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Petaquilla Minerals Trading Card
Website: http://www.petaquilla.com Symbol: TSX: PTQ | US routing symbol:PTQMF
Here is a junior Canadian mining stock flying completely under the radar that has already produced over 26,000 ounces of gold and recently announced that it has reached the status of commercial gold production. That’s right, Petaquilla Minerals is a now a junior gold producer, operating its gold processing plant at its 100% owned Molejon Gold Project in Panama. Anticipated throughput for the project during the first year of commercial production is estimated to be 2200 tonnes per day. Commercial production commenced January 8th, 2010, with annual gold production targeted at 100,000 oz/yr at a cost of $550 per ounce. The Molejon mine site is located in the south central area of the Company’s 100% owned 842-square kilometer concession lands, a region known historically for gold content. With a target share price of $3.97, Petaquilla is quickly becoming one of my top Canadian gold stocks.
Opportunity($):
Current Share Price: $0.50 | Target Share Price: $3.97 | Share Price Increase: ~7.93x
With 121 M shares outstanding and a share price of US $.50/share, Petaquilla Minerals is shaping up to be one undervalued junior gold stock. A gold producer priced at only $0.50 cents/share in my mind is definitely worth taking a hard look at. I have followed this company for quite some time and did not feel comfortable with getting on board with them in the past for a lot of reasons. The main problem was their past management, which did not have such a great track record for getting things done, especially on time. For a long time it seemed that Petaquilla was just a very poorly managed junior mining company. There were also other issues that introduced too much risk for me, such as the politics of starting up the first mine in Panama in modern times. There were issues with obtaining the necessary permits as well as environmental issues/opposition that needed to be dealt with too. So off and on I kept an eye on Petaquilla to see if they would resolve some of these issues or not.
It is good to be patient when you are in the world of junior mining stocks. Take your time and wait for the opportunities to meet your requirements. Some penny mining stocks can begin as real ugly ducklings and eventually turn into beautiful swans. However, many of them unfortunately will not turn into anything at all. Petaquilla lost a lot of trust over course of 2007-2008 with delay after delay, a quickly dropping stock price, and a lost of confidence in their then CEO Richard Fifer. Richard Fifer was surrounded in controversy which I believe made many investors uncomfortable and head for the exits. However in 2009, Petaquilla started to turn the corner. There were many positive changes that really removed a ton of risk for this junior gold stock. After reviewing the events of 2009 and early 2010, Petaquilla now meets the requirements for my hot penny stock picks list. Let’s take a moment and review some key events that were instrumental in Petaquilla’s magnificent turn around.
Key 2009/2010 events that now make Petaquilla an attractive play:
- 04/07/2009: After many delays, Petaquilla finally makes its first gold pour.
- 09/15/2009: Richard Fifer resigns as President and CEO. (Perhaps the best news!)
- 11/05/2009: President/CEO and majority of board members resign (R. Fifer should have left too).
- 11/06/2009: New Board members announced (New business/financial guys added to board).
- 11/06/2009: Joao Manuel appointed as President/CEO.
- 11/18/2009: Panamanian Government authorizes commercial production.
- 12/14/2009: Discovery of significant gold mineralization on its Oro Del Norte concession.
- 01/08/2010: Commercial production commences at 70% capacity.
- 01/29/2010: Producing 6,000 ounces of gold per month.
- 03/04/2010: Commences exploration drilling program Oro del Norte concession.
- 04/13/2010: $70 million debt elimination – converted to gold shipments (91.7K oz over 5 years).
Petaquilla is a Canadian mining stock in position for its share price to move substantially higher over the next 6 months if they continue to execute well. They are already producing gold (produced over 26,000 oz of gold!) and has a 1.1 MOz+ NI43-101 compliant gold resource and counting! Resource expansion in on going and could add much more upside to this company by the end of 2010. Petaquilla has been relieved of about $70 M dollars in debt which had a very high maintenance cost and drag on earnings. Elimination of this debt will dramatically improve their bottom line. At an average gold price of $1150/oz, cost per oz of $550, and a standard valuation of 8x earnings, I am targeting a share price $3.97/share. This is about 7.93x the current share price! With this kind of profit potential, Petaquilla certainly looks like pretty good play.
