Metallic Ventures (TSX: MVG) [Shares: 51M issued, 59M fully diluted]
Date / Location of update	Comments
23rd October 2006, Weekly Update (Stock price: C$1.99)	Metallic Ventures (TSX: MVG) is one of the most under-valued gold stocks we know of, but we are now going to remove it from the TSI Stocks List. In doing so we will realise a loss of around 60% (based on our July-2004 entry at C$4.90 and Friday's closing price of C$1.99), our only loss of more than 20% over the past 18 months. The stock's upside potential is huge, but the company's progress has become too laboured. The catalyst for our decision to remove MVG from the TSI List was last week's news that the completion of the scoping study for the company's Nevada-based 4M-ounce Converse gold project has been delayed by several months while more infill drilling takes place. This delay doesn't materially affect the stock's valuation and management's decision to delay the scoping study is appropriate if there is good reason to believe that the additional drilling will substantially improve the project's economics. However, there is a limit to the number of stocks we can track at the TSI web site, and Gryphon Gold (TSX: GGN) -- an under-valued exploration-stage gold miner that has not, up until now, been a member of the TSI List -- appears to have a more favourable intermediate-term risk/reward ratio than MVG. We've therefore decided to replace MVG with GGN. As is the case with MVG, GGN's assets are situated in Nevada. As is not the case with MVG, GGN is moving its main project toward production at a fast pace. By the way, we have a sizable position in MVG in our own account, mostly purchased in the 1.50-2.00 range, and haven't sold a single share. The reason is that we continue to like the story and don't have the same practical limitations with regard to the number of stocks we can own as we do with the number of stocks we can properly follow at TSI. Based on what we know now it is likely that we will, however, reduce our own exposure to MVG if given the opportunity to do so at around C$3 within the next few months.
27th September 2006, Interim Update (Stock Price: C$2.10)	Early this week MVG announced the results of the independent scoping study on its 1.1M-ounce Goldfield project in Nevada. The results were good and have prompted the company to move the project into the pre-feasibility stage. Specifically, the scoping study completed by AMEC indicates the potential to produce 50K ounces of gold per year at an operating cost, including royalties, of US$294/oz. In our opinion, the scoping study results for this one project justify a stock price of around C$2/share for MVG. The more important scoping study is the one currently being completed for the much larger (3.9M-ounce) Converse project. The results of the Converse scoping study are expected to be published within the next few weeks. If the Converse results are also positive then we will almost certainly keep MVG in the Stocks List in anticipation of a doubling in its stock price over the coming year.
13th September 2006, Interim Update (Stock Price: C$2.34)	An independent consulting company is in the process of finalising scoping studies (preliminary economic assessments) for MVG's 1.1M-oz Goldfield project and its 3.9M-oz Converse project, both of which are located in Nevada. If these studies reveal robust economics then MVG's shares will have a good chance of at least doubling in price over the coming 12 months. Both studies are expected to be complete by mid October and we will make a buy/sell/hold decision based on the results.
23rd August 2006, Interim Update (Stock price: C$2.25)	One of the cheapest ways for investors to gain exposure to gold in the ground in a politically-secure location is to buy the shares of Metallic Ventures (TSX: MVG). To be specific, buyers of MVG shares near Wednesday's closing price of C$2.25 are, in effect, buying Nevada-based measured-and-indicated (M&I) gold resources at less than US$20/oz. However, MVG has offered exceptional value for a long time and this hasn't prevented it from being the worst-performing stock in the TSI Stocks List over the past couple of years. The problem? In our opinion, the company's management is non-promotional -- stock promotion is an extremely important aspect of managing a public exploration-stage resource company -- and has progressed its two main projects at a frustratingly-slow pace. As noted in a previous commentary, it sometimes seems as though MVG is being run as if it were a private company. It is, in fact, closer to being a private company than most publicly-traded enterprises in that insiders own 40% of the shares. Fortunately, over the next couple of months the company will almost certainly be announcing some significant news. In particular, the results of a scoping study on the Goldfield project -- a project with a 1.1M-ounce M&I gold resource -- are scheduled to be released before the end of this month, and the results of a scoping study on the Converse project -- a project with a 3.9M-ounce M&I gold resource -- are scheduled to be released towards the end of September. The 5M ounces of M&I gold resources contained within the above-mentioned projects should be worth at least US$50/oz IF the scoping studies reveal favourable economics; and a market valuation of US$50/oz would result in a stock price of around C$5.00 (120% above Wednesday's closing price). Given MVG's potential upside we've decided to persevere with it until the results of the scoping studies are known. Based on these results we'll decide whether to keep the stock in the TSI List or replace it with a more dynamic company.
