Russ, ABX is a company I don't understand. I believe we had this conversation once before when I was trying to crunch the AR numbers. At the time of my DD attempt I thought their hedge book was at around 25% of reserves, and of course, I was quickly corrected -- the hedge is more like 400% --essentially the company mines paper?
I believe from the AR -- Goldstrike accounted for approximately 65% of their revenue. If Goldstrike is showing signs of stress why isn't there more acquisitions within this industry? Actually, it’s a rhetorical question, the same thing happened in the oil patch in the 1980s, no one want’s to stick his or her neck out in this kind of market.
When it comes to the issue of reserves wasn’t the Homestake take-over an effort to cover some of the hedge? When you combine both the Veladero and Pascua-Lama projects the gold reserve estimates are about 26moz, plus 130moz for silver.
As an investment, I personally wouldn't touch ABX, but it seems that every analyst, mutual fund and TV show recommends the darn thing. So when it comes to raising money in the equities market, I have no doubt that Barrick can consolidate as much as needed to cover whatever hedge book manipulation scheme they conjure up.
It seems they don’t feel the need, at the moment…
Regards
Frank P. |
