IAG

[Pascal]

This is a good one, as pascal notes, for a dead cat bounce. But you may want to put it one the radar screen longer term as well. A lot of funds liquidated positions (including mine) the day after the company updated their expected cash costs (which rose dramatically) for 2013--this bad news came after an announcement of a significant acquisition that made very little sense for the company, in my opinion. However, they do have many unique assets, including a nobium mine and, additionally, potential a rare earths mine. The nobium mine is cash flowing. I would give them very little credit, if any, for the rare earths. While they appraised the nobium mine as worth more than 1.6 billion dollars, I think a more likely value is ~1-1.2 billion (adjusted for taxes). If you take that out of the enterprise value, your implied gold producing company is very cheap---cheap even by other miners. But management credibility is out the window for now. I would follow the EV on this one, particularly after any significant news event. I suspect at some point funds will re-enter and this will re-rate.

Thank you for these comments. I did not know this "value" based story.
Always good to know when you are investing in a stock.

Below are similar patterns for a much larger miner: AEM.
Depending on the behavior of gold itself next week, I could take a long position on Monday.


Pascal