seems extremely undervalued, page-16

Hi Champ2003,

Here is a snap shot of the fundamentals of cxc.
It’s parent company is cde which is listed in New York stock exchange.

The main assets are San Bartolome mine in Bolivia,
Cerro Bayu in Chille
Martha in Argentina,
Rochester in USA
Endeavour in Australia (This is not a mine but rather a royalty like process where CDE gets all the by product silver from the miner in Broken Hill at a low price)
Palmarejo in Mexico and Kensenton in Alaska.

Of the lot there are at the moment only 3 assets that are really worth consideration and they are the ones in Bolivia, Mexico and Alaska.
The other few mines are too small to consider.

First the negatives

Cde has had its problems as you would be able to see from the long term chart where its share price has been dropping from well over 70 dollars in 2006 to the present value.
The reason I am with cde is really because of Bolnisi gold which was merged with cde a few years ago.
Since the merge the share price has gone from over 5 dollars to a low of less than 1 dollar. Part of the low share price is of course the financial panic, part of it is the silver price and the other part is management.
They have been delay in startup times and capital cost blow out pertaining to the Bolivian project and the Mexican project. Also the Kensington project was not been able to progress due to law suits.
Partly because of this(I believe) they have to sell of halve their gold at $400 per oz for the life of the mine in Mexico to Franco Nevada to raise $80 million to complete the Mexican project. (The bright side is the fact that the Mexican project is mainly silver which is about 2/3 by value.)
The tax is quite high in Bolivia. (forgot how much it is).
Of course the sovereign risk is high too in Bolivia. Mexico at the moment seemed ok but further down the track we really do not know.
They have a few hundred million dollars of debt which I just could not work out in their balance sheet. (I am not an accountant but I can usually work that out with Australian companies)

But on the bright side of things is that all this problems seemed to be behind us.
Bolivia seemed to be producing as planned at a reasonable cash cost of about $7.00 an oz of silver.
Kensington’s court case is resolved and they will not need to spend much money to complete the tailing dam to start mining possibly in the first half of 2010.
And Mexico seemed to be on target with both cash cost and production.

Now the positives.
Bolivia is producing about 9 mil ozs of silver a year with a mine life of about 14 years.
Mexico will be producing 9 mil ozs of silver and about 120,000 ozs of gold with a mine life of at least 11 years. Production has just started last quarter.
And Kensington is projected to produce 140,000 ozs og gold a year for about 10 years mine life
The average cash cost after by-product credit is about $4.75 at the corporate level and is projected to be lower in 2010.
They will participate in the silver price upside because they are unhedged apart from half the gold in Mexico as mentioned earlier.
Their projection is a cash flow positive of at least $100 million with silver price of $13/oz and $900/oz gold
They still have a large prospective area in Mexico which is not fully explored yet.
Most of the capital cost is now expanded and hopefully the cash will roll in.
They would be in a very good position to buy up other cheap distress projects.
The charts are saying the worst is behind it for the company
Now with the share reverse split it is priced at $18 instead of $1.80 per share which is good in the American market because institution can which are constrained by guidelines on share price can now purchase CDE.
It has 68.6 million listed in the US which would give it a Market Cap of about 1 billion compare to a cash flow of $100 million with silver at $13 and that excludes the Kensington asset.
The exciting part is for every dollar increase in the silver price the cash flow rises by 20 million over dollars.
The best part is there are evidence that fundies are starting to buy into precious metals

Please be informed I hold cxc shares and hence I may be biase towards it. All dollar value are in US dollars. By the way this share is in the long term buy list of zeal investment. It is probably in the buy list of fat prophets too.

Cheers