Abcourt Mines, or why should I bother?

Just for a change in pace (for me and my site) I've decided to look at at a few stocks once in a while. It's informative for you (hopefully) and forces me look a little closer at those companies I follow.

Abcourt Mines ABI.V it also trades in Frankfurt and in the pink sheets, but I’ll let you look up the symbol if you care.

To be honest Abcourt has been a looser for me, I bought some a couple of years ago, made a small gain,and sold. Recently I dived back in at what I though was a bargain at about .60 only to have it languish and falter on a combination of no substantive reporting on progress and repeated missed targets for getting production going. Since its plunge I have averaged down but without some real news of progress I would not invest any more than I already have. Drill results are fine but I want a time table for production, and I want to see goals set and met.

On the surface Abcourt seems to have the goods; known and growing resources, 12 million in mothballed infrastructure (estimated replacement value) and it resides in Quebec where the Provincial Government practically pays you to drill holes in the ground.


So what do you get for today’s .36 share price?

.005 ounces of gold/share

.51 ounces of silver/share

16.93 pounds of zinc/share

2.56 pounds of copper/share


Now prices are fluctuating a fair bit but this certainly represents over $30 per share of resources spread over a couple of different projects.


The most advanced project is the Abcourt-Barvue zinc-silver mine touting compliant resources of 500 million lbs of zinc, and 13+ million ounces of silver. In the recent optimized feasibility study it states that $43 million is required to bring this property into production with a 4-5 year payback period. Mine life is expected to be 13 years, with potential to expand the resource on site or perhaps truck in ore from near by satellite properties.

Abcourt has several satellite properties that are undergoing or have had recent drilling programs ,
Aldermac – zinc-copper
Jonpol zinc, copper, silver

Abcourt also has the separate Elder property, a past producing gold mine showing 200,000 oz of 43-101 compliant gold with much of it’s infrastructure intact.

Here’s a detailed paper by Howlett Research

Abcourt has 48,064,898 fully diluted shares which at .36 makes for a market cap of 17.3 million which is pretty damn cheap for what you get provided they ever get off their asses, live up to some promises and actually get the Abcourt-Barvue property into production.

That’s the major problem with this company, the Hinse family seems to think that because they hold 30% and control the board they don’t need to give us poor peasant shareholders accurate or timely information. Abcourt has an ugly ass web site and they don't make any effort to update their pages to keep them current. From what I've seen in online forums, small stock holders are just plain sick and tired waiting for news or action from this company, and I don't blame them.

Are they just building the resource, stalling and hoping for a take over, or are they serious? I can’t say that it’s clear either way, at least not to this poor slob.

At .36 this stock seems to have valid reasons for some solid upside, however I’m no longer confident that this team wants to achieve production and I don’t have the patience to wait indefinitely to find out, I guess I’m just frustrated as are many other stock holders who were promised production last year.

(Of course the moment I sell someone will probably buy them out at a 2.50 which is just my kind of luck.)

So Abcourt, Tell my why should I bother holding or enlarging my stake?

Do something, anything to convince me and other stock holders we are not wasting our time and money.


DISCLAIMER

These are not endorsements, I'm simply going through my stock watch list in no particular order and commenting on the companies themselves, my luck with them and my meagre insight. Some of these companies I own, some I have owned and some I just watch looking for opportunity or wishing I had more cash to invest.

While I believe that not having precious metals is foolish and state so frequently, I also believe that taking stock advice without doing your own research is just as foolish. Be warned and do your own due diligence, and don't you dare blame me for your losses if any. Of course comments are always welcome as are monetary rewards should you make money by ignoring this warning.

Silver battery revolution!

The Silver-Zinc battery story has been quiet for some time but ZPower claims to have made progress in energy densities and apparently has a pending deal to put it's batteries in Laptops as per this story over at EDN

We already know that Silver-Zinc is safer than Lithium-Ion and is fully recyclable with no toxic metals, so if these claims of higher density and adequate performance are proven there certainly will be a premium market for these higher priced batteries. While price point will matter to some consumers, tens of millions will pay the premium for better, safer, cleaner batteries adding great demand to the silver market. This type of battery and High temperature super conducting cables are likely to become biggest new users of silver in coming years.

That slurping sound you hear in the background is the remaining silver surplus being siphoned off.

Good times for silver are ahead.

Speaking of good times, today's 52 cent gain and the $18 for gold is nothing to bitch about. Man I hope I get this years tax refund before the market goes tilt, there is still time to get in but I don't know how much time.

Canadian Silver Bug- Predictions for 2008 Pt 3

I had some final 2008 predictions that I failed to write up for the New Year so I thought I’d just jot those down quickly.

U.S. recession- most definitely, the media is starting to use the R word and I doubt the Government can keep the lid on doctored growth numbers forever.

