Time to Move On: I’m Selling Ivanhoe

Guys, it has been a great run but I am cashing out of my much beloved Mongolian Mining Company, Ivanhoe Mines (IVN). For those of you who have followed me since the start, you know that I absolutely have loved everything about this stock. In fact, Ivanhoe was the first research report I ever wrote for Stocks on Wall Street back on February 20^th. At that time, IVN’s share price was at $4.42 and since then it has been all up-hill. I sure hope that throughout the way you bought some shares of IVN as since the research report was published the stock has appreciated 107% in only five short months as the stock hit a high of $9.15 last week. I wrote about it multiple times: Mongolia’s IVN’s Outlook, Pick of the Year: IVN, and Past Research Reports, so don’t say I didn’t give you the opportunity. I am still Bullish Long-Term on Oil and IVN itself yet just think my gains are too good to pass up as a result, I have to pull out. Unfortunately since last week, the stock has dropped $0.75 cents which lowered my overall return however I was able to cash out and sell all my shares yesterday at $8.37 for a total gain of 90% in only five short months. Great gains huh? I am not selling this stock based on weakness but more on the fact that I have some stronger picks lined up that I need cash for and that I foresee IVN’s gains not becoming as substantial in the following months as they were in the past. The overall outlook for Ivanhoe is mixed due to a mixture of good news and bad news.

Good News

So I will give the good news first. Yesterday IVN was able to sell all of their U.S. oil and gas operations to a segment of National Fuel Gas Company for about $40 million. This deal went down, as the proceeds were needed in order to finance IVN’s future projects in Canada and Ecuador. The cash will be used to advance the initial stages of its heavy-oil projects, Tamarack in Western Canada and Pungarayacu in Ecuador. At the time, Ivanhoe’s U.S. assets produced about 645 gross barrels per day of oil in California and Texas. Also the sale will include certain exploration acreage in California. Ivanhoe’s heavy-oil experts based the sale on the fact that they believe the operations in Canada and Ecuador will prove more profitable than an expansion in the U.S.

Bad News

So now to the bad news. Last week, Ivanhoe received a major setback as they were close to winning the final parliamentary go-ahead to build a massive copper and gold mine in Mongolia. Ivanhoe said Mongolia’s parliament passed a resolution that authorizes the government to finalize a “definitive investment agreement” with the Vancouver Company and its partner Rio Tinto to build and operate the Oyu Tolgoi project. Prior to the parliament’s resolution, there had been expectations the Mongolian lawmakers could award the final go-ahead for Oyu Tolgoi, which the company has been trying to achieve for more than five years. Instead of approving any such agreement, the parliament has given the government authority to conclude the agreement. This was not the news Ivanhoe investors were eager to see. If the government had said, “Go Ahead build the mine, we love the agreement” then maybe I would still be an investor. Instead the government has created another long fight between the mines and parliament in which I do not feel like sitting through.

Overall

At the end of the day, yes in a years time IVN’s shares will have most likely appreciated and quite a bit if they can sort out the deal with the government though on the other hand if the government drags this deal out shares could drop and with a current gain of 90% that is too good for me to pass up.

Like this article, then subscribe to the Stocks on Wall Street RSS Feed.