Euro.Mins. Share Discussion Threads

[chipperfrd] 03/2/2008 18:11

H,

The price of the hedge was a record at the time!! But they were let down by the failure of their main contractor and have lost considerable time overcoming the situation they were left in. And of course in the meantime gold has made massive gains - but no one ever said mining was easy!

They plan to reach an annual rate of gold production of 150k oz and will meet their hedge commitments at 75k oz pa, leaving around 75k oz at spot.

Their 26m lbs of Cu pa should provide revenues of around $78m @ $3/lb and should therefore effectively make the cash cost of gold zero or better! But much will depend on copper maintaining it's price over the next few years in the face of a US recession.

The market has been a bit harsh on EUM (as it has with enumerable other juniors) so I am expecting a rise towards a fairer value as initial earnings roll in. Yet another stock which requires much patience especially as the TSE day traders move it around at will.

Chip

[ukgeorge] 03/2/2008 17:56

none of the copper is hedged.

[hectorp] 03/2/2008 17:29

dona -use Waterhouse, they let TSX duals into ISA.

PS
this share price is looking attractive for its potential.
But an awfully high amount of the gold was hedged at rather a low value:
From Jan 07) which has reduced the depth of my interest:

'Hedging of 443,000 ounces of gold at approximately US$574 per ounce has been incorporated into
this updated mine plan '
HOw eill the sale of gold then, pan out? sell at the hedged price for a year or two, or sell some hedge price, some full market price?
- lastly , surely this is mainly a copper play, or is THIS also hedged at lower than $3 a lb.. and Market cap is no longer cheap ..
H.

[donaferentes] 01/2/2008 16:37

Thanks everyone for the info on IASable stocks - also to all for the quality of posts here.

Happily sitting on all mine watching the perfect uptrend from October 2006.

Good luck all.

[simon54] 01/2/2008 15:23

dona - as strow says, but you may find your broker won't allow it in the ISA - Barclays are a real pain about this, and basically won't allow any dual-listed stocks which are incorporated in the other country. This is their own restriction, though, and is nothing to do with IR regs (even though Barclays might like its customers to think the latter).

There are some stocks which are dual listed on an exchange which is not recognised (e.g., the Berlin third tier) which can't be included, but any part of the TSX (including the Venture Exchange) and the ASX is fine.

[arc en ciel] 01/2/2008 15:23

From Lawrence Rawlston, January 2008

European Minerals (EMP-TSX;
C$1.31) quietly began production last
month with its first gold pour. Formal
start-up is still several months off, as
the company systematically
commissions the various components
of its processing facility. Proven and
probable reserves at the
Varvarinskoye project in Kazakhstan
stand at 2.2 million ounces of gold
and 254 million pounds of copper.
The deposit has gold-rich zones and
copper-rich zones. Mining has been
on-going for some time, creating an
ore stockpile......

The copper credits are projected to result in an
extremely favourable production cost
for the gold. The economic evaluation
of the project used a gold price of
$525 and $1.30 for copper, presenting
scope for enormous upside potential.

European Minerals management team
has done an outstanding job of
developing this mine. They are
ideally positioned to further expand
the operation by proving up more
reserves close to the existing
operation and taking on new projects.

[chipperfrd] 01/2/2008 15:22

The TSX/TSE is listed as a qualifying exchange (see HMRC website), hence any AIM quoted stock that has a listing there will qualify for inclusion in a self-select ISA wrapper - but not BATR as strow says.
Chip

[strow] 01/2/2008 15:16

It is dona-try inland revenue website-dual listed stocks are isa-able,but also due to this,they are not then eligible for taper relief by nature of being an aim stock-the two are mutually exclusive

[donaferentes] 01/2/2008 15:11

UKGeorge
Can you repeat your last sentence - are you saying EUM is ISAable (does not qualifying for AIM CGT relief by virtue of being listed on TSX, automatically mean it is ISAable?) Where can you get a defeinitive ruling on this?
TIA

[chrismisson555] 01/2/2008 13:38

Maybe a good time to pick up the warrants, looks like a good rally today in the US after the Microsoft bid and rising job numbers.

Long-term I dont think there is a better gold junior at the moment that is least ISAable.

[ukgeorge] 01/2/2008 11:39

i think the juniors are starting their move. when $1000 gold is hit even more people will be looking to get a piece of the action.

[simon54] 01/2/2008 11:18

The US$127 figure for years 1 - 3 ($261 after that) was with Cu at $1.30/lb -



Wise to presume that pre-credit costs have risen since then, of course.

[chipperfrd] 01/2/2008 11:00

strow,

In the light of the terrible sentiment that has depressed the junior miners I have cast a very critical eye over all my valuation models recently, but have still come up with a healthy upside in prospect at EUM.

However, with a market that will only give a grudging appreciation of actual earnings, and with short-term profits being (apparently) the only game in town for the majority of market participants, it would appear to be sensible with regard to forward projections.

