AUY

[yukii]

Wait for $10

[TerryG]

I think there is a bigger problem. If this is your secret.

Holygrale      Re: AUY an ambitious GOLD stock
                         « Reply #160 on: May 25, 2007, 01:43:21 AM » 

We need a relief rally from POG..........hoping $650 holds.........

There is a suspicion the downside floor may be $520. Got it from the iTunes Gold Report.

[la-onda]

fyi TerryG:

News Flash: Yamana Announces Agreement with Northern Orion
Friday , June 29, 2007 12:32ET

Jun 29, 2007 (M2 PRESSWIRE via COMTEX) -- Market Gainer is quickly emerging as the one stop shop for international small-cap investors looking to stay a step ahead of the markets. Activity on the NYSE market has brought this company to the attention of our research team. YAMANA GOLD INC. (Toronto:YRI.TO)(NYSE:AUY), is responding to the attention of investors. Our goal is to create a community of international investors who consistently and effectively capitalize on the enormous gains the small-cap Canadian and American exchanges offer.

June 27 - YAMANA GOLD INC. (Toronto:YRI.TO)(NYSE:AUY)(LSE:YAU.L) and Northern Orion Resources Inc. (Toronto:NNO.TO)(AMEX:NTO) today announced that they have entered into a business combination agreement and a concurrent proposal has been made to Meridian Gold Inc. with respect to the combination of the three companies.

The contemplated terms for the three-way transaction are as follows:

Meridian shareholders would receive 2.235 of a Yamana share plus C$3.15 in cash which, based on Yamana's closing share price of C$13.02 on June 27, 2007, equates to total consideration of C$32.25 per share. The cash and share consideration represents a spot premium of approximately 23% over Meridian's closing share price on June 27, 2007, and a premium of approximately 24.4% based on the 20-day average closing price.

Northern Orion shareholders would receive 0.543 of a Yamana share which, based on Yamana's closing share price on June 27, 2007, equates to a value of C$7.07 per share. Holders of Northern Orion warrants and other convertible securities will be entitled to receive, or will receive a security in exchange that will entitle them to receive, on exercise 0.543 of a Yamana share in lieu of a Northern Orion share and otherwise on the same terms as the original security. The share consideration represents a spot premium of approximately 21.3% over Northern Orion's closing share price on June 27, 2007, and a premium of approximately 28.3% based on the 20-day average closing price.

The strategic combination would result in the creation of a pre-eminent mid-tier gold producer with the following attributes:

A Leader in Production Growth - estimated annual gold production increasing to more than 1.4 million ounces by 2009 from a combined base in 2006 of approximately 660,000 ounces

Ultra-Low Cash Cost Producer - sustainable negative cash operating costs with a projected 2007-2010 average of less than negative US$100 per ounce, net of by-product copper credits Average Operating Cash Flow of More Than US$600 Million per Year - projected cash balance growing to approximately US$2.4 billion by late 2010 (fully diluted basis)

Strong Balance Sheet - initial net cash balance of approximately US$575 million (fully diluted basis)

Highly Liquid Gold Vehicle - combined historical average daily trading volume of more than C$160 million through three leading global stock exchanges

Unparalleled Latin American Operating Base - six principal mining and development projects in Brazil, Chile and Argentina estimated to account for over 73% of the combined company's pro-forma net asset value Reserves Plus Measured and Indicated Resources Totaling 27.7 Million Ounces of Gold - additional inferred resources of over 13 million ounces of gold - estimated average mine life currently in excess of 12 years

To complete the transaction, Yamana would issue approximately 309.4 million new common shares (225.7 million and 83.7 million common shares to Meridian and Northern Orion shareholders, respectively) plus cash consideration of US$300 million to Meridian shareholders. On an issued basis, the pro rata shareholdings are anticipated to be: 53.4% existing Yamana shareholders, 34% existing Meridian shareholders and 12.6% existing Northern Orion shareholders.

