Tuesday, 31 December 2013

Chaparral Gold (TSX:CHL) $0.32 - A spin-off and a Net-Net

Chaparral mining is a spin-off of International Minerals after that company was taken over. I purchased shares before the spin, as I discussed here. That article includes an attempt at valuing the company's mineral assets, which is something I'm generally uncomfortable with. However, the company has begun trading at $0.32, below the approximately $0.48 in net cash and current assets the company indicated they will have on their balance sheet. At 66% of NCAV, this is a Benjamin Graham net-net type stock. If the mining assets turn out to have any value or the price of gold increases, there is additional upside past $0.48. Basically, I just look at this as a chance to not lose money with potential upside past the cash value.

Disclosure: Long CHL

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