If EUM can deliver on their initial production targets;
if gold and copper can maintain/improve their current prices;
if EUM production can be lifted in future years
if costs can be constrained within reasonable bounds
if the region can remain politically stable

then all holders can enjoy the prospect of a rising share price - but that is a lot of 'ifs' and I will just take things one step at a time.

First they need to prove they can sustain production of gold at the c 150k oz pa rate and bring the Cu production up to the 26m lbs pa rate. If that can be achieved during 2008 then they 'ought' to benefit sp-wise, whatever the market conditions!
Chip

[strow] 01/2/2008 10:29

Chip-i think you are absolutely right to be very conservative at the moment(and your experience i know is much greater than mine),but the current market malaise wont last for ever and i think its important as you also say that the objectivity remains and that our sentiment does not swing too far the other way
To quote deslauriers again "We estimate that incorporating european minerals hedge at $575 on 75,000 ounces,using metal prices of $625 gold and $2 copper,epm(the tsx ticker)will cash flow $120 million in 2008"
Actual prices now $900+ gold and $3.2 copper,although clearly he was assuming a whole year at full production of both gold and copper

[ukgeorge] 01/2/2008 09:59

the only worry i have with this share is they are taken over very quickly and we lose out as someone would get such a bargain.
the copper chart looks very good and it could even go higher using $2 copper this project makes good money factor in $4.5 copper and the numbers will be staggering.
i think eum have proved a great deal and just have the last couple of hurdles to clear. Copper line coming on line soon then 3-6 months of ramping up to full production. then surely plain sailing, with a rerating for the share price and an abosolute money making machine.
if they are taken over for less than £1.5- £2 i will be disapointed. the risk reward ratio at these prices is surely one of the best in the mkt.

[chipperfrd] 01/2/2008 09:08

Kibb2/strow,

I agree that I am probably being a bit too conservative as EUM have said that with 26m lbs Cu pa @ $2/lb the net cash cost of their gold production will be at around $0 for the first 3 years.

I do think we need to be careful in making any bullish assumptions regarding Cu price in the present economic climate, but I have to agree that the probability of a fall to below $2/lb looks unlikely.

However, EUM still have a lot to prove as their own LOM predictions are currently for lower production levels and higher costs once past the initial 3 years - obviously we are all expecting improvements to those forecasts once they have bedded-in their initial target production levels, but we cannot assume these improvements will occur.

I get so tired of misinformation being spouted to hoodwink and fleece PI's that I have probably over-reacted to the contents of the Stockhouse post above which (IMO) has over-egged initial production, ignored tax, interest, sustaining capital, et al, and has used current spot prices in order to calculate the most bullish scenario.

I am a holder here and I feel positive about the future prospects. Sorry if I came across as too negative.
Chip

[strow] 01/2/2008 08:10

Deslauriers also used a figure of cu $2/lb i believe and came out with negative cash costs!

[kibb2] 01/2/2008 07:14

>>Chipperford

If I remember correctly the cash cost of $127 was based on Copper credits with the price at $2. Are you factoring in a higher Copper price anywhere in your model?

K

[chipperfrd] 31/1/2008 11:43

UK George,

I am reasonably positive about EUM but I find the above post does rather ignore a few details on the debit side of the balance sheet.

1. Should be using fully diluted shares in issue of 439m for EPS calc.
2. I use cash cost of $127/oz after Cu credit - not 0.
3. Gold royalty of 1.2% amounts to around -$1.3m pa
4. Cu royalty of 1% amounts to -$0.8m pa
5. I estimate G&A at around -$6m pa
6. I estimate interest payments at approx -$4.2m in 2008
7. After allowance for depreciation I assume Tax of around -$19m in 2008
8. There will also be ongoing CAPEX & EXPEX which should be allowed for

When you put it all together it should still be a profitable operation but I have lower expectations than your Stockhouse poster.
Chip

[ukgeorge] 30/1/2008 14:29

not bad but i want/expect more. But 24% will ve a start.

[donaferentes] 29/1/2008 17:36

Has to be said EUM is following a pretty steady upward trend line from Sep 2006. If we continue that line, it's a 24% pa increase in value - not bad at all.

[ukgeorge] 28/1/2008 12:22

i wonder if they have had any more gold pours. apparently it won't be long before the copper circuit comes on line so hopefully that news when it comes will help the share price gold continues to do great wish the same could be said for the gold juniors.

[strow] 25/1/2008 13:18

Yes arc re hedge,but all the same cash costs are well negative,so revenues will incorporate full 140,000 oz at current gold prices-big money-deslauriers certainly knew what he was talking about when he covered these

[ukgeorge] 25/1/2008 13:00

hoping they have a good day in canada. these seem so un followed in the UK i think they have a better plan/prospects than many of the other junior Producers.