Yamana and Northern Orion have entered into an agreement pursuant to which Yamana will acquire all of the issued and outstanding securities of Northern Orion, subject to the requirement that Yamana acquire at least 66 2/3% of the issued and outstanding common shares of Meridian, calculated on a fully-diluted basis. It is anticipated that the Northern Orion transaction will be structured as a statutory plan of arrangement. The acquisition of Northern Orion by Yamana has the unanimous support of the Boards of Directors of both Northern Orion and Yamana. GMP Securities L.P. has provided its opinion to the Board of Directors of Northern Orion that the consideration to be offered to Northern Orion shareholders pursuant to the agreement with Yamana is fair, from a financial point of view to the shareholders of Northern Orion other than Yamana. Under certain circumstances, a termination fee of C$35 million, and under certain additional circumstances C$50 million, would be payable by Northern Orion to Yamana. Northern Orion has agreed to carry on business in the usual course and not to enter into any agreements outside of the ordinary course in respect of its assets other than certain specified transactions. The business combination with Northern Orion is subject to customary conditions, including definitive documentation, receipt of all requisite third party and regulatory approvals and consents, court approval and approval by shareholders of Northern Orion. A copy of the agreement between Yamana and Northern Orion will be filed under the profiles of the companies on www.sedar.com and on the SEC's website at www.sec.gov.

In the event a consensual transaction with Meridian cannot be reached, Yamana has agreed with Northern Orion to commence an offer to acquire 100% of the outstanding common shares of Meridian on the terms of the proposal made to Meridian within 30 days, subject to certain conditions. As part of the transaction, Northern Orion has committed to fund US$200 million of the US$300 million cash component of the Meridian offer, subject to definitive documentation. The loan is not conditional upon the completion of the transaction with Northern Orion, will be secured by shares of Meridian acquired by Yamana, will bear interest at LIBOR plus 2% and will be repayable on the earlier of 12 months following the initial drawdown and 30 days following acquisition by Yamana of 100% of the fully diluted issued and outstanding shares of Meridian. The first drawdown is conditional upon at least 66 2/3% of the fully diluted issued and outstanding shares of Meridian having been tendered, and not withdrawn to Yamana's offer. The US$100 million balance of the cash portion of the consideration to be offered to Meridian shareholders will be funded from Yamana's existing US$200 million revolving credit facility which the lenders have agreed to increase to US$300 million, subject to definitive documentation.

Yamana's lead financial advisors are Genuity Capital Markets and Canaccord Capital Corporation and its legal advisor is Cassels Brock & Blackwell LLP. Ongoing advisory services are also being provided to Yamana by Wellington West Capital Markets. Endeavour Financial International Corporation and GMP Securities L.P. are financial advisors to the Board of Directors of Northern Orion. Northern Orion's legal advisors are DuMoulin Black LLP and Blake, Cassels & Graydon LLP.

Commenting on the transaction, Peter Marrone, chairman and chief executive officer of Yamana said, "The strong merits of the proposed transaction compelled us to agree to terms with Northern Orion and approach Meridian. The combination of Yamana, Northern Orion and Meridian makes sense from a strategic and geographic perspective and we believe that the proposed structure is a creative way to unlock value for all shareholders involved. The three-way transaction would be accretive to Yamana's net asset value and long-term earnings and cash flow, while delivering a meaningful premium to Meridian and Northern Orion shareholders. Following the transaction, the combined company could look forward to improved market multiples reflective of the new company's scale of operations."

"It is Yamana's desire that this proposal to Meridian be considered in the friendly manner in which it is being presented - a win-win-win for three successful companies and their respective shareholders," said Mr. Marrone. "We would encourage constructive discussions in this regard."

David Cohen, president and chief executive officer of Northern Orion added, "The operating base of the combined entity would be unparalleled in Latin America. We believe that bringing our collective expertise together in the areas in which we operate should result in further opportunities to deliver value for shareholders. We will have a solid platform for further growth in our core areas of Brazil, Chile, Argentina and Central America. From this platform, and with the significant cash flow that will be generated, the combined company will be well positioned to create further shareholder value through additional growth throughout the Americas."