17th April 2006, Weekly Update (Stock Price: C$2.50)	Gold, silver, and most of the gold/silver stocks that we follow have exceeded our expectations over the past several months, but there are a small number of stocks in the TSI List that have stood out due to their failure to do very much in the face of the strong sector-wide rally. Over the next 2 weeks we will decide whether or not to persevere with these under-achievers. One stock that has been a disappointment is Metallic Ventures (TSX: MVG). The company owns a large gold resource in Nevada and has a small market capitalisation, so it offers substantial leverage to the gold price. And yet, in a strong gold market the stock has done very little. The main reason, we think, is management's failure to promote the stock in any meaningful way. When a company relies on raising money through equity financing, getting the company's story out to the investment community is a critical management task. This is because the higher the stock price the lower the number of new shares that will need to be issued to raise a specific amount of money. In other words, a higher stock price will actually lead to a higher per-share VALUE. MVG's senior management clearly doesn't understand the importance of stock promotion. In fact, we sometimes get the impression that MVG is being run as if it were a private company. We've decided to persevere with MVG because it will probably not have to issue a lot of new shares to get at least one of its two major projects into production. That is, in MVG's case the ultimate cost of doing a poor job of stock promotion might not be that great. And if the company continues its steady march towards production then at some point the market WILL start paying attention.
6th March 2006, Weekly Update (Stock Price: C$2.38)	At Friday's closing price of C$2.38 Metallic Ventures (TSX: MVG) had a market capitalisation of C$131M (US$115M). This is extremely low for a company with 5M ounces of measured-and-indicated gold resources in a relatively low-risk location (Nevada) -- it works out to US$23/ounce -- and a solid balance sheet (US$16M cash, no debt). At current metal prices MVG's in-ground resource would appear to support a 100%-higher market capitalisation. The market is obviously concerned that MVG's gold deposits will prove to be uneconomic and, due to an earlier disappointment, is not prepared to give the company's management the benefit of any doubt. This, however, provides some margin of safety and means that the stock has the potential to be substantially re-rated if there are any positive developments. In addition to offering above average value, the stock looks good from a technical perspective. Specifically, the following chart shows that MVG broke upwards out of a lengthy consolidation at the end of last year and then entered what appears to be a smaller consolidation. An upside breakout from this recent consolidation would create a short-term technical objective of C$3.00. We think that C$3.00 is a reasonable short-term target and that something in the order of C$5 will be achieved over the coming 18 months if the feasibility work on the company's two main projects -- the Goldfield and Converse projects -- reveals positive economics.
23rd January 2006, Weekly Update (Stock Price: C$2.06)	Amongst the exploration-stage gold stocks, two reasonable candidates for accumulation near current prices are Metallic Ventures (TSX: MVG) and Canarc Resource (TSX: CCM). Both of these companies have reputable management and have market capitalisations that are very low relative to their in-ground gold resources. For example, MVG has 5M ounces of measured-and-indicated (M&I) resources in Nevada and has a market cap of slightly less than US$100M at Friday's closing price of C$2.06. In other words, the stock market is valuing MVG's M&I resources at less than US$20/ounce. And Canarc is potentially even cheaper, although it is yet to calculate an M&I resource at its Benzdorp project in Suriname. Also of significance, neither stock is extended from a technical perspective (see charts below).
