Profiling: Alcorn Gold Resources Corporation

Alcorn Gold Resources Corporation (PSE: APM) is a holding company which is primarily engaged in the exploration of oil and mineral resource. APM has the following service contracts:

APM1

Among APM’s SCs, SC 14 (B1) is producing and SC 51 is at the most advanced stage of exploration. SC 14 (B1) North Matinloc is producing in a cyclical manner where 16,107 barrels of oil were extracted in 2011. SC 51, an onshore oil exploration interest of the Company in Norhtern Leyte, is expected to initiate drilling this year with Otto Energy as the Operator.

APM has the following mining claims:

APM2

On December 12, 2012, the shareholders of the Company approved the resolutions of the Board of Directors to: [1]

  1. Increase the capital stock and change of par of the Company from  P3 billion with a par value of P.01 to P10 billion with a par value of P1.
  2. Change of name from APM to COSCO CAPITAL, INC.
  3. Spin-off of the oil and mineral assets to a wholly owned subsidiary.
  4. Confirm the subscription of the Lucio Co Group of 4,987,560,379 APM shares at P15 each through share for share swap of the following companies: [2]

APM3 APM4

Below is the basis of the P74,813,405,682 (4,987,560,379 shs x P15) subscription price: [3]

APM5

APM, to be renamed as Cosco Capital, Inc. upon approval by the Securities and Exchange Commission is intended to be the Lucio L. Co Group’s holding firm. Lucio L. Co Group cosnists of Lucio L. Co, Susan P. Co, Ferdinand Vincent P. Co, Pamela Justine P. Co, Camille Clarisse P. Co, Katrina Marie P. Co and Jose Paulino Santamarina. The Company expects the holding firm’s market capitalization to increase to P93 billion (or a per share market value of P15 [P93 billion/6 billion shares]) and the Company’s public float to fall to 6% from the current 30-35%.

Sources:

  1. Stockholders’ approval of increase in authorized capital stock, change in par value, subscription by Lucio L. Co Group, change in corporate name, reorganization and spin-off of oil and mineral assets and operations; appointment of officers, http://www.pse.com.ph/resource/disclosures/2012/pdf/dc2012-8957_APM.pdf
  2. Additional Information re: subscription by Lucio L. Co Group, http://www.pse.com.ph/resource/disclosures/2012/pdf/dc2012-9279_APM.pdf
  3. Supplement to previous disclosure re: subscription by Lucio L. Co Group, http://www.pse.com.ph/resource/disclosures/2012/pdf/dc2012-9383_APM.pdf

16-year old Stock picker, Gambling Industry, Ethanol, Tampakan, Stock Thoughts: PX

16-year Old Stock Picker

Check this out:

http://www.bloomberg.com/video/is-this-16-year-old-stock-picker-the-next-buffett-lJswdaHVSASgGYCfWGrfzA.html

Investing in what you already know is a good way to invest but it does not mean you stop expanding your knowledge. 🙂

 

Gambling Industry

An idea on how big the gambling industry:

http://www.businessmirror.com.ph/index.php/news/top-news/9453-gambling-betting-activities-now-a-p42-billion-industry

This may be a good reference in analyzing gambling stocks.

 

Ethanol

Rising global demand for oil:

http://www.interaksyon.com/business/54806/rising-global-demand-tight-ethanol-supply-driving-up-fuel-prices—-doe

The rise in fuel prices are also attributed to the ethanol blend requirement.

Ethanol prices rising:

http://www.futuresmag.com/2013/02/12/brazil-ethanol-topping-sugar-signals-millers-may-f?t=commodities

 

Tampakan

The locals actually like the mining operations to commence:

http://www.businessmirror.com.ph/index.php/news/top-news/9461-tribal-leaders-in-south-cotabato-press-for-tampakan-clearance

That’s nice. 🙂

 

PX

PX paid P1B fine:

http://www.bworldonline.com/content.php?section=TopStory&title=Philex-pays-P1-B-fine&id=66062

More on PX here:

https://fundamentalenthusiast.wordpress.com/2012/09/20/everything-about-philex/

Oriental Peninsula Resources Group, Inc. (PSE: ORE)

Oriental Peninsula Resources Group, Inc. (the “Company”, “ORE”) derives 100% of its earnings from its 94% interest in Citinickel Mines and Development Corporation (Citinickel).

Citinickel was granted with a Mineral Production Sharing Agreement (MPSA) on January 3, 2007 for their Toronto and Pulot Nickel Mining Projects located in Narra and Sofronio Espanola, Palawan respectively.

On March 9, 2011, Citinickel was registered with the Board of Investments which entitles Citinickel to the following incentives:

  1. Income Tax Holiday for four years from March 9, 2011 to 2015
  2. Exemption from wharfage dues, export tax, duties, and imports and fees for 10 years.

The Company started commercial operations in the third quarter of 2011 ending the year with 20 shipments or 1 million WMT of nickel ore sold. As of the 3rd quarter of 2012, ORE performed 56 shipments with a total of approximately 2.8 million WMT.

Comments:

Nickel mining companies went out of favor mid-year of 2012 and with a very valid reason:

ORE3

Nickel prices went plunging from a high of $21,000+ a ton to as low as just over $15,000 in the 3Q of the year. A sudden drop in price should translate to a sudden drop of net income for any nickel producing company.

Below is Nickel Asia’s (PSE: NIKL) earnings chart, the largest nickel miner in the country:

ORE4

But ORE defied the trend:

ORE5

This is possible because the Company has a huge capacity for growth in terms of production. ORE compensated the decline in nickel prices through increase in shipment volume. According to the interview done by First Metro Securities [1] with ORE’s CEO, Ms. Caroline Tanchay, ORE is shipping a minimum of 3.5 million WMT for 2012 and 4 million WMT for 2013.

