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Gold/Mining/Energy : Precious and Base Metal Investing
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To: Claude Cormier who wrote (1884)2/18/2002 10:39:38 AM
From: russwinter  Read Replies (1) of 39344
 
<projects with a 15% IRR are a no-go. Seniors want 20%.>

You may be right as it stands today, but as the pressure on majors and mid tiers to maintain production intensifies I expect the lean to be more toward 15% especially if there is room for new discovery and where country risk is good. Agree that stand alones run by juniors will need at least 20% and low capexs to get financing.

<Your all-in cost of $200 for a senior that would take over is right on!... but will he get a big enough return with gold only at $300?>

I think it's quite lucrative and accretive actually, but not for cash, should be stock. Juniors should be accepting stock swaps not going to banks and legbreakers to develop projects themselves. I intend to sell companies going that route alone (strong carried JVs would be acceptable if terms are good). If the mid tier or major traded stock for it they will clean up. All the following have overpriced stock currency they should be running amok with. I anticipate a big consolidation of juniors is coming using this swap finance method. Cash flow summary at 286 POG shown on page 19, adjust for current quotes: corriente.com

ABX 12X cash flow
Agnico 30 X Cf
Goldcorp 13X
HGMCY 9X
MDG 14X
NEM/NDY 9X
PDG 13X
GLG 12X
IMG 11X
AU 9X
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