Strengths:
| Status- | New gold producer-has already produced 26,000 oz of gold to date, projecting 100,000 oz/yr starting at a cost $550/oz. |
| People- | Recent management shakeup has been very positive for the company. |
| Property- | 100%-owned Molejon mine has a total 1.1 Moz+ of gold (NI 43-101 Complaint), about a 10 yr mine life.
Oro Del Norte concession could have 2-3 times mine life of Molejon. |
| Share Ownership- | Institutional Ownership – Peninsula Merchants Syndications Corp. 18 M shares, Insider Ownership- Unknown. |
| Financials- | Just converted $70 M of debt to gold payments over 5 years. Financial risk pretty much eliminated. |
| Recommended by- | -Andrew Mickey, Canaccord Adams, Carmel Daniele |
| Promotion- | -Oro Del Norte concession drilling program likely to turn up a substantial gold resource.
-Announcement when they have reached near 100% capacity and reduce cost/oz. -Increasing mill throughput from 2200 tpd to 5000 tpd -Bumping up annual production to 150K oz/yr . |
| Push/Time Frame- | Share prices should substantially move upward after 2-3 quarters of solid gold production. Also, good Oro Del Norte drill results could put a nice pop in the share price. |
Weaknesses/Threats:
| Minor Weakness- | Richard Fifer still in the picture as non-executive chairman.
Past negative history haunts Petaquilla and will need to be overcome with consistent results. Petaquilla also needs to improve investor relations and be more forthcoming on company updates. |
| Medium Weakness- | None. |
| Major Weakness- | None. |
Trading Strategy:
Strategy: A trader doing an analysis on Petaquilla Minerals would conclude that the majority of the risk that use to make this junior gold stock to risky to bother with has been eliminated. And after reviewing the past events since Nov 2009, he/she can see that the new management has been extremely effective in such a short amount of time. Also, the trader would reason that the stock price was over $3.00 in 2007 before Petaquilla had mining approval, started commercial production, eliminated their troublesome debt, improved their managment, started producing 6K ounces of gold per month. Now with all that accomplished coupled with the likely possibility of significant resource expansion and minimum downside risk, the trader sees a current share price of .50 cents as an incredible value play!
Furthermore, the trader understands that there are typically there 3 times to enter a junior mining trade, 1) before a significant discovery is announced, 2) before production is announced, or 3) after production starts. If you enter after production starts, then you typically want to wait until the price comes down because of start up issues which could range from equipment failure, poor efficiency, low throughput, low ore grades, etc. The stock price tends to rebound after the issues are corrected.
Summary:
I sent out an alert to my Newsletter subscribers when Petaquilla was trading around $.49-.50 cents a share to give them the heads up on this undervalued junior mining company. Petaquilla is now at a maximum entry point with very little downside and a whole lot of upside potential. Most junior miners never make it to commercial production, so this is a great accomplishment for Petaquilla. If they reach 150K ounces/yr that will put them into the mid-tier producer range. I guarantee you will not find one mid-tier producer priced at .50 cents/share. Also, I had previously recommended Timmins Gold in my trading card analysis back when their share price was only $1.13 they are now trading around $1.50. Petaquilla is comparable to Timmins gold in terms of annual gold production, gold in the ground, and production schedule. I still think Timmins Gold is better for other reasons, but for sure Petaquilla should trade near their range not too far from now.
I love investment opportunities where you get the chance to buy near the bottom. When the risk are very low and the potential is very, very high. Many investors are going to make a lot of money on this stock and I plan to be one of them. If you are not making money on this stock, it is definitely not my fault. This is a great turnaround story in the making and one for the history books. I really would not sleep on this one. Also, the new management team is possibly trying to get Petaquilla ready for a buyout. Just to be clear, I am not getting paid to write a review on Petaquilla Minerals. They are not an advertiser on this website, and I do not plan to receive any compensation for them.
Related Posts:
- Petaquilla Closes Deutsche Bank Refinancing!
