Minefinders (MFN) (MFL.to) 2q11 financials

A simple yet interesting chart from your author's numbercrunch of the 2q11 numbers:

On the whole MFN gave us a good set of numbers, by the way.

Minefinders (MFN) (MFL.to): As day follows night....

...the Canadian brokerages and their analysts will always return to Minefinders (MFN) and call it a buy again after dropping it, like meth to a junkie. Today's relapse is suffered by Trevor Turnbull of Scotia, with this little write-up from Scotia nerve centre reaching your author's inbox just a few minutes ago:

MFN-US: Still Oversold Despite Progress (NEW 1-SO, US$15/sh target, Trevor Turnbull ): Trevor Turnbull is re-launching coverage on Minefinders(MFL-CN, MFN-US) with a 1-SO rating and a US$15.00/sh target (ROR of 56%).  MFL is very attractively priced trading at a deep 28% discount to his NAV of $13.36/share.  The mill feasibility study expected this year should increase the Dolores valuation by 26% which he uses in his base case NAV (given they raised over US$150M to finance it in December 2010) – but Trevor adds the market is yet to embrace this scenario.  With improved performance from Phase 2 leach pad and the proposed mill option which serves to increase overall recovery (especially for silver) – Trevor believes MFL is good value and not a value trap.  Furthermore, Dolores has the potential to grow from new discoveries peripheral to the pit as well as from deeper higher-grade underground mineralization.

Here's the chart.

Hey you never know, this time might be different, Trev. Good luck on the call dude...and I mean it.

How mining analysts back down

Chart first shown here on Oct 4th

Canadian brokerage mining analysts have a hard time and suffer....from the size of their egos because it must be physically painful for them to squeeze through doorframes due to the enormous diameters involved. Rule One amongst the dumbasses in suits  is never, but NEVER admit you're wrong or you made a mistake about anything because it's just not the done thing to be honest, is it? 

However, if you do watch the sector carefully you get to see when the analyst has decided they've put their foot royally into it and pumped the wrong dog. Take for example Indi Gopinathan, analyst at Scotia that follows and has liked Minefinders (MFN) (MFL.to) for quite some time. Up to now Indi has kept bullish on MFN despite being such a pisspoor performer and has forgiven its trespasses. For example on August 5th, just after a bad set of numbers from MFN here's a report of her opinion:

"This was a miss on consensus and Indi (the analyst) believes any pullback on MFL today should be bought........ The Q2/10 quarter likely won’t change investor’s minds but that is backward looking and Indi believes the inflection point is right now."

Then on September 29th, when it turned out that 2q10 wasn't that "inflection point" after all (surprise surprise) and we're going to have to wait til 2011 (at least) for MFN to get its jive together, Indi was still stubbornly bullish, saying that "..any negative reaction to yesterday’s news (w)as a buying opportunity." Well, she sure got plenty of chances to buy!

However, today's Scotia daily report has Indi rather more subdued. As we mentioned in paragraph one of this post, the admissions of guilt and/or error are never explicit (that would never do) but now she's actually gone to see the Dolores trainwreck the talk from Indi about buying ops and such has disappeared. We now get this:

MFN: Minefinders Tour Takeaways (1-SO, US$14/sh target, Indi Gopinathan): Earlier this week, Minefinders hosted Scotia clients on a tour of the Dolores gold and silver mine in Chihuahua , Mexico .  In the short term, it appears the liner tear issue will negatively impact both Q3 and Q4 production as all of the Phase 1 leach pad was taken off leach in August.  Indi currently models Q3 production that is 40% below guidance with Q4 figures 8% lower than company expectations.  Longer term, block model reconciliation could lead to a 10% grade improvement over the average reserve grade.  While short term issues continue to plague the company, Indi reiterates her 1-Sector Outperform rating and US$14/sh target with the view that Dolores is a good asset and a potential M&A target. 

The change is subtle, but when you're attuned to these things the message is clear enough and now IKN confidently predicts that Indi will "lower her guidance" on MFN the next time it misses anything from its current guidance slate. Going by this pathetic excuse for the mining company's track record, that will most probably happen very soon. DYODD, dude.

