Lake Shore Gold: notes (updated July 22, 2011)

Lake Shore Gold: Timmins operations

UPDATE:  TD Newcrest has maintained a buy rating for LSG but has lowered its NAV5 estimate to $2.83 at LT $1000/oz gold (I don’t know what they mean by “LT”–and this is a huge problem with analysts who not infrequently drop unexplained abbreviations into their reports with no explanation) and its target price from $5 to $3.  But when was the last time we saw $1000 per oz gold and is there anyone who thinks we will ever go back to that price?  If gold were to stay at $1600, that NAV5 would be over $4.

LSG: current price CDN $2.04

Is Lake Shore Gold (TSX:  LSG) a value now?  TD Newcrest in its Action Notes May 30, 2011, stated that it’s NAV5 was $3.45 when gold was selling at $1535 and LSG had a estimated cost price of $575.  Two days ago, LSG came out with revised their production cost and lowered their production estimates for 2011 to 85,000-100,000 oz from 125,000, and they indicated their production cost from the Timmins mine was $583 per ounce.  Today, gold is at $1590 per oz.  There is a possibility that NAV will have to revised downwards, but still, for the speculator, LSG may be a bargain right now.  I’ve therefore doubled my position today.

Apparently, according to a bullboarder (not necessarily a reliable source), the institutional investors are now increasing their positions while the retail investors have become frightened:

Not to worry.   Top seller of the day is TD — just a panicked herd of retail and small time players.   TD over past three days was a big buyer at higher levels and now is emerging as a big seller as apparently some retail investors bit off more risk than they could chew.

MacQuarie, today, has loaded almost $6 million and has not sold a share.   Sprott is also moving up the ranks and is now net buyer #4.   I wouldn’t worry about the “unlimited” retail selling — it is not unlimited and will fizzle off.   Then the stronger hands will take over.

Is this a case of dumb money out, smart money in?  Or is it a case of fraud?

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