- Timmins Gold Trading Card
- Petaquilla Minerals Financing Update 8-20-2010
- Petaquilla Minerals Update – 5/10/2010
- Petaquilla Minerals Update 7-26-2010
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Disclosure: I have not received any compensation from Revett Minerals, Timmins Gold, Metanor, or Petaquilla Minerals. None of these companies are advertisers on GoldStockMania.com. I am extremely bullish on Petaquilla, Timmins Gold, & Metanor and currently hold shares.
Disclaimer: I am not a professional/qualified investment advisor. Readers should note I am not responsible for errors or omissions in this report. Also, I am not responsible for your trading decisions as you should do your own due diligence before making any investment decisions.
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Thank you for another interesting trading card!
In my opinion, any company with a market cap of 100M or less, and with a production of 80-100k per year is a real bargain. PTQ is not there yet, but the early signs are encouring.
I also like that Mr Market hasn’t really warmed to the fact that PTQ’s history of ‘bad reputation’ now seeems well behind them.
You write ‘I still think Timmins Gold is better for other reasons’, please elaborate! Is it due to lower cc and less political risk?
Hi Fredrik,
Sure, I like Timmins because they have a great management team that I consider to be trustworthy. The management team, to me is one of the most important factors of evaluating junior mining companies. The better the team the greater chance you have on making a profit. Petaquilla’s prior management was not very good or credible. The new management is executing well for the short amount of time they have been there. They will have to earn the trust of investors and continue to execute well.
Also, as you mentioned Timmins is in a stable mining district and is considered to be a very safe bet. Petaquilla, as I have outlined in this trading card has become a pretty safe bet, especially since becoming a gold producer and getting their debt situation under control. What I like a lot about Petaquilla is leverage. You can get a boat load of a potential mid-tier gold producer at only .50 cents/share.
I agree with you, PTQ is a real bargain that has yet to be discovered by the majority. I will keep buying on any weakness and wait for the move up.
Hi,
first, thanks, Im happy to hear this. I have thousands of stocks of this company, bought them a bit higher that the current cost of 0.50, and was beginning to get worried and even considering to sell and loosing some.
With your analysis, I think Im might have a little great investment, and just need to be a bit more patient.
Ill really appreciate if you do some follow up on this stock in the following months!
Thank you for your earlier reply, I have some additional questions.
How do you think the delayed closing of the PP will affect the company, do you see this as a serious sign of weakness?
How many shares will be issued and at which price?
@Gabriel
Hi Gabriel,
You are welcome. I believe you will be very pleased that you held on to your Petaquilla shares. This company was in a pretty weak position but their share price was much higher. Now it seems ironic that their position is substantially stronger but their share price is now substantially lower.
I am adding to my position around .49/.50 cents as it is an excellent price. The share price will start to appreciate when the debt restructuring is in place and shows up as savings in the bottom line, when they ramp up to full capacity and produce a couple of solid quarters of production. Also, I think it will get off the ground with the private placement has been completed.
Petaquilla is executing well at this point and not one I worry about. I will be doing a follow up soon. In fact I am scheduled to talk with Petaquilla this week.
Also, thanks for buying me a beer! I had been working really hard for the last couple of weeks with my taxes being due, my job, family, etc… Your beer reminded me to take a long needed break.
Hi Fredrik,
Very good question. I will post an update covering this info within the next couple of days with a newsletter update or on the website.
The placement was for 19,750,000 shares @ .60 cents a share plus a warrant. The details of the private placement can be found here.
http://www.petaquilla.com/news_document.aspx?Document=163
Hello
I have been looking online and there are so many options for trading stocks. Can someone suggest some they use so I can buy these stocks and others at a fair trade price?
Much appreciated.
Hi Tim,
I used http://www.firstrade.com to buy/sell stocks. I find they have a good price. (6.95 per transaction) (also, they’re one of the very few that allow non-US residents, living abroad, to invest in stock market online.
