Wednesday, August 10, 2011

Silver-With-A-Bit-Of-Gold Resource Corp (GORO) reports its quarter

The new name for GORO is Silver-With-A-Bit-Of-Gold Resource Corp (GORO), because what we have here is a company trying to pretend it's a goldie when in fact it's a silver miner that's being hugely overvalued for what it is. The 2q11 financials at GORO came out last night and you can access them right here. When you do you'll notice that:
  • GORO returned a net profit of $3.06m (its first ever net profit)

  • That's a quarterly EPS of 6c

  • Compare that to its market cap, currently standing at $1.378Bn

  • Yup, that's a PE of around 100X

  • And not only that, you're not paying way over the odds for a gold miner, you're paying for a freakin' silver miner. Here's a quick chart that shows the breakdown of sales revenue per metal:

metal Oz sold avg price $
gold 2384 1576.03 3.757
silver 460479 36.66 16.881

And if you want the paydirt in chart form, here it is.

This is a GOLD miner? Gimme a freakin' break! It's a silver miner pretending it's a gold miner, end of story. It's profitable now, which is good, but it's hugely overvalued for what it is, even for what it promises to be later. And finally, let's remind ourselves that GORO hasn't bothered to put together a 43-101 and nobody really knows whether what they say about their PM deposits is true or not. 

But what Silver-With-A-Bit-Of-Gold Resource Corp does have is a legion of fanatical goldbug loopheads as shareholders, so your author is now expecting the usual round of abuse in his mailbox whenever cold, hard truths are given out to the whackjob end of the PM sphere, the people who give gold bulls like myself a bad name. DYODD.

UPDATE: For those of you just tuning in, this update post may be for you. 

UPDATE 2: Oh this is interesting. Hey guys over at the Yahoo board, did you know that GORO management are regular readers of your posts? Hey, wouldn't it be interesting if you found out that one of the posters there was in fact part of the managerial team at GORO, too?

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