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Topic: Talk with CEO (Read 1057 times) previous topic - next topic

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Talk with CEO

I just saw this post on stochouse and thought I would post it here.  Another shareholder spoke to the CEO today and he posted the remarks below on another message board. Very interesting information!!

I just got off the phone after a long conversation with management. The news is very good for the ongoing development at San Rafael and they are already tuning the mill to handle ore. Development ore should be processed to test the plant within days, and the company could announce commercial production in September.

There is some wiggle room here on how long they continue running development ore until they declare full commercial operations. It comes down to a financial distinction because income from operations will be credited against cap-ex until they formally declare commercial operations. As it stands now the entire development will probably come in on time, and below cost. If they hold off until November, the total cap-ex budget will come in slightly higher than the lowest forecast number of $18 million.

Some interesting info from the call:

They locked in some of the lead production @ $1.11 per pound, which is near the highs for the metal. This will carry through to the end of the year and it basically puts a profitable operating range for the Galena operations.

The lower USD has been good for the bottom line, as the company reports profits in USD but pays costs in Pesos. However, over the longer term they anticipate a stronger Peso, and in any case if the Peso stays low they expect they will have to pay the miners more to earn a living wage, so the benefits are not going to be huge either way.

Some production has been stockpiled from El Cajon, as they expected that Nuestra Senora would run out of mine inventory prior to getting San Rafael into production. However, they have continued to find ample high grade ore feed from Nuestra, and therefore they now have the bonus stockpile from El Cajon that can give a boost to production in the future, of serve as a measure of safety if an unplanned production halt arises.

The CEO was very clear that the company has excess mill capacity to increase production if they choose. But he stressed it makes no sense to run higher silver output now when the company would barely break even. Instead, they will focus on high grade zinc and lead ore, and make a great cash flow windfall from operations. They can earn a profit and maintain a low cost structure, while holding the high grade silver ore in reserve for when silver prices rise. This is a huge fundamental fact that is going to be overlooked by most investors but I think its a luxury to have this kind of operating flexibility to hold off until silver prices rise.

Meanwhile, if and when we finally get a sustained window of higher silver prices, USA will be able to rapidly increase output (and profits) while most other producers are already running flat out and burning their mineral inventory.

The last point is that USA will be in position to report cash flow per share that will blow the doors off the entire sector when San Rafael is in full production. With such a tight share structure after the rollback last year, and the potential for low cost / high profit operations, the cash flow per share could surpass $2 per share next year. For a stock that is below $5 today, I think that suggests a much higher share price just to price in a reasonable cash flow multiple.

Given that the new mine appears to be nearly completed and on budget, most of the risk is now gone. The company did not have to issue new shares or take on new debt to build the mine. USA has a strong balance sheet and profitable operations today, but will very shortly see the cost structure fall to the lowest in the peer group, while earnings per share will rise to the top quartile.

I think this one is a screaming buy here. I own shares and I will be a buyer of more.


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  • edthelorax
  • [*][*][*][*][*]
  • Administrator
Re: Talk with CEO
Reply #1
Fantastic summery. It is not often that a company comes along with all the ducks in a row like this.
For Entertainment Purposes Only.

Re: Talk with CEO
Reply #2
Fantastic summery. It is not often that a company comes along with all the ducks in a row like this.


That is a fantastic post with very specific information, maybe too specific for release to an individual. I hope the company and individual does not get chastised for disclosure that should have been through 'proper channels'. It does give confidence in the company.

  • ken
  • [*][*][*][*][*]
  • Global Moderator
Re: Talk with CEO
Reply #3
Years ago I learned if the CEO will talk with you, sell the stock.

  • edthelorax
  • [*][*][*][*][*]
  • Administrator
Re: Talk with CEO
Reply #4
For Entertainment Purposes Only.

  • ken
  • [*][*][*][*][*]
  • Global Moderator
Re: Talk with CEO
Reply #5
That chart sure is beautiful! I just can't see why a CEO would talk to a individual share owner and paint a utopian picture as to the future of the co...

  • edthelorax
  • [*][*][*][*][*]
  • Administrator
Re: Talk with CEO
Reply #6
You can call yourself, I talked to him under 3$ US
Tel: 416-848-9503
For Entertainment Purposes Only.

  • ken
  • [*][*][*][*][*]
  • Global Moderator
Re: Talk with CEO
Reply #7
You can call yourself, I talked to him under 3$ US
Tel: 416-848-9503
Did you post your conversation here?

Re: Talk with CEO
Reply #8
Buy the dips, looks like good stuff for USAS. Not that it couldn't change, but it's likely USAS will not yield much to pressure. It has places to go.


  • edthelorax
  • [*][*][*][*][*]
  • Administrator
Re: Talk with CEO
Reply #9
You can call yourself, I talked to him under 3$ US
Tel: 416-848-9503
Did you post your conversation here?
I thought i had, it was right before the AMEX listing, but i can't find it,
For Entertainment Purposes Only.

Re: Talk with CEO
Reply #10
Years ago I learned if the CEO will talk with you, sell the stock.

If you held this stock, I hope you did not sell Ken, it has been on fire. Recently, I added at $3.55 and again today at $4.55. Even if we get a correction, the story here is very good. Dollar cost averaging into it will pay big long term.
In January 2016 the stock trades around 50 cents, late April it was six or more time higher Assuming this run started at around $3.00, then $18.00 is not out of the question. It all depends on management delivering on the forecasted doubling of production and making good on switching plant feed mixes to take advantage of price swings in metal prices. I t sure feels good to be holding a winner.

  • Erich
  • [*][*][*][*]
Re: Talk with CEO
Reply #11
USAS has been a huge winner. Great call by ED and very early on it. My rules wouldn't let me buy do to low volume
and, at that time it was trading on the OTC  exchange. Sometimes trading rules will kick you in the ass. Looking at that chart gives
me a little vertigo. Hell of a move though. He slammed EXK @ 2.11 as well. Oh well, still doing fine with SSRM and the mighty PAAS.
I expect new 52 week highs on both soon. Spec play on UEC slightly under water.
 NOKO Holiday this weekend should keep a bid on Gold all week. Nice staying over 1300 for a change. :D
ER

Re: Talk with CEO
Reply #12
Just my thought on USAS. Ed had commented that USAS was likely to pullback some before continuing and I agreed with that outlook. USAS has continued on instead. To me that would indicate that it is likely to suffer a very volatile selling day that could be very deep indeed. If so, it would be a great opportunity for a stock that looks to be heading for $6.00 to $7.00 For me, it would all be a matter of timing, but not now. Just watching, great show.