this stock has been trading sideways for a long time now, built a base around $5.25. Anyone know why it's not moving higher as the price of silver has moved a bit higher and expected to go much higher.
The feeling is that it is a stock captured in a JV with only one possible suitor (Penoles/Fresnillo) who has no intention of paying anything approaching fair value for it. My feeling is it doesn't matter. Once the mine is in production in 2011 (and despite what Fresnillo says in PR releases in NA, the fact they've already built the ramp and are continuing to develop it, plus their releases in Europe indicating increasing production around that time, they ARE going to develop the Valdecanas vein sooner rather than later), MAG will take its share of profits, and the SP will rise accordingly.
ja_prufraock had a great take on it over on SH:
A good summary of the problem. This would be a good example for an MBA management class of how not to manage a JV. In my opinion Penoles is being extremely short sighted in dealing with MAG for the following reasons:
1) Jauncipio and other veins appear to be extremely rich and there appears to be a promise of much greater resources, so a 44% stake should generate plenty of cash-certainly enough to fulfill MAGs commitment to the project and then some.
2) MAG can be an epic pain in the excretory orfice for them by staying in the JV and managing their share of the profits by demanding composite retain samples of each and every truck load of ore, and a certified copy of each ore analysis, which can be corroborated at any time through random analysis of the retain samples.
3) The MAG silver goose has about 8 testicles (for most of which the potential is currently unknown). The huge Lagartos properties cover the northwest and southeast portions of the Fresnillo and Jauncipio trend. I would let Penoles know that if the hard ball continues, they will never smell anything that may come from these properties. All of these properties are in elephant country.
4) After MAG's experience, how many jrs. would readily deal with Penoles? I don't think that The Lone Ranger would deal with them.
5) When Goldcorp took over Glamis they paid about $600 an ounce for the gold. Their average cost is about $230/oz. So they have locked in good supply with probable escalating Au pricing without destroying their reputation-
----smart! Now they will have something to sell at good margin. They have sowed properly.