The combined company offers a solid foundation of nine operating mines, and an unparalleled pipeline of six development projects and a leading presence in Latin America. Yamana estimates that six core assets of the combined company will account for more than 73% of the combined company's pro-forma net asset value. A brief summary of these core assets is as follows:

Chapada (Brazil): open-pit copper and gold mine with conventional milling facilities that produce a copper/gold concentrate. Commercial production for the mine was achieved in February 2007, and production is projected at approximately 180,000 to 205,000 ounces of gold and 130 to 145 million pounds of copper this year. Operating costs of production on a co-product basis in Q1 2007 were US$187 per ounce of gold and US$0.66 per pound of copper, and on a by-product basis was negative ($1,077) per ounce of gold. Chapada's mine life is projected at approximately 19 years.

El Penon (Chile): high grade underground mine with average grades of approximately 8 grams per tonne of gold and 231 grams per tonne of silver. El Penon has been a flagship operation since 1999 and 2006 production was 230,100 ounces at a cash operating cost of negative US$68 per ounce net of silver by-product credits. El Penon currently has measured and indicated resources totaling 2,902,000 ounces of gold and 106 million ounces of silver.

Alumbrera/Agua Rica (Argentina): 12.5% equity interest in the Alumbrera copper/gold /molybdenum mine, plus 100% interest in the feasibility-stage Agua Rica project. Alumbrera is operated by Xstrata is projected to produce about 190,000 tonnes of copper, 500,000 ounces of gold and 2,200 tonnes of molybdenum annually (100% basis). Reserves currently support a mine life through to 2016. Agua Rica has the potential to be developed either as a stand-alone project with annual production projected at approximately 136,000 tonnes of copper, 130,000 ounces of gold and 7 million tonnes of molybdenum, or on an integrated basis with the Alumbrera complex which could potentially extend Alumbrera's mine life through to 2032.

Jacobina (Brazil): underground gold operation producing over 62,000 ounces in 2006, and projected to reach over 200,000 ounces by 2008 through developing and bringing on stream several underground mines, and expanding the processing plant. Jacobina's mine life is currently projected to be approximately 10-12 years. The Jacobina property encompasses upwards of 155 kilometres of exploration concessions along historical gold occurrances in the Bahia Gold Belt.

Gualcamayo (Argentina): advanced stage development project with a first phase open pit heap leach feasibility study expected by mid 2007. Production is estimated at 200,000 sustainable ounces annually by Q3 2008. Drilling results to date show potential to expand the global resource base at Gualcamayo at higher grades and to expand the limits of the deposit.

Sao Francisco (Brazil): open-pit, gravity heap-leach gold project. Commercial production was achieved in August 2006, and over 80,000 ounces of gold were produced to the end of 2006. As the operation ramps up, annual production is estimated to be in the range of 125,000 to 135,000 ounces of gold starting in 2007. Sao Francisco's mine life is projected to be in excess of 10 years.

[TerryG]

Sold my AUY last week and watched it drop past 12, I guess I should have looked further before jumping to conclusions.

Thanks.

[bjc]

Buying AUY soon.  Chart is turning over, and the fundamentals are soon going to look phenomenal.  AUY deserves to trade at a forward PE of 20-30 like its competitors, but it trades at a forward PE of slightly less than 10. 

In my opinion, there is a lot of upside here.  Especially if Gold breaks out of this symmetrical triangle it's been in for the past year or so.

[stockhunter]

This stock is so badly beaten up with the buyout of another gold company.  Any opinions on buying options for 09?

[bjc]

I think it'd be brilliat, stockhunter.

I'd be buying some AUY this morning but I have no cash.  The way Cramer was talking this morning on CNBC, the fed sure saved my ass.  Chose CHL over AUY, bought before the close yesterday.  AUY would be slightly better so far I guess.

