I spoke with the prez today for an update. This is the second time in less than a year that the company has come out with an increase in resources, yet the stock sold off from the already stupid low prices. Is something wrong?
Byberg has delivered exactly what the company promised to do. They wanted to put Miguel Auza back into production. They did. They wanted to fund an aggressive drill program to rapidly increase the mineral inventory of the project. That has happened to, and its still ongoing, with several drills turning and many entirely new resource zones have been discovered. Underground development continues. They announced they wanted to increase production, and that too is underway now.
Construction has commenced to increase the capacity at the mill and recovery plant. Upgrades have been designed to allow treatment of sulphides in addition to the oxide ores that have been processed up to now. New equipment has been purchased and will be installed. Additional staff have been hired, including a new metallurgical specialist who will help to ensure the mill is running properly.
Byberg confirmed that the company has been running the lower grade development ore that had been stockpiled at surface, but they are now also producing higher grade ore from the underground stopes, which will begin to make an impact on the bottom line.
I sense frustration from Byberg on how the market has not awarded any value premium at all for the accomplishments of the company. But I see that reaction all over the sector. I do not know how the company can do more to win the confidence of investors. I think they are set to begin a rapid growth phase, with increasing production and revenues, and also continue outlining new discovery zones.
My experience in the markets would suggest that all of that will eventually result in higher share prices. The market is usually forward looking and will pay a premium to buy growth and recurring earnings. There are few juniors however that have seen any price appreciation at all over the last year. I do not think that valuation metrics have gone out of style, and this is just another example of an episode in which investors will have to remain patient before they can reap gains.
I have not sold a share of SEG. The company is a paid advertiser on my website.
cheers!
mike
