I tend to write about McEwen Mining (MUX on TSE and NYSE—I will be speaking in USD price terms–$2.97 currently) every May it seems but that hasn’t been intentional. But so be it, now happens to be a great time for an update. As you can see below (I’ve posted what I wrote in May 2016 with a link to the initial buy recommendation on the blog from May 2015 if you would like to review the progression of thoughts), I initially recommended MUX at $1.09 so in 24 months the share price has tripled essentially.
Last summer the price doubled within 2 months after our update and Q&A/webinar with Rob McEwen posting in May 2016. We took off our principal risk in July 2016 literally at $4.90-$5 as my alert was right at the interim top. I have recommended adding that position back on and then some each time the share price has dipped below $3. So, we own a much bigger position “on the house” now than we did last summer and I have just added even more to my position in the high $2’s. There is a chance the gold miners remain weak through the summer, which is normal, and we could have a chance to add even cheaper. But technically and fundamentally, this is where investors want to be adding to their positions.
During the May 2016 video, I raised my price target to $10 by the end of 2017. I am maintaining the $10 price target but am expanding the time horizon to 18 months from now (year end 2018). I believe we’ll see MUX test last summer’s high of $5 by the end of 2017 and it may trade higher than that but I’ll be a bit more conservative on the timing as it is a very aggressive call on ROI from here. WE MUST BE IN THE HABIT OF ADDING TO BEST OF BREED GOLD MINERS WHEN THEY ARE DOWN EARLY ON IN A NEW BULL CYCLE. This is a discipline and unless you have the resolve to buy when things don’t look rosy, you will rarely make money in the market, especially in mining stocks!
There is nothing wrong with MUX. This is a normal fluctuation in prices! MUX will trade with the sector and I believe will outperform it going forward due to their excellent assets and operator at the helm, Rob McEwen. Timing is everything and now I feel is a good time to revisit the webinar with Rob for a refresher or to introduce you to this quality company for the first time.
One year ago in May 2015, I initiated coverage on McEwen Mining (NYSE: MUX) (TSE: MUX) at $1.09 per share with a strong buy recommendation and a 12-24 month price target of $3 (speaking in terms of USD MUX on NYSE). You can read the report here.
The share price has gone up by 150% and closed today at $2.53. During my webinar below, which Rob and I recorded today, I raised my price target to $10 per share by the end of 2017. I will be walking through more solid economics in my next report but we did some back of the napkin tabulations on the webinar. Rob demonstrated that when all categories of reserves are measured, and including their copper monstrosity that is Los Azules, MUX owns 46 Million ounces of Gold equivalent ounces in the ground right now. Stick that in your pipe and smoke it! In the report from May 2015, you’ll see a 10 year chart showing 3 major bottoms and two major tops since Rob took over UXG (now MUX). The 3rd top will be hit again, and it also will likely be breached. The price has twice hit $10 per share when MUX wasn’t nearly as established. Rob McEwen has put $127 MM of his own cash in MUX to acquire his 25% equity ownership position. His only reward in building the company is share price appreciation as he takes no salary, no options, no bonuses, etc. His personal cost average is just under $2 per share. We can buy today just 20% above his cost basis but he has been busting his hump building value in the business for well over a decade, we just press the “buy” button. Enjoy the 45 minute or so webinar for yourselves. The camera didn’t zoom back and forth to who was speaking so you’ll have to look at my mug throughout! Or better yet, just turn up the volume and listen versus watch….it’s a talk/Q&A.
Check out the webinar below with Rob McEwen and sign up with your name/email for updates on MUX and other unique investing ideas from GIL.
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