U.S. unemployment is going up, proof came out this week with private sector job growth slowing and those receiving jobless benefits rose. The first wave of job loss was mostly missed by manipulated stats and the numbers of undocumented illegals working in the housing industry. However with the second wave, legal labour, lumber, cement, hardware companies, furniture stores etc will hit take a hit as people don’t need shit if they don’t have a new house to put it in. I expect the statistical lying to continue but expect they will fail to keep inflation climbing from today’s two year high of 5% to no less than 6% by year end.

Added to my prediction of big banks going insolvent I expect to see at least one large house builder (probably Lennar) file for protection before the end of the Q2.

The subprime mess will continue but this year’s price downturn will also put many more prime mortgages into trouble as loan values exceed property values. Previous estimates of defaults will be sorely insufficient as even trustworthy borrowers end up owing more than their house is worth, those that can pay will ride it out, others who get asked for new down payments will bail.

I think the credit crisis, (the one thing I did not foresee last year) will get much worse unless the Fed just starts buying all debt or mandating loans to the public via the banks(legally the Fed can order loans be made then cover the risk themselves). Baring that, I can see a point this year where banks will start cancelling credit lines, many of these are backed by house equity that no longer exists, others just because of credit ratings or inability of banks to access sufficient credit. The result will be lower consumer spending and a switch from reasonably priced credit lines to expensive credit cards to float excessive consumption. This will be just one of the factors that will hit consumer spending hard this year. While the freeze seems to be thawing in Canada U.S. banks are rightly afraid of each others balance sheet.
Citibank for one is toast.

The recent trend of nearly 5% of car loans going bad will increase, credit card defaults will also head higher.

The inflation vs. deflation argument will continue all while the biggest personal investments of most people, (their homes) will continue to devalue in the U.S and soon Canada, England and Spain. At the same time, food costs, energy costs and the tax burdens in most countries will increase validating neither argument and making it that much harder when deciding how to protect yourself.

Stocks

This year will be a year of chaos, energy and precious metal stocks, some industrial metals, Ur, Moly, Cobalt, rare earths will still do very well. Financials, retail, commercial real-estate will range from weak to nuked

Oil

low of $90 high $140 on shortages. yes I said $140, it will take only 1 fire, hurricane, war etc to put the U.S. into it's emergency supplies, Canada has no emergency supply. What if that pipeline from Alberta into the U.S. that blew up last month had taken all 6 or 7 pipes and not just one? What if someone helped it blow up at one or more points along it's length? Mind you I take this a proof there are no real terrorists in N.A., that or they are too damn stupid to bring us to our knees.

For those who still think my pessimistic views are loopy I leave you this article Crisis may make 1929 look a 'walk in the park' as proof I'm not alone and the fear is spreading, Hell my wife is starting to think it will get worse than even I do. Soon she will actually listen when I tell her I really want that gold sovereign or bag of libertads for Christmas.

Flying money is everywhere

The money is flying fast and furious as more and more schemes and emergency bailouts are brought forward to the market.
Citibank’s 4.9% sale to Abu Dhabi sovereign fund, Merrill Lynch scores $4.4 billion from Temasek of Singapore and a further $1.2 Billion to another firm today.


Morgan Stanley sets the stock price for a 5 billion bailout from the Chinese Government


Banks are in trouble and I’m telling you once again to diversity between banks, avoid the weakest banks, take out 2-3 months of cash if you have any savings and of course buy the anti dollars, Silver and Gold.

Who are the weakest banks? It is not entirely clear as many companies have yet to fully disclose their exposures to bad paper, I would certainly put Washington Mutual and CountryWide on my avoid list, In Canada CIBC looks to have the worst exposure and the National Bank has already taken considerable write downs considering it’s size. At this point the safest most conservative of the Canadian Banks looks to be TD.

In the U.S. the first of the new wave of low rate credit auctions intended to ease the credit constraints received bids from 93 different banks. These banks put bids in for over $60 billion when only $20 billion was up for auction ensuring the additional auctions planned for January should be fully subscribed. Some commentators have speculated the terms on this credit is destined to become long term.


The ECB has offered $500 billion in 2 week loans to European banks in order to ease them through any holiday liquidity issues. (Egad, that’s like the entire Canadian Federal debt.) Why is it no one will loan me enough for a ton of Silver or my dream farm below prime?

Very shortly I fear this will become an insolvency crisis not a liquidity crisis, borrow as the might from this emergency short term money pool, banks who have taken large loses from subprime products will eventually have to come clean with a full accounting.

The scariest news is the from the bond insurers. MBIA admitted to having a total of $30.6 billion in complex mortgage securities with $8.1 billion of those being the highest risk varieties, including CDOs backed by other CDOs. Should MBIA be downgraded every single one of its insured bonds will also be downgraded. When this paper starts going under the companies net worth of $6.5 billion will evaporate leaving bond holders and stock holders with nothing, already shares have plunged to near the $20 range from a 52 week high of $72.02.