I think if you bought some 08 or 09 leaps, you could make a 10-20 bagger easy stockhunter.  This is a $20 stock barring any collapse in the overall markets / gold.

[Holygrale]

Wow.........I never thought wed see $8 again, but last week was unreal........

This is a buy, merger talk has dragged it down along with the markets of course, wish I had some extra cash to buy back in this week...........

[TraderStar]

I think it'd be brilliat, stockhunter.

I'd be buying some AUY this morning but I have no cash.  The way Cramer was talking this morning on CNBC, the fed sure saved my ass.  Chose CHL over AUY, bought before the close yesterday.  AUY would be slightly better so far I guess.

I think if you bought some 08 or 09 leaps, you could make a 10-20 bagger easy stockhunter.  This is a $20 stock barring any collapse in the overall markets / gold.

I'm still relatively new to options trading, just buy (not sell) calls & puts, 2-4 months out.... so I have never traded a LEAP.  When you say "10-20 bagger" ... how does that work?  How many months out do you buy? Are LEAPS different from regular options or is any option with expiry longer than 6 months considered a leap?  Do you determine the strike price based on where you think the stock will end up, or is it better to get ITM or ATM? 
I'd appreciate any input about this ..  thanks in advance.

[bjc]

I dont have any experience with options.  It's all paper trading.

A LEAP, as far as I know, is just a longer term option.  It's the same thing, just long term.  When I say a 10-20 bagger, I mean 1000-2000%.  I think AUY represents amazing value here.  I'll wish I bought.

[bjc]

Bought AUY today at 10.47.  20 ema cross.  Chart looks good, fundamentals are unquestionably good. 

Analysts expect $1.20 in EPS in the next 4 quarters.  Conservative PE of 15 gives you $16 a share.  Most gold stocks trade at a PE in 25-30 range.  This is a no brainer unless there's some major flaw in the fundamentals I'm missing. 

[stockhunter]

i've picked up quite a few 2010 options.  I see gold peeking around 2011/2.

One of the main things holding this stock down is the merger that's going on.  It's still not clear if it'll go through or not (don't always believe what the press tells you).  If it fails, we'll get a nice pop, otherwise who knows.

And, BJC: looking at yahoo the P/E for auy is 49.12.  Gold corp is 56.51

[bjc]

Stockhunter, when evaluating a stock, we look toward the future, not the past.

Look at the revenue trends and the earnings trends. 
                     EPS               Rev
Q3 06 -         $0.02          50 mil   
Q4 06 -         $0.00          60 mil

Q1 07 -         $0.13          145 mil
Q2 07 -         $0.22          184 mil

Q3 07 (est.)  $0.25
Q4 07 (est.)  $0.27
Q1 08 (est.)  $0.33
Q2 08 (est.)  $0.35

Stocks are usually valued based on forward EPS.  AUY is expected to make well over a dollar in the next 4 quarters.  If you go with a conservative PE ratio of 20, this gives you $20 a share.

When AUY announces their next earnings, we will drop a quarter of $.02 and replace it with a quarter of about $0.25 if analysts are in the ballpark.  The PE will then be 10.6 / .6 = about 20.  This will be the trailing PE, but wall street will be looking ahead still.  I expect AUY to be at least a $15 stock by then though..

and by the way, the trailing PE is actually 29 right now.  10.68 / $0.37.

This is all assuming E*Trade's earnings information is correct.  I've found it to be far more trustworthy than Yahoo!

[stockhunter]

thanks for correcting me bjc.  I rarely use my e*trade account research centre, but will do it more often. 

Lastly, there's a lot of money to be made here with this stock.  Pick it up now and forget about it for a few years and you'll be laughing.

[bjc]

I agree, I think your options will be home run.

I love the E*Trade research, it's all I use these days.  I like the visual you get with the earnings section.  The fundamental picture with AUY is truly beautiful.  If gold stocks come back into favor, this baby could really take off.  If gold stocks stay neutral / out of favor, I still think we have some ground to make up to catch up with the multiples of the rest of the industry.