Sunday, June 6, 2010

Laramide Resources: Company + Management = LT success

Laramide and its charismatic chariman, Marc Henderson, are inextricably linked together.

He has had several successes and accomplishments in the past decade's resourced boom.

1) Getting Laramide Resources out of bankruptcy (as told to me by him verbally many years ago)
2) Buying Laramide's key asset for $1 million bucks from Rio Tinto
3) Buying Homestake's uranium assets in the US
4) Buying then selling the big silver deposit in Argentina through Aquiline Resources
5) Having a stake in the US's largest area for deposits: Virginia. A location that is similar to the Australian one due to the fact it is a coal mining area and anti-nuclear.
6) Raising a bunch of money to develop and expland the flagship Westmoreland property

The negatives were

1) Where did all the money that he raised go? Now down to $6 million. It's hard to understand reading the reports. I hope not in the executives pockets, but even so he is the type of executive that will put more money in the company if the opportunity is there or in another promising projects.
2) Some of the money in question went into Khan Resources, another great asset but in Mongolia that basically cancelled Khan's right to explore on its property.
3) The Laramide property is on Native land so there was a delay in exploration
4) Australia just announced a mining tax that to the observer would appear to be negative for miners and explorers in Australia

Going forward:
1) Tax or no tax. Laramide is trading with a market cap of $50 million. They have two key untapped mines in the world: Australia and the US. If you need the stuff there will be investments.
2) You can't buy and develop these two deposits for the market cap traded at
3) He's a veteran of the boom bust cycles of commodities so he is a good asset allocator
4) I don't believe that the big miners like BHP and Rio Tinto were caught with their pants down when the mining tax was announced. This was long time coming.
5) Cameco bought a big prospective mine in the land down under and I believe they factored in the risk of 40% tax. It's the cost of doing business.

Is Laramide worth investing in ?
1) If one believes in the growth of nuclear energy without new technology diminishing the demand for new deposits of uranium
2) It's trading below mineral value

Any negatives?
1) The big money have been burned in uranium investments so it may be awhile before valuations are truly worth what they should be. I'm thinking 2016.
2) There may be other better investments out there

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