Other insurers are in trouble and downgrades in this industry would be like pulling the lynch pin from some piece of machinery, expect gears, cogs and wheels to start falling off any time after.


Canadian markets can however breath a small sigh of relief from the claim today that a deal to unfreeze $33Billion in ABCP has been worked out. This is not a bail out however, people who guessed badly will take loses but it does give hope that normal trading of this paper in the spring will allow many organizations to recoup some or all of their investments.
http://www.reportonbusiness.com/servlet/story/RTGAM.20071223.wabcp1223/BNStory/Business/home

It’s a quiet day in the markets so far, Gold and silver are holding their gains from Friday and the office is not likely busy so please get your asses over to your coin dealer and buy your own Christmas gift. If you care, I’d like a couple of Sovereigns or perhaps a bag of Libertads, or DOS Pesos.

The Great Race to Zero

A little break from my 2008 predictions to take note of yesterday’s surprise interest rate decrease by the BoC.

While a 25pt decrease is not a big issue in of itself, it is a huge sign that the BoC is going to join the U.S. Fed in a series of competitive rate cuts to devalue the dollar in what I’m calling the “Great race to Zero”.

Why are they doing all this?

They claim that its simply an attempt to stave off an impending recession but in reality this is about saving a financial system that is all but dead. My bet is that the Fed will lower rates down near 2% by the next U.S. election but you will see the spread between the Fed rate and the street rate will grow giving the Banks a larger profit margin. The Banks will basically be fleecing those who can still pay their bills in order to cover off bad debts; the slight improvements in the street rates will hopefully decrease total value of defaults, making the potential 500 billion in bad mortgages somewhat smaller.

At the same time low interest rates will weaken the U.S. dollar and pump in liquidity in an attempt to inflate their way out of both Government debt and onerous public entitlements. Imagine that each time inflation rises by 10% you tell the public inflation is only 3%. This means inflation (even with a cola clause) is good for the Government and the management of its liabilities because they get to pay with freshly created/devalued dollars. What good is a promise of a $1000/month pension when after inflation it won't buy you more than 1 buggy of groceries.

In reality the U.S. is creating money at the blistering rate of 14%, making the real cost of living is far higher than stated by Gov. Shadow Government statistics claims CPI is really over 10%. Have no doubt Canada's stats are just as biased/corrupted/massaged/just plain wrong!

A low dollar will create export jobs, price imports higher and hopefully lower trade deficits.

“Surely you overreact?” you say.

No I don’t think I do. The U.S. Federal Gov has about 56-60 trillion in real debt (if they used the same accounting standards they demand from businesses) or about 3.5 x GDP
Add in municipal, state, business and personal debt and the U.S. tops out near 100 trillion dollars or about 7.5 time the U.S. GDP

That’s problem #1

Problem # 2

Housing: 2 more years of mortgage resets are still ahead which means 2 more years of foreclosures which could total 400-500 Billion in the subprime class alone, some higher quality paper may also take a hit including business loans, prime mortgages, and credit cards. If banks are in trouble now how will they fair when more of this paper goes bad. A perfect example is the desperation of Citi which sold 4.9% of itself (the max allowed without Federal approval) offering a staggering 11% interest.

Problem 3.

Derivatives: 400 Trillion dollars worth of unpricable paper, 90% of which trades in back rooms with no regulation certainly sounds like trouble to me. These guys are shady and manipulative when we can see what they are doing and yet they are trading 6 times the value of the world GDP in mystery paper. What’s next financial pixie dust to sprinkle on your portfolio?

Martin Weiss from Weiss Market Analysts has a great article on "Money Panic" that
states 5 of the biggest U.S. banks have exposure to credit risks that range from Wachovia’s mere 89% of their total capital to JP Morgan whose credit exposure is a whopping 388% of their capital. A 26% default rate is all that is needed to wipe out all of JP Morgan’s Capital.

We are on the verge of a fundamental change, nothing is certain and nothing is safe. The U.S. is desperate and is trying to wiggle out of financial troubles by screwing its debtors, citizens who save, citizens and employees who are owed medical coverage, pensions or welfare. The rapid and purposeful devaluation of U.S. debts is in effect a declaration of economic war. The U.S. is saying “Screw you Guys, we are paying our debts with half priced dollars and you’ll like it”

The BoC has taken the challenge and lowered rate ensuring that our citizens will also suffer the ravages of inflation, lowering the price of our wares for export, raising the prices of imports and taxing our savings by devaluing them. Of course this will give the Fed Reserve motivation to lower more and faster in order to stay ahead of the curve.

Inflation management is supposedly the goal of the BoC but its actions and explanation says economic stimulus is more important, screw the real costs of such a policy. It does however support my stance on buying silver and gold. The entire situation strengthens my belief that a major Fiat currency or three will be destroyed in the next 5 years.