The next two years are hold on times for NDY. They do have some good low cost production. But, like HM, they have a good chunk of more marginal (@265) higher cost, smaller stuff (that adds up), and like HM have expense vulnerability to the stronger Aussie. They have profitably closed out much of their 2001-2002 forward sales, and have about 1.5 million of their 4.4 million anticipated production for that period locked in at only $285 US. The rest will have to be sold at spot. They have little room for error on production as they have about $860 million US debt on the balance sheet, half due within five years.
NDY is liquidating capital (gold) at a pretty good clip, and doesn't seem to be in a hurry to replace it, having spent only $19.5 million on direct interest worldwide exploration. Thus, they may be a buyer of one of the few ripe projects in the hands of a junior?
Vulnerable list:
Bronezewing: 109K @ US 204 (using .55 conversion, if Aussie went to .60 costs would be 222)
New Britannia (Canada): 55K @ $214
Paracatu: 115K @ 192
Martha: 43K @ $203
Wiluna: 60K @ $193
Mt. Charlotte: 54k @ $208
Boddington: 115K @ $198
Kalgoorlie: 365K @ $187
Kinross: smaller version of NDY except that they are pretty liquid financially with about 94 million cash and reasonable debt. They are actually a pretty good model on hedging, having entered the market at low prices to close out 150,000 oz of 2001 deliveries. They aren't afraid to close down junk either (Refugio).
They have two mines that are just liquidating capital: Hoyle Pond 140K @ $187 and Ft. Knox 360K @ $206. FK seems to be suffering from the "slow dwindles" as grades have dropped from 0.98 (1999) to 0.87 (2000). Recoveries are off from 91% to 88%. If Kinross could pick up a good low cost project in the junior bear market, they might have a future? |
