Everyone has their own approach to the sector and I certainly respect yours. I understand the idea behind investing in a stock like Harmony (knowledgeable operators with high cost, but leveraged to price gold production). I'm conceptualizing the outcome of a gold rally a little differently. IMO attention is going to be quickly focused on developing low cost deposits that can be synergized with existing operations. GBG's Ivanhoe is a work in progress, but fits the bill.
I'm not so sure investor demand is going to clamor aboard existing old production like Harmony that has high costs?? In part this is because players will continue to hear the footsteps behind them of the old bear market. You pay your money and you take your chances, so hopefully we will get the rally that gives us the answers, and hopefully we are both right. I'm just betting on a different outcome.
As far as 80% downside in GBG from here? Well, anything can happen, and these aren't T-bills. But 80% would be about 13 cents or three million US market cap after all the money they now have (US 10 million) totally goes down the toilet. That would mean coming up complete goose eggs on the next drilling rounds. Presuming that could happen (unlikely given that they have found more new vein systems, just a question of how big), I completely dispute the notion that Ivanhoe and the results to date would be effectively shoved into some cubbyhole somewhere and forgotten about. Remember this is FN land, and they are the royalty collector on it. They have Midas next door, and I have no doubt that they would pay well in excess of $3 million for the one million ounces found so far and the remaining considerable prospective potential. Indeed I see the opposite result, as more ounces are proven up, Midas becomes a prime target for a number of companies (FN, ABX, NEM, AU, and others). They will pay accordingly. |
