Here are some posts by John Disney (probably the best analyst of SA gold stocks on Kitco)from the last few days on Kitco thread:
Date: Sat Jun 10 2000 01:32
John Disney ( droopy comments ..) ID#200272:
Copyright ¸ 2000 John Disney/Kitco Inc. All rights reserved
for ERLE ..
who said ..
"I am somewhat sceptical about some of the EPS numbers
that are floating around on Kitco for DRD. I am not
saying that Disney, longj, and you aren't correct,
but it seems suspicious that the home-field boyz in
SA value it so cheaply. "
*************************************
the home field boys are the mining analysts with
the brokerage houses .. I know one pretty well ..
he hates drooy ( he got burned on it ) .. most of these
guys hate gold anyway and are pushing plats ..
sucessfull too ( for their clients ) ..
suggest you do the numbers your self .. drooys big
booboo was locking in almost half their production
at about 1750 Rand/oz ( rather than equvalent dollars ) .
this is right AT their total cost of production ..
only a bit more than half their gold is effected by
gold price moves .. Their calls only cut in at 320 ..
.. nonetheless .. suggest YOU try to estimate the
effect rain ( now gone ) had on their March costs in
surface and open cast .. and the benefit cutting out
production from DRD and west wits underground wil
have .. then take a stab at the added production from
blyvoor ..
.. You have often spoken well of the crown piece ..
Im lost on that one and I dont get the picture there.
.. By cutting out uneconomic production, Prinsloo
is following the swanapoel lead .. many RSA mines
"carry" uneconomic production sectors as long as the
mine overall makes money .. this in my view is a horror
and goldfields is probably the worse offender..
.. regarding home field boys .. I havent seen Goodman
on drooy .. have you ??
Date: Fri Jun 09 2000 12:38
John Disney (drooy fascinates ...) ID#200272:
Copyright ¸ 2000 John Disney/Kitco Inc. All rights reserved
simple view of drooy ..
assume 550,000 oz of production is a wash as hedge
= avg cost ..
so profit = ( 2000 - 1750 ) * 650,000 oz = 162 mill
plus savings via under ground closures at drd
and wes wits PLUS clearing up the rain problem =
125 mill Rand ..
plus .. profit from Blyvoor new shaft .. 176,000
times 650 = plus 114 mill ..
total = 162 + 125 + 114 = 400 mil on 106 mill ord
shares = 3.8 rand/share or $0.53 .. all at the
current rand gold price ..
this ignores effect of gold price increase ..
where 500,000 oz of calls kick in at $320..
with a 350 gold price .. this thing is a lulu !
Date: Fri Jun 09 2000 05:16
John Disney ( drooy fine print and Rugby relations ..) ID#200272:
Copyright ¸ 2000 John Disney/Kitco Inc. All rights reserved
more on droopy ..
IF you go to the DRD url and call up their march
quarterly results .. you find some interesting things
1. they closed down several loss making shafts at
DRD and west wits .. but loss making is hardly the
word .. take a gander .. their underground costs at
this location were in excess of 100,000 rand/kg or
maybe 2950 rand per oz on something like 300 kg per
quarter .. that means they were losing about 1000
rands per oz on this production. Thats 300 *34*4=
about 41000 oz per year times 1000 = 41 mill rand
per year.. if they STOP !!
2. Next look at suface ops ..
about 2500 kg/quarter or 340,000 oz per year ..
the rain apparently ran their costs up by some 5000
rand per kg or 145 rand/oz .. that's 49 million
on surface production .. to be saved in nornal weather.
3 .. next look at open cast .. costs ran up to 70,000
versus 50,000 prior quarter on 450 kg/quarter ..
.. that makes 61000 oz taking a bath of 590 rands
per oz .. or 36 mill rand per year ..because of rain .
4 .. they say the potential of the new blyvoor hole
is to double underground production there .. that
means as much as 1300 kg or 176 mill oz per year ..
at reduced cost ..
.. I have not tried to estimate this little number
but the first 3 mean an extra 126 mill rand or about
an extra $ 0.17 per share ..
can someone check my numbers .. Ive been known to
make mistakes .. I stick with 106 mill ord shares
because thats what they list at their site ..
The following is a PROJECTION for June results which aren't out yet:
Date: Thu Jun 08 2000 07:06
John Disney ( my very last statement on droopy ..) ID#24387:
Copyright ¸ 2000 John Disney/Kitco Inc. All rights reserved
drd june results ..
adjusted for hedging .
revenue
55% unhedged at 1950 * 300,000 = 322 mill
45% hedged at 1759 *300,000 = 236 mill
total revenue = = 558
cost 300,000 oz at 1750 = 525 mill rand
profit = 33 mill rand or 132 rand annually ..
on say 114 mill shares = 1.15 rand or $0.165
per share ..
additional plusses come from any income on
the 500,000 oz calls strinking 320 ..
plus effect of blyvoor expansion which will add
up to 150,000 plus UNhedged oz .. and reduce cost
on that increment by $50 per oz ..
Date: Thu Jun 08 2000 05:06
John Disney (my closing statement ..) ID#200272:
Copyright ¸ 2000 John Disney/Kitco Inc. All rights reserved
last point on drooy ..
Drooy says they closed several shafts at Durban deep
itself .. this could reduce production by as much as
300 kg per quarter or 40,000 oz per year .. but costs
wil be reduced since these were loss makers ..
OTOH the holing at blyvoor MAY double blyvoor underground
production which means as much as an added 1300 kg
per quarter or about 170,000 oz per year at reduced
costs .. so future production may show as much as
an extra 130,000 oz which is unhedged .. hopefully
costs will be reduced even further ..
Date: Thu Jun 08 2000 04:40
John Disney ( beating droopy to death ..) ID#200272:
Copyright ¸ 2000 John Disney/Kitco Inc. All rights reserved
for longj ..
was it you who mistakenly referred to droopys calls as
stiking 360 ??? if you check a bit closer you will find
that they have net options at 400,000 oz over period jun
2000 - jun 2001 striking 320 .. assume these bought
and paid for .. if gold goes to 350 .. they get a
15 million dollar windfall or an extra 0.13 a share.
this is a cheap way of offsetting their forward
sales ..
.. the problem is that they have about 400 to 500
thousand oz sold forward at about breakeven with
their cost .. ie 1750 .. looks like about 40 %
of production is a wash .. so their profits must be
reduced to about 60 % of what you would normally
calculate and any gains on their net call position
added back in .. confusing isnt it ??
Date: Wed Jun 07 2000 11:48
John Disney () ID#200272:
slangking .. yer a wise man ..
droopy's june quarter ..
Ill try to predict drooys p/e for the quarter ending
June .. Ill assume the rand gold price will average
1950 for the quarter ..
so profit = 1950 -cost of 1750 = 200 rand/oz profit
times 300 thousand oz or 200 * .3/106 = .56 rand per
share or $0.08 or $0.32 annually ..
at an abx pe of 25 .. that puts the price at 8 bucks
p/e of 8 puts it at $2.56 |