Minefinders (MFN): Who is more laughable, the company or the goofball analysts that recommend this company to their sheep?

Yesterday evening, Minefinders (MFN) released this NR to tell the world it's not going to make its guidelines for production for the rest of the year.  Have a read yourself, but the lag centres around the company's inability to fix the tear in the leach pad tarp the way they said they would and in the time they allotted themselves.

Toldya so. Let's be clear about this, IKN told you that this perennial screw-up OPUD-merchant would screw it up again. Take for example this post, where we laid out our doubts and noted the madness of a company that says to the world "yeah, well...we've constantly missed guidance, but now we're guiding for record production and THIS TIME WE REALLY MEAN IT".  Here's the table in that post, showing the constant underperformance of the company. 

Minefinders (MFN) Au prod vs previous MFN guidance, six month periods
gold	guidance*	result	comment
2h09	50,000 to 60,000	39,759	fail
1h10	36,000 to 40,000	32,561	fail
2h10	55,000 to 60,500	?	buy used car?
*2h09 guidance from 2q09 md&a, 2010 guidance from YE09 md&a
Minefinders (MFN) Ag prod vs previous MFN guidance, six month periods
silver	guidance*	result	comment
2h09	1,200,000 to 1,300,000	615,870	fail
1h10	680,000 to 765,000	522,233	fail
2h10	1,650,000 to 1,830,000	?	boy cry wolf?
*2h09 guidance from 2q09 md&a, 2010 guidance from YE09 md&a

It's amazing that anyone takes them seriously, but this is not a world of logic, ladies and gentlemen, it's a world of bullshit hype and shift-that-paper, so as this post noted on August 5th the Canadian houses were quickly lining up to pump this dog yet again. Choice quotes include this from Scotiafool:

"This was a miss on consensus and Indi (the analyst) believes any pullback on MFL today should be bought........ The Q2/10 quarter likely won’t change investor’s minds but that is backward looking and Indi believes the inflection point is right now."

And this from Desjardinsfool:

"However, we are encouraged by the fact that realized grades should continue to improve in 2H10......"

There were plenty more besides those two, as well. Another thing you can bet your house on is that none of the Canadian houses will bear any sort of responsibility for they pisspoor call on this dog, as they'll much prefer to blame the "disappointing news from the company" than note their own bullshit hype.

And so here we are with MFN explaining to the world how it won't make guided production in 3q10 and most likely 4q10. This company, that promised to be a cash cow in 2009, now tries to get its long-suffering sheep to wait til 2011 before even the prospect of a profit is on the table. As we said last month, the clue is in the name of the company. Minefinders should have stuck to finding mines and not pretending they could actually run one, as it's now patently obvious that they can't. DYODD

UPDATE: The hypnosis continues as the Scotiafool covering MFN considers "...any negative reaction to yesterday’s news as a buying opportunity..." Jeesh, those guys must be knee-deep in this paper. When will the world call bullshit on this game of cahoots?

Minefinders (MFN) (MFL.to): Would you buy a used car from the man that guides forward production at this underachiever?

Minefinders (MFN) (MFL.to) released its 2q10 results after the bell today and guess what? Yep, they sucked again. The NR, numbers and fun can be found here, but what MFN failed to do once again is pass Rule One™ for a producing gold miner in commercial production yet again, i.e. it failed to make a profit.

Here's the count since the company started commercially at the Dolores (English translation = "pains"...quite apt, really) and we see that in the five quarters of commercial production so far, MFN has managed to return a profit just once:

All that and record gold prices too, which is pretty pathetic. The biggest problem at MFN is the tendency it has for OPUD (over-promise, under-deliver) which is summed up in these next two tables, the first for gold production and the second for silver production. What you see here are the guidances the company has made for the second half of 2009, the first half of 2010 and the second half of 2010 that's to come. For the record the 2h09 guidance is taken from the company's 2q09 MD&A and the 2010 guidances are from the 2009 year-end report and MD&A and they're all available on SEDAR if you don't believe me.