As of 3Q ORE has a total of 56 shipment or 2.8 million WMT sold ore. Assuming that ORE will be able to complete 10 more shipment for the quarter or an additional of 500,000 ore sold for $16,000/t we can expect ORE to report an EPS of 0.39/sh. That makes ORE trade with a single digit PE ratio of 8x at P3.10. Even at 3Q EPS of 0.36, ORE is already trading at 9x PE ratio.

ORE stands at numerous advantages that will enable them to generate growth:

  1. Income tax holiday until 2015
  2. Young MPSA rendering it unaffected with EO 79
  3. Exemption from wharfage dues, export tax, duties, and imports and fees for 10 years.
  4. The Company still has room for increasing its production.

A Company with a growth potential and competitive advantages but trading in a single digit PE ratio is definitely undervalued.

Other data:

ORE1 ORE2

Sources:

  1. The Bellwether, “Oriental Peninsula Resources Group, Inc.”, http://fami.com.ph/wp-content/uploads/2012/07/Bellwether-1-5.pdf
  2. SEC filings

Disclaimer: I do not claim to be an expert and nothing I say should be taken as a recommendation to buy or sell.

Abra Mining and Industrial Corp. (PSE: AR)

Business Profile

Abra Mining and Industrial Corporation (AMIC) was incorporated and registered in the Philippines with the Securities and Exchange Commission (SEC) on September 28, 1964. AMIC listed its shares of stock in the Philippine Stock Exchange (PSE) on December 24, 1969.

AMIC is licensed to engage in the exploration, development, exploitation, process, manufacture, extract, mill and sale of cement and metal concentrate, marble, building materials and other minerals such as copper, gold, silver, iron, lead, etc. processing and manufacture of non-metals for industrial and commercial purposes at wholesale only.

The Company has the following mining claims: [1]

The Company is not yet in commercial operations but had expressed their five-tiered long-term management program. The five tiers are as follows:[2]

1.   Baticang Magnetite and Gold project (Alluvial Plant) – the company considers the project as promising. They believe that the project is positioned to take advantage to the rising demand of iron and gold. The magnetite or iron sands project is acknowledged by the company as good long term business as steel is the basic requisite and foundation for growth of any developing nation. The Alluvial plant has an installed capacity of 50-60 MTPD (Metric Ton Per Day). Currently the operation is occupied by research work on recovering the very fine gold traces and other precious metal in order to optimize the revenue to be generated in the project. Trial shipments were also being mulled as the magnetite inventory piles up to the marketable and shipping volumes.

2.   Capcapo Gold Field – The Capcapo Gold Property is strategically located in Abra Province, Northern Luzon, Philippines, north of the prolific Baguio-Mankayan Gold District that has combined production, current reserves and resources in excess of 60 million ounces of gold. [3]

On the last quarter of 2011, Olympus Pacific Minerals, Inc. has signed a joint venture agreement with the Company. The terms of the joint venture are as follows:

a.   Payment to Abra Mining of $300,000 upon signing of the joint venture agreement and additional payment of $400,000 upon gaining “unencumbered access” to the property.
b.   Payment of $2,000,000 and 2 million common shares of Olympus Pacific Minerals, Inc. or common shares with total value of $5 million whichever is of lesser value each time a specific level of mineral reserves was defined or daily production rates were achieved.

3.   Setting up of kiln for the Baticang-Bucay Lime Plant – the lime kiln construction blueprint has been ready for implementation immediately when project funding is readily available. The project is very relevant to the mining and agricultural industry which can be commissioned immediately by the company with the least capital outlay and can generate high revenues. This lime project will become an integral part of the Patok reopening in that it will supply the lime requirements of the Patok plant. The lime project will serve the demand in Northern Luzon being the only producer should it commence commercial operations.

4.   Reopening of Patok Gold Project – the Patok Gold Project which was operating in the 1970’s to early 1980’s was shut down during the oil crisis.    The Company claims that the reopening will be relatively easier and can be fast tracked since the assets related to the operations are still intact and operating, provided that the required fund is readily available. Other advantages enjoyed by the Patok project were the high grade ore body that was already blocked and accessible upon rehabilitation and the qualification of the mine site under the government revival program for “Certificate of Non-Coverage” where old mines may restart operations while their Environmental Compliance Certificate (ECC) documentation is in process with the DENR.

The rehabilitation of the Patok project is hampered due to the unusually high incidence of major landslides in the area obstructing the delivery of supplies and the poor security situations in the area due to political rivalry.

5.   Expansion and refinement of the Alluvial plant – The paramount objective of the expansion is to produce a consistent shippable volume monthly. The projected expansion will employ electrically powered dredging equipment to lower the cost of mining due to unfettered fuel increases.  This reduces costly utilization of heavy equipment that is presently being employed in our operation and  to  further  enhance  processing  tonnage  of  precious  metals.

Sources:
1.   Abra SEC 17-A 2010 filings; http://www2.pse.com.ph/html/ListedCompanies/pdf/2011/AR_17A_Dec2010.pdf
2.   Definitive Information Statement for Annual Meeting of Stockholders on October 28, 2011; http://www2.pse.com.ph/html/ListedCompanies/pdf/2011/AR_D20IS_10072011.pdf
3.   Olympus SEC filings Form 6-K September 30, 2011; http://secfilings.nasdaq.com/filingFrameset.asp?FileName=0001199073-11-000943%2Etxt&FilePath=%5C2011%5C09%5C30%5C&CoName=OLYMPUS+PACIFIC+MINERALS+INC&FormType=6-K&RcvdDate=9%2F30%2F2011&pdf=