4th January 2006, Interim Update (Stock price: C$2.50)	Metallic Ventures (TSX: MVG) surprised us by moving sharply higher over the past three trading days. This was a stock we listed in the 28th December Interim Update as a likely top performer over the next three years, but we weren't expecting big things from it in the short-term. MVG closed at C$2.50 on Wednesday. There's no overhead resistance anywhere near the current price other than psychological 'round number' resistance at C$3.00. This round number is probably a reasonable short-term target now that the stock has broken out to the upside.
23rd November 2005, Interim Update (Stock price: C$1.79)	Right now there are several junior gold/silver stocks in the TSI List that have either just broken out to the upside or appear to be about to do so, while there are some other stocks that have barely moved during this year's rally in the gold sector. One stock in this latter category is Metallic Ventures (TSX: MVG). Our most recent comments on MVG were in the 8th August Weekly Update and these comments can be read at http://www.speculative-investor.com/new/MVG.html. Fundamentally and technically, the stock is in almost exactly the same position now as it was then, so we won't repeat ourselves. We just wanted to point out that, over the first three weeks of this month, the stock price rose from a low of C$1.50 to its recent high of C$1.95 on minimal volume and on no significant news (a chart is included below). It has since settled back to C$1.79. The point is, the stock has been so low and uninteresting for so long that there are very few sellers left near current prices; the result being that even the slightest up-tick in buying leads to a sizeable price gain. Now, a LOT of exploration-stage gold stocks are in similar positions to MVG. These stocks will probably remain unloved as long as the HUI remains within its 2-year range, but once the HUI eventually breaks out to the upside they are likely to rocket higher.
8th August 2005, Weekly Update (Stock Price: C$1.92)	One of the cheapest ways to buy gold-in-the-ground in a politically low-risk location is to buy the shares of Metallic Ventures (TSX: MVG) because the market is currently valuing this company's measured-and-indicated gold resources in Nevada at only US$11/ounce. MVG's management is well respected within the mining industry, although some credibility was lost when the company's first development-stage project (Esmeralda) had to be halted during the first half of last year due to higher-than-expected production costs. MVG is scheduled to complete feasibility studies at two other advanced-stage exploration projects (Converse and Goldfield) over the coming 12 months and a re-rating of the stock should occur if these studies yield positive results. Technically, the stock has been basing over the past year and has nearby resistance at C$2.05 and at C$2.25 (see chart below). A close above 2.25 would open up the possibility of a quick move up to around C$3.00. We expect that MVG will trade way above C$3.00 within the next two years, but we would view a move of that magnitude over the next few weeks as an invitation to take some money off the table. Note that we aren't forecasting a 50% gain in MVG over the next few weeks, but just wanted to point out what could happen in this thinly-traded stock if resistance were overcome and how we would react if it did happen. There are, in fact, quite a few exploration-stage stocks that have been basing in similar fashion to MVG and that could explode upward if strength in the gold sector is maintained for just a few more weeks.
2nd May 2005, Weekly Update (Stock price: C$1.51)	MVG and CLG are development-stage gold stocks that are extremely under-valued at current prices. Both stocks are highly-leveraged plays on our 18-month forecast for a higher gold price and lower non-gold commodity prices. If you don't have a position already we think it would be appropriate to do some buying now with the aim of buying more during periods of additional weakness over the coming 6 months.
31st January 2005, Weekly Update (Stock price: C$1.60)	At its current stock price this well-financed company's "measured and indicated" gold resources in Nevada are being valued by the market at less than US$9/ounce. As is the case with CLG, though, the company's management does a sub-par job when it comes to stock promotion.
