CDE is a buy
March 31, 2009
Coeur d’Alene Mines Corp.
CDE is a buy as of Tuesday, March 31st, 2009 @ $0.95
CDE is one of the world’s leading silver companies and also has significant gold production. CDE produced 12 million ounces of silver in 2008 and production is expected to jump 66% in 2009 to approximately 20 million ounces.
Last year, CDE began production at what is now the world’s largest pure silver mine, San Bartolomé in Bolivia. CDE is expected to begin production this month at another world-leading silver/gold mine, Palmarejo in Mexico.
They have also begun production at their new silver/gold mine at Palmarejo, making is one of the largest gold/silver mines in the world! [ Article Source ]
CDE also owns and operates underground mines in southern Chile and Argentina and one surface mine in Nevada; and owns non-operating interests in two low-cost mines in Australia.
CDE just disclosed today in an 8-K filing that they agreed to exchange a total of $19,735,000 in debt for 15,084,789 shares of its common stock. If the noteholders were willing to convert at $1.308 per share, more than twice CDE’s current share price, it tells me that CDE is extremely undervalued at these levels.
CDE is down from a 52-week high of $4.89 and could have astronomical upside potential.
CDE finished the year with reserve levels of 248 million ounces of silver and 2.3 million ounces of gold.
CDE has cash, equivalents and short-term investments of approximately $100 million as of January 31st and projects 2009 operating cash flow to reach $100 million.
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April 2nd, 2009 at 12:45 am
Regarding your CDE post. As a long term cde investor i share you undervalued perception, but why then their need to try and reverse split? Once again abusing long term holders for their patience. I will definitely vote no on proposal but firmly believe this stock should be trading at least around the 5-10 level WITHOUT the R split. Appreciate your views.
April 2nd, 2009 at 6:58 am
What about the CDE proposal — which is thought to be a lock to pass — of a reverse split of 10-1. Isn’t that a serious negative? If so, how does it figure into your assessment…does it make your assessment of CDE less positive?
April 2nd, 2009 at 9:16 am
@ Ed, I agree with your $5 range based on its market cap and sound future outlook especially with the new mine in Mexico. As for the reverse split…
What Does Reverse Stock Split Mean?
A reduction in the number of a corporation’s shares outstanding that increases the par value of its stock or its earnings per share. The market value of the total number of shares (market capitalization) remains the same.
Investopedia explains Reverse Stock Split
For example, a 1-for-2 reverse split means you get half as many shares, but at twice the price. It’s usually a bad sign if a company is forced to reverse split – firms do it to make their stock look more valuable when, in fact, nothing has changed. A company may also do a reverse split to avoid being delisted.
As many as 75% of all stocks wind up trading lower after a reverse split.
So this is def. something to keep your eyes on, if this goes through — you might want to sell for a few months an buy back in at a cheaper price.
April 2nd, 2009 at 9:16 am
@C.Shelton, yes it does… read my above post.
April 15th, 2009 at 9:03 am
I’m also a long term holder who currently plans to vote against Proposal #3 and #4. The company has been using the shareholder as a piggy bank the past 5 years, selling stock to raise cash to fund expansion. I’ve been patiently waiting for that expansion to result in higher earnings. The recent announcement about Mexico is encouraging.
The company should reward the shareholder with a share buyback using the new cashflows from the same expansion instead of a reverse split. The reverse split is historically a sign of last gasp, management having no other option to raise the stock price. This is not the case with CDE.
However, I do find it interesting that the stock price spiked the day after annoucement of the split. It does not make sense. Any idea why would be appreciated.