Today’s good news on Petaquilla:
“VANCOUVER, BRITISH COLUMBIA, Apr 27, 2010 (MARKETWIRE via COMTEX News Network) — Petaquilla Minerals Ltd. (“Petaquilla” or the “Company”) (TSX: PTQ)(OTCBB: PTQMF)(FRANKFURT: P7Z) announces its gold production in Q3 2010 increased by 3,274 ounces or 31% over Q2 2010. As a result of this production increase, together with reductions in operating costs, cash costs were reduced to US$637 per ounce on a by-product basis, down 33.6% from US$960 per ounce in Q2 2010. Gross margin from the sale of gold in Q3 2010 amounted to $4.7 million.
Similarly, in line with the above performance, administrative and other expenses for the nine months ended February 2010 were reduced by US$3.6 million or 26% to US$10.3 million compared to US$13.9 million for the nine months ended February 2009.
The Company is also pleased to announce that it has poured approximately 6,500 ounces of gold during the initial four pours of the current month of April and, as a result, is targeting cash costs in the mid-US$500 per ounce range for the month.
In addition to the recurrent gold production process operation and for the second phase of the Company’s heap leach project, Petaquilla initiated the construction of an on-site test facility to determine the recoverability of the different ore types and particle sizes for the planned heap leach operation expected to commence during the first calendar quarter of 2011. The Company anticipates the heap leach operation will generate an additional 50,000 ounces of gold annually.
Simultaneously, the Company advanced its exploration work at its 100% Oro del Norte concession, moving from initial superficial rock chipping and sampling activities, as disclosed in the Company’s news release of December 14, 2009, to a trenching and drilling program with a professional crew working onsite since early March. The Company will provide regular updates on the respective results.”
Here is a guy who is not buying PTQ:
http://incakolanews.blogspot.com/search/label/ptq.to
I can’t understand why Fifer is still associated with the compaby?
I have read that blog before while researching Petaquilla. That guy is really bearish on the company as a whole. He definitely has reason to be on Richard Fifer who I mentioned in the Petaquilla Trading Card as a the “person surrounded in controversy and the best news to date was him resigning as President and CEO.”
Many of the false starts with this company are contributed to Richard Fifer and that’s why I did not recommend this stock until he stepped down as President and CEO among other changes. I think the Panamanian government probably wanted him to step down as well before permitting commercial production.
I am not sure why he remains on the board. His reputation has really hurt this company over the years. However, the past is the past. It is a new day for Petaquilla as they are working to overcome their past mistakes and history.
Getting their debt deal finalized soon, closing the private placement, and a couple of quarters of solid gold production will all contribute to a rising share price. Oh yeah, rising gold prices should not hurt either.
Thanks for a quick reply.
There must be a reason for valuing a 6k oz/month producer at 60m, and as you have detailed above, it must be down to management and Fifer in particular.
Mr Market will probably need time to digest the fact that PTQ has new management.
Otto (IKN blog) knows South America, but I’m under the impression he wouldn’t buy into the company regardless of any fundamental or change of management.
@Gabriel, @Fredrik,
I posted an update on Petaquilla this morning. I will post another short update on Richard Fifer soon.
Goldstockmania,
First of all: very noce blog you have, with some very interesting companies.
Petaquila seemed to have turned around the corner, as you also mentioned in your piece.
Yesterday, I stumbled upon the following piece:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=50158506
The link to the original post does not work, and I can’t find it on the net either.
The investment scheme looks pretty bad. I was trying to find out if this was representing the current situation of was of before the (assumed) turnaround.
Would you be able to value this piece regarding past/current situation?
Also very curious regarding your Richard Fifer update! When do you think it will be out?
Keeping an eye on your site! Willem
PTQ is now 32 cents.?? anyone have any idea how the share price could get so bad in such a short time when this mine is producing 6500 Oz of gold per month???
Here’s a lot of comments that might give you some idea:
http://investorshub.advfn.com/boards/board.aspx?board_id=9883
News came for Petaquilla. Deutsche bank entered into a forward purchase agreement for 45M.
How should this affect the stock price? Is this like a gold hedge?
@Nathan
See my comments on http://goldstockmania.com/petaquilla-minerals-financing-update-8-20-2010/