29th November 2004, Weekly Update (Stock price: C$1.85)	In an article at http://www.321gold.com/editorials/moriarty/moriarty112404.html Bob Moriarty puts forward the bullish case for European Minerals (EPM.U), a development-stage mining company with a project in Kazakhstan (Central Asia). Bob notes that EPM has a very low market cap relative to the size and economics of its gold resource and suggests that this huge discount can be attributed, to a large extent, to the company's failure to promote its story. It is critical to the success of any small-cap resource company that the company promotes itself aggressively and effectively, but in EPM's case we suspect that the huge discount is due more to the project's location than anything else. Jim Rogers, who probably more experience than anyone else on the planet when it comes to investing in obscure third-world countries/regions, devotes a few pages of his book "Adventure Capitalist" to explaining why he doesn't think Kazakhstan and the other countries of Central Asia are good places to put money at risk. For example, here's a quote from the book: "To say I am not optimistic about the future of Central Asia is an understatement of oceanic proportions. The entire region is unstable, with ethnic disputes and conflicts over borders, water, oil and pipelines disrupting every political discussion. It is debatable whether these countries are in fact countries. Turkmenistan, for example, was shoved together by Stalin out of a vast stretch of desert, incorporating five nomadic tribes. There is no logic at all to Kazakhstan. And Uzbekistan as an identifiable country does not exist. Ethnic and tribal distinctions will drive the region's politics for the foreseeable future. Their current leaders are "opportunists" who seized the moment as communism fell but who have little support. Groups in all the Stans will start to agitate to establish their independence..." Now, our intention isn't to talk anyone out of buying the stock of European Minerals. When it comes to picking winners in the world of small-cap gold stocks Bob Moriarty has an excellent record and EPM could certainly turn out to be another winner over the next few months if the intermediate-term upward trend in the gold sector continues (it's the sort of speculative stock that will tend to do well near the end of a rally when market participants are becoming less risk-averse). We simply want to point out that you can buy gold-in-the-ground just as cheaply without having to worry about political risk by purchasing the stock of Metallic Ventures (TSX: MVG) at the current price of C$1.85. The cost of mining MVG's gold will be higher than the cost of mining EPM's gold, but MVG's gold is located in Nevada so the political risk is about as low as you can get.
15th November 2004, Stock Selection Update #28 (Stock Price: C$1.95)	In our opinion, Metallic Ventures (TSX: MVG) continues to offer the best value in the gold sector when taking into account financial strength, management, political risk, and the market value assigned to in-ground gold resources.
25th October 2004, Weekly Update (Stock Price: C$2.00)	Metallic Ventures (TSX: MVG) has gained about 35% from the ultra-depressed lows reached during the early part of last month, but at Friday's closing price of C$2.00 we think it still offers the best value in the gold sector taking into account a) the quantity of in-ground gold relative to market capitalisation, b) management, c) balance sheet strength, and d) political risk.
29th September 2004, Interim Update (Stock Price: C$1.74)	The stock price of Metallic Ventures (TSX: MVG) has gained about 9% over the first 3 days of this week in response to news of a large increase in resources, which in our opinion represents a big UNDER-reaction to the news. Jeff Ward, MVG's CEO, gave a presentation earlier this week that provides a good overview of MVG's projects, prospects and relative value. The presentation, which can be viewed at http://www.metallicventuresgold.com/pdf/presentation_092704mvgi.pdf, includes a valuation comparison of 26 development-stage gold mining companies to make the point that on a market-cap-per-resource-ounce basis MVG offers the best value in the sector. When we combine MVG's relatively low value with its strong balance sheet, first-rate management and low political risk (all of MVG's projects are located in Nevada), we arrive at the conclusion that this stock remains a very strong BUY.
