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) 2q11 production

Minerfinders (MFN) (MFL.to) just came out with its 2q11 production numbers. Find the NR here, find two pretty charts generated by your author below:

Two words on the numbers this morning; In Line. Not bad numbers not a blowout, the upside is that if this keeps up, MFN might start getting a reputation for reliability. That really would be refreshing. It's noticeable though that these days MFN is a silver producer with gold credits, not the other way around. The company says that's due to the rocks its been putting on the pads happens to be richer in silver than the normal for Dolores and I say OK fine, just tell us when the mix is going to change again.

Minefinders (MFN) (MFL.to): What has it done to deserve this?

It reported a drab net profit on a bad day to report drab numbers, that's what. Luckily, we took (85% in 6 months) profits on this stock a few days ago at U$16.89 (wish I could say the same for the other stocks left in the portfolio, though).

As it happens, here's what was sent to subscribers re. MFN in a longer Flash update that covered several stocks and the Peru political scene yesterday afternoon. We do get a few right amongst the normality of drab, underperforming picks, y'see.

Minefinders (MFN)
We recently sold around 10% higher than today's close and tonight MFN reported its quarter.

http://finance.yahoo.com/news/Minefinders-Announces-First-iw-1764354432.html?x=0&.v=1

It looks ok, but it's not great either. The breach between adjusted net profit ($19.0m) which backs out derivative losses and actual net profit of $2.3m was wide and won't make for great headlines. Perhaps a better gauge of the state of financial affairs is working capital at MFN, which rose $8.5m (a tad over 10c/share) from 4q10, which is kind of ho-hum. Our costs profile (mining costs + processing costs + G&A) rose from $16.8m in 4q10 to to $18.5m in 1q11, but the change in the gold/silver ratio to 44:1 makes it look like total cash costs dropped. In fact total gold Eq costs per ounce dropped $2 to $509/oz, but the costs creep is clear to see in absolute terms and in costs per tonne mined (or stacked) terms once numbers are crunched. Overall I'm glad I sold when I did.

Gary and Minefinders (MFN)

What i like about Gary BiiWii is that he's nobody's fool, stands his corner and follows no track but his own. Your humble scribe and the BiiWii dude often bicker about differences (after all, he is a freakin' charty) but on the odd occasion when he and I agree on a subject, or more importantly a stock, it's a signal I take very seriously indeed.

We came to a view on Minefinders (MFN) (MFL.to) a while back at almost the same time, he coming from his starting point and this humble corner of cyberspace from its own murky world of spreadsheets and mumbojumbo. But we called it the same. And so far......well, go see Gary's chart and his words for yourself.

Moral: Do like me and associate yourself with way smart people, because it makes you look far more intelligent than you actually are. DYODD.

Minefinders (MFN) (MFL.to) update

I'm happy with the way this trade is going. Not only that, but we got the timing right too:

Y'see, even a dumbass like your humble scribe gets one right occasionally. Disclosure, long (reco'd to subscribers since November 3rd 2010) and still holding, because the target price is much higher (and it'll get there too).

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.

Goldfails, 2010

In a year like 2010, when gold bullion hit new highs and the world finally began to wake up, smell the coffee and look at gold as a decent safehaven alternative, anyone who aimed some cash at the junior gold producers should have been on a good winner, right?

Well maybe yes but maybe not, because amongst the leveraged wins there's a group of gold producers with more than one thing in common:

1) They're small gold producers working in Latin America

2) They have a dubious track record of promising more than they can deliver

3)  Their share prices have all performed much worse this year then their main product, gold.

4) They all quote on the US exchanges

5) They've all, in their time, been pumped to death by brokerages and analysts who care more about the commissions and cheap shares thrown their company's ways than decent, unbiased analysis

So a warmly sarcastic round of applause as we ask these three 2010 goldfails to step forward: Give it up for Minefinders (MFN), Gammon Gold (GRS) and Jaguar Mining (JAG):

The chart shows the 2010 year-to-date performance of MFN, GRS and JAG compared to GLD, the gold ETf that serves as an accurate proxy to the metal. So Minefinders has managed to scrape out an "unchanged on the year" performance due to a late year rally, but it's still some 20% under an investment in gold, certainly not the type of performance that wins friends an influences people in junior mining. As for JAG and GRS, it just goes to show (once again) that you gringos will buy anything, especially if it's available on the NYSE and has the word "gold" in its corporate title.

