Thoughts from Myron — Graphene to the Forefront

By Myron Martin, February 17, 2014

[Ed. note: Here is our latest contribution from longtime reader Myron Martin. He has agreed to our trading restrictions, and, as usual, we have not reviewed, approved or screened his stocks or ideas, and the opinions he expresses are solely his own.  Many of the stocks Myron covers are microcap “penny stocks” that can move dramatically with or without fundamental reasons, so please be cautious. Myron’s past commentaries can be seen here.]

Hello again Gumshoers! I was planning on making one of my next columns about copper, but sometimes one’s hand is forced by new events that affect the market. This news item about a copper producer is important enough that I would be remiss if not mentioning it. I try to cover everything of importance in the market in as timely a fashion as possible, but nobody can anticipate in advance what the next news headline will be that affects a specific sector or individual company. A lot can happen in any two-week period and in this case there is a situation that requires close watching, which is why I am issuing this alert in respect to a takeover offer from Hudbay Minerals (HBM in New York and Toronto) for Augusta Minerals (AZC in New York and Toronto). I owned Augusta years ago and made good profits as its project developed, but finally decided to sell to avoid years of “dead money” that often results from long permitting times, etc. The most money in juniors is made on “first discovery” of a significant resource, and then again when the “grunt work” has been done and a 43-101 report is made on a project, then a PEA, and finally a mine development decision is made. Timing on whether to be in or out in the development process is crucial, and often dependent on many different factors.

In this case, as in many I expect in 2014, investors will be making decisions on whether the premium being offered by larger established companies adequately reflects the assets and potential of the junior being bid for. In this case, I would be happy to own HBM should a takeover of Augusta actually result. However, as in the case of Goldcorp’s (G.TO GG) bid for Osisko (OSK.TO), there is a good chance the bid will be turned down as inadequate, so even though prices have been bid up close to the offer price, there may still be a profit potential ...

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