Minefinders (MFN) Au prod vs previous MFN guidance, six month periods
gold	guidance*	result	comment
2h09	50,000 to 60,000	39,759	fail
1h10	36,000 to 40,000	32,561	fail
2q10	55,000 to 60,500	?	buy used car?
*2h09 guidance from 2q09 md&a, 2010 guidance from YE09 md&a
Minefinders (MFN) Ag prod vs previous MFN guidance, six month periods
silver	guidance*	result	comment
2h09	1,200,000 to 1,300,000	615,870	fail
1h10	680,000 to 765,000	522,233	fail
2q10	1,650,000 to 1,830,000	?	boy cry wolf?
*2h09 guidance from 2q09 md&a, 2010 guidance from YE09 md&a

Each and every time, MFN has promised the market more than it was able to deliver. In the case of gold, over the 12 months MFN has produced 72,320 oz Au, which is 13,680 ounces less than even its minimum guidance level. In the case of silver it's even worse, with the 1.138m ounces produced falling 740,000 ounces short of even the minimum targets.

So now MFN is guiding higher and telling the world that the higher grades being mined now will get production up to at least 55k oz Au and 1.65m oz Ag in the half year to come. The obvious question here is to ask how many more times can MFN get away with pulling the wool over the eyes of the investment community before people start calling bullshit on this operation?

Meanwhile, let's check on how the company's stock price has got on this year:

Oh dear. I wonder how MFN's paid shiller Mike Niehuser is going to explain away the MFN mediocrity this time? In the end, the name of the company itself is a bit of a giveaway. It should have stuck to finding mines, not trying to play at producer.

DYODD, dude.

Minefinders (MFN) puts in a poor quarter

Back in April, your humble correspondent called MFN a speculative buy at U$6.94 and put a U$10.97 (+58%) target price on the stock, but also laid out a range of caveats in the NOBS report (that at around 40 of you bought at the time..thank you) that made it clear there was plenty risk involved.

Today the company reported its second quarter and the numbers are not good. Far from the "steady state gold and silver production at model rates" we were promised in the February 2009 company presentation, the cruel reality is a $552 per ounce cash cost, a full $255 higher than that "model rate" they talked about just six months ago. Also included in the report are a range of "it's not our fault" stuff and excuses that looks petty as a whole that just makes you go humph.

Since that mid-April "spec buy at 7" call the stock went to $9, went back to $7 and then moved back up to the recent $9-and-bits. All in all I'm cool with my original call on the stock but it's already back down under $9 this morning on the earnings report...quite right, too. All the pretty painting in the press release can't hide the fact that MFN have over-promised and under-delivered. I'll be looking in more detail at the stock in this weekend's IKN Weekly. DYODD, dude.

Disclosure: No position in MFN.

New NOBS report on Minefinders (MFN) available now

In the ongoing quest to make this humble corner of cyberspace pay for itself, here's the latest offer in the (glad to say increasingly popular) NOBS "no B.S." reports we do round here. The company in question this time is Minefinders (MFN) (MFL.to), operators of the newly commissioned 'Dolores' gold/silver mine in Mexico. In the seven page report you get my views on:

• company structure and financials
• production and profit expectations
• sensitivity to gold and silver spot prices
• political and social risk factors
• etc

You also get a 12 month forward price target and a conclusion section where I lay out my views on MFN as an investment, all in the usual straight-shooting NOBS style that praises when good and criticizes the bad. The price is the usual bargain U$10 via paypal to.....

otto.rock1 (AT) gmail.com

(change the (AT) to an @ sign)

.....and to make it easy you can order via this pre-paid button below (all the usual credit cards available). Once PayPal tells me you've paid, you'll get your copy by return mail. The usual drill, in other words.

So don't delay, get yours today. For just ten US dollars, which is less than the price of a trade commission, you'll know a whole heap more about MFN than the rest of them and give yourself the edge. You know it makes sense.