27th September 2004, Weekly Update (Stock Price: C$1.60)	After the close of trading on Friday Metallic Ventures (TSX: MVG) issued good news and bad news. The good news is that the company reported a huge increase in measured and indicated (M&I) resources at its Converse project and announced that this project will immediately progress to the Feasibility Stage. MVG's total M&I gold-equivalent resource across its three projects in Nevada is now 5.9M ounces, up from the 3.2M ounces previously reported. Total resources (M&I + inferred) now stand at 6.9M ounces. This means that at Friday's closing price MVG is being valued by the market at only US$10.80 per M&I ounce. Furthermore, the company confirmed that the US$18M cash in its coffers would be sufficient to develop the Converse and Goldfields projects. The bad news is that MVG has been unable to reduce production costs at its Esmeralda project to a level that would allow the mine to be profitable at the current gold price, so this project is being placed on "care and maintenance". We think the news is, on balance, very good and confirms that MVG is a strong buy near current levels.
13th September 2004, Weekly Update (Stock price: C$1.56)	If you currently don't have a full position in the stock then now would be a good time to average down in Metallic Ventures (TSX: MVG). By the same token, if you have no position in the stock then now would be a good time to start averaging in. There were fundamental reasons for the sell-off in MVG over the past few months but the weakness in the stock price appears to be totally out of proportion to any adverse fundamental developments. This, we think, is partly due to the general lack of investment demand for junior gold stocks and partly due to the exit of a large shareholder.
17th August 2004, Stock Selections Update #23 (Stock price: C$1.99)	We weren't planning on writing anything about Metallic Ventures (TSX: MVG) today, but will do so due to Monday's sharp drop in its stock price.   As far as we can tell, Monday's tumble was a reaction to news that achieving commercial production at the Esmeralda project was continuing to be more difficult than originally expected. In other words, costs at the Esmeralda project are too high and/or production is too low for the mine to generate positive cash-flow at current metal prices.   Yesterday's reaction seems extreme given that the news was effectively a repeat of what the company previously stated in its 22nd July press release. Also, the stock has now fallen to around C$2.00 from C$9.60 last December and C$6.00 as recently as late-May of this year. The decline therefore appears to be way overdone given that Esmeralda is only one of three advanced-stage projects owned by MVG and the company's enterprise value (market capitalisation + net debt) is now only C$75M . The only thing we can think of is that some participants in the large private placement that was done in March (7.8M shares were issued at C$6.40) are now dumping their high-cost shares on the market.   When a stock with a bright future plunges in response to bad news there is typically a bounce following the initial plunge and then a test of the low before a sustainable recovery begins. Something like this might be in store for MVG. We plan to buy some more MVG for our own account if we can get the shares near current levels or lower, but if not we'll wait for some basing action before adding to the position.
2nd August 2004, Weekly Update (Stock price: C$3.40)	MVG dropped sharply over the past two weeks, perhaps in response to news that the company was behind schedule in achieving commercial production at its Esmeralda gold project. However, if this is the reason for the fall in the stock price then it appears to be a huge over-reaction by the stock market resulting in a better buying opportunity than we would have thought possible a few weeks ago. The company has good management, net cash of around US$30M, three advanced-stage projects in Nevada with a combined total of about 5M ounces of gold (including the in-production Esmeralda project), and a market cap of only US$130M at Friday's closing price of C$3.40.
5th July 2004, Weekly Update	Metallic Ventures (TSX: MVG) achieved the second highest total rating. This company was in the TSI Stocks List for much of last year until we decided to exit in October after approximately doubling our money. It moved considerably higher during the month after we exited, but since peaking in December of last year it has fallen by almost 50% and is now well below our average exit price. MVG owns three advanced development-stage projects in Nevada, including one -- the Esmeralda project -- that has just been put into production at the annual rate of around 70,000 ounces/year. Furthermore, there's a good chance that the other two projects -- Goldfield and Converse -- will be in production by the end of next year, making MVG a mid-tier producer. The company's senior managers have a good track record as mining-company builders and there is likely to be positive news-flow over the coming months, including revised resource/reserve estimates. Further to the above, we will immediately return MVG to the Stocks List at Friday's closing price of C$4.90. We would consider MVG to be a reasonable buy for long-term investors below C$5.50.