Talking of Minefinders (MFN).....

..Holy Moley, it's a biggun! This out just 10 minutes ago:

VANCOUVER, BRITISH COLUMBIA--(Marketwire - 12/13/10) - Minefinders Corporation Ltd. (TSX:MFL - News)(AMEX:MFN - News) ("Minefinders" or the "Company") has announced today that it has entered into an agreement with a syndicate of underwriters under which the underwriters have agreed to purchase on a bought deal basis by way of a supplement to the Company's short form base shelf prospectus filed in Canada and the base shelf prospectus in the Company's Form F-10 registration statement filed in the U.S., 13,650,000 common shares (the "Common Shares") at a price of C$11.10 per Common Share for gross proceeds of C$151,515,000 (the "Offering").

Minefinders has also granted the underwriters an over-allotment option, exercisable in whole or in part for a period of 30 days after Closing, to purchase up to an additional 2,047,500 Common Shares at the Offering price per share.

The Offering will be led by Scotia Capital Inc. and BMO Capital Markets. The Offering is expected to close on or about December 20, 2010 and is subject to regulatory and stock exchange approvals.

The net proceeds of the Offering will be used for future expansion and mill construction at the Dolores mine, continued development of La Bolsa property, future debt repayments and general corporate purposes.

The Company has filed and received yada yada continues here

IKN is long Minefinders (MFN) (MFL.to): Read the report here and find out why

This humble corner of cyberspace has been pretty hard on junior gold company Minefinders (MFN) (MFL.to), ripping into it and all its permabull followers on a regular basis due to its silly habit of over-promising on guidance and forecasts of a ShinyHappyPeople future, only to disappoint time and again (link thru here to see all the posts we've run on MFN over time, if reminders are necessary).

So why are we now long the stock?

Well in fact we've been long ever since November 3rd when a Flash update was sent out to subscribers recommending MFN as a buy. We followed up with a fundamental report in The IKN Weekly, issue 79 (six weeks ago now) that laid out the case for the buy. So let's see how the stock has performed since then:

Right now the stock is U$11.72 up 37.9% from the original call (and made a new 52 week high today), though because The IKN Weekly didn't take its position until after the report on November 7th, our own position is 28.9% up. But no matter, because according to our target price (which you can see in the report below) there's still plenty more in the tank. So if you're interested in what your humble scribe thinks MFN can still do for you (even though the best prices have gone, there's plenty upside left to our 12 month target) you can read, free gratis and for nothing, the IKN Weekly fundamental report published on November 7th that subscribers read at the time by clicking here and downloading it. 

DYODD, dude.

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.

Explaining Minefinders (MFN) (MFL.to) share price action over the last 12 months

IKN offers this handy visual guide to Minefinders' (MFN) (MFL.to) share price this last year.

click to enlarge and for better focus if necessary

If you look very very closely, you may be able to spot a trend.

DYODD, dude.
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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?

Hypnotize me

Regarding Minefinders (MFN) (MFL.to) and its latest round of pisspoor results, yesterday this humble scribe asked....

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?

Well, we didn't have to wait long to find out and the answer seems to be "forever". According to Scotia's analyst covering MFN:

"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."

Meanwhile the Desjardins dude covering MFN, while recognizing the results were a negative, said:

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

In other words, the dumbasses that think they know about the market are falling for the soft soap yet again, evidenced by the morning trade in the stock that sees it slightly up on a general down day.

I'll leave the last line to Albert Einstein: "Only two things are infinite, the universe and human stupidity, and I'm not sure about the former".

UPDATE: In answer to a mailer a couple of minutes ago and by way of full disclosure, your author has no position in MFN. Not long, not short, not nothing. So STFU.

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: Fundies still count for something

On Thursday 6th, just after the quarterly results came out at Minefinders (MFN), your humble correspondent ran the post "Minefinders (MFN) puts in a poor quarter" which pointed out that....errr, well...they'd put in a poor quarter. Since then the stock has done this.....

...which makes the paid-off analysts like Thomas Tan at Europac (the Schiff place) look pretty stoopid as he and a lot of other kneejerk cheerleaders were all bullish about the report.

Hey Thomas, I can't believe that you actually raised your projection on MFN from $10 to $12 on the strength of this piece-o-junk report. I hope for your sake you didn't mention your crappy call to Sir Peter himself. Y'see it's one thing to actually read a quarterly earnings report and quite another to understand it.

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.