As recently as last June, I published an article giving a way of valuing Aurcana that made it look attractive. Since then Aurcana's price collapsed, along with most other precious metal Juniors.
I held too long but dumped my shares about a month ago.
Here's why. Aurcana consists of a currently producing, mostly base metal mine in Mexico (La Negra) and a silver advanced exploration project in Texas (Shafter). It also has another, lower-quality advanced-exploration project in Mexico (Rosario) which, from a valuation standpoint, is not worth discussing. The outlook both for La Negra and Shafter have darkened substantially since last June.
La Negra was a mine reopening project that was a Zinc, Lead, Copper, Silver producer. The fact that it was a mine reopener means it was not a low-cost producer and could not survive the previous round of low metal prices. When I was trying to analyze La Negra in detail, they didn't seem to get the revenue from their metal that I would have suspected given the ore grades. I think this is because they have an unfavorable deal with their smelter, but I could never get the information I really needed to conclude this. Most of Aurcana's silver production has been sold to SLW at $3.90/oz as part of the deal which brought Aurcana the Shafter project.
Anyway, La Negra was barely making money early in 2008 and since then the price of zinc, lead and last copper collapsed. I finally bailed on Aurcana when copper collapsed. Anything can happen, but I fear that La Negra will have to be closed at anything near current metal prices.
So, with La Negra closed, what is Aurcana? Its an advanced development silver explorer with a property in Texas that needs funding. The property is not permitted. The property does not have a bankable feasibility study. The plan was to get funding from Silver Wheaton (SLW) and skip the full feasibility study, but just look at the SLW situation. Its pretty clear that SLW is having trouble just paying off their existing debt. So, where is Aurcana going to get that funding? Who is going to provide the funding in this environment and at what cost?
I dumped Aurcana in the $.15 to $.12 range Aurcana because there was, in my mind, a significant risk that it was going to zero and the upside depended on a reversal in base metal prices. It may not go to zero, but I didn't have the stomach for that kind of risk so I pulled as much out of the fire as I could.
P.S., Why am I putting this kind of post on this web site and not the Aurcana Stockhouse board? I'm pretty much done with stockhouse.com as far as posting is concerned. Anything other than a pure pump is considered bashing, so you can't get any kind of reasonably objective analysis there. So, you may be seeing more "negative" material on this web site as I post things that are "unacceptable" on stockhouse.