
*TAIC, you will recall, includes G&A Expenses, Corporate Taxes & Royalties, Refining & Transportation Costs, Working Capital, and Exploration Budgets, in addition to all capital and operating costs. TAIC is, in our opinion, a much better reflection of a company’s true costs, as it makes an effort to include costs that are often excluded from related non-GAAP.
Alio Gold is an outlier: The Future Market Cap Growth projection is higher than for peers in spite of a comparable TAIC, as Total Operating and Capital Costs are relatively low while its Capital Structure is tight.