Not fully appreciated by the market is the fact that CNMC is enjoying solid profit margins. People focusing on gold price having turned down after a great run between 2000-2012 --- but overlook the fact that CNMC makes something like 50% margin!
Sure, gold equity values everywhere have corrected sharply . This is a window of opportunity for CNMC as it harvests its Kelantan mine on low costs.
All the gold miners stock prices in the world has jumped from 20% to 50%.. Why?
Because the smart money are buying for:
1.geopolitcal risk
2.currency risk
3.stock market risk
4.flight to safety
5.negative interest rates risk
6.China is beefing up its gold reserves by selling its US treasuries at record level-the fear of USD collapse. USD is not backed by gold but oil. aka petrol-dollar
7.India is the second dominant buyer for the precious metal
8.refugees crisis
9.gold price has broken the downward channel
10.finally, I am betting big on hyperinflation. The world is currently going thru deflation. The time will come when energy and commodity companies go belly up. Once that happens, there will be a huge shortage supply of the essentials which will ultimately send the prices going vertical.
Also, silver-a by-product of the company- has a huge demand/supply imbalance as its used for EVs, solar panels, transmission lines, and your mobile phones. Soon, it will rocket soon as a lot of silver miners has cut production due to low prices. You can google silver production to find out.
Stock is currently trading at 5x PE and 2.6% yield with no debt and net cash! The company has been increasing its dividends for the last 3 years.
Last call to buy before its too late. I am vested. Do your due diligence.
The company has more than 500, 000 ounces of gold (disregard the other resources) and assuming a conservative selling price of US$1000/oz.(this is the price that major gold miners need to breakeven)
That is equivalent to about US$500,000,000 or US$500 million in revenue over the next few years.
The company generates about 47% of NET profit margin, so we use 40% conservely and we get US$200 million in net profits.
If we assume that the stock still trades at 5x net earnings, that will put the company at US$1 billion market cap. (5x$200m)
The company is now trading about S$100 million market cap (@0.24) which marks the company at 10x current price upside!
If the market starts to apprecIate the stock and trade at 10x pe (which is still conservative), that will value the company at US$2b market cap or US$5 PER SHARE!
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