selwyn

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Why Selwyn is two-faced

On March 3, 2014 Selwyn issued a press release stating that it is “currently exploring options for financing the Company, with a view to restarting the ScoZinc operation in Nova Scotia, Canada”.  (You’ll have to find this press release on SEDAR because it’s not the company website.)  A few months before that in December, Selwyn returned millions of dollars of cash to shareholders that could have been used to finance such a mine.  On the surface, it looks like Selwyn management is inept.  IKN has colorful commentary as always, even though I disagree. Continue reading →

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Selwyn Resources: Closed my position

I closed my position at $1.74-$1.9.  I think that Selwyn’s current valuation is reasonable given that:

  1. Selwyn burned through a few million of cash in overhead, legal fees (Selwyn paid Samara Capital and RCF’s legal bills), and severance to the CEO and other employees.
  2. The mine did not find a buyer (yet) and has been put on care and maintenance.  If it has been mothballed, it means that the mine is not economic.  If the company has been trying to sell the mine (which it probably has been) and hasn’t found a buyer, it probably means that the market for the asset is weak.

The stock closed at $2.12 yesterday.I would say that this trade worked out fine.  If you had bought at $8 and sold at $1.74, you would have made a low-risk 9.25% return after the $7 dividend (all figures split-adjusted).

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Selwyn: Possible $0.10 dividend on a $0.08 stock

The short story is this.  Selwyn Resources recently announced a deal to sell its flagship deposit for $50M.  After paying off its debt, it should be able to distribute $40M to shareholders (or around $0.10/share).  Most of Selwyn’s shareholders now seem to be in favour of the dividend.  It seems likely to me that Harlan Meade will eventually get kicked out (though this is not a sure thing).

Here’s RCF’s position on it:

http://www.newswire.ca/en/story/1150743/rcf-comments-on-events-at-shareholders-meeting-of-selwyn-resources-ltd

*Disclosure:  I own… 1 share of Selwyn.  I may buy Selwyn shares in the future if my orders get filled.

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Selwyn update… it is bad

Russell Cranswick, Resource Capital’s nominee to the board of directors, has resigned (press release).  In my opinion, it is highly likely that Resource Capital will liquidate its position.  The Selwyn project is likely uneconomic due to the increased cost of mining (this has gone up a lot in the past several years… look at the cash costs of gold producers for example) and the fall in lead and zinc prices.

*Disclosure:  Still long.  I probably should have just cut my losses earlier and sold… it’s just that I have an aversion to selling near the yearly lows and selling into a depressed market.  I will be trying to sell.