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Gold/Mining/Energy : Blue Chip Gold Stocks HM, NEM, ASA, ABX, PDG
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To: Gator who wrote (409)6/18/1999 11:01:00 PM
From: Exsrch  Read Replies (1) of 48092
 
If PDG and HM look interesting take a gander at ABX. Looks like barrick will have about $700 million in cash next quarter (depending on cap expenditure, depreciation and average price per once sold).

Overall, if gold continues to slide ABX get stronger in relation to their peer companies. They also have $1.5 billion in credit for a war chest. With $2.2 billion cash in total they could almost eat up a sizable competitor. With the following implications:

- ABX would put additional downward pressure by forward selling all the acquisitions production
- Exact higher cantango on greater volume and increase earning perportionaly
- Force more competitiors to close unprofitable mines
- When gold prices stabilize ABX would exact a premium P/E
- Greater volume production with effective cap expense to increase operational efficency will make ABX the lowest cost producer in the next year
- The likes of NEM won't be able to keep up with Cap Expense when they are in negative cash flow.
- Even PDG and HM are not focused on growth and ops effiency. They just want to conserve cash in this low AU price environment

I think ABX is positioning for a consolidation, could they buy or would they want to buy PDG, HM or NEM. Do they have the balls. If they are successful (in buying nem or pdg) they could be the worlds #1 profitable company if gold recovers.

Your thoughts would be appreciated.

Cheers,

Exsrch
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