Terry you wrote:
<Their downgrade is based on $320 gold, a US$100 million mine at Pancho with no
resulting expansion of production, and a valuation of Refugio at US$.88. You read that
right.... Refugio at US$.88. A producing mine, 4 million ozs of proven reserves
(Bema's share) and NB values it at $.88. The analyst who made those assumptions is
smoking something illegal. They are laughable. If you want to apply such ludicrous
assumptions to Barrick or Newmont, you could reduce your target price for them by
50-75% but nobody would be dumb enough to do so. Why NB has made such
ludicrous assumptions regarding Bema, only they know. Good luck.>
The reason is very simple. Refugio is not a cash cow as ABX is, it has low gold grade mined at extremely high altitude, it is full of hope but is not bringing any serious cash right now and its learning curve is close to 2 years now. CC is Refugio's big brother with the exact same anemic genes...
Anybody that knows a bit the mining industry and does not focus only on one gold stock sees nothing really exciting in BGO right now.
The trader loves the stock because there is still a lot of hope build into it, it is very liquid and volatile. Excellent for the non emotional investor. The value investor will have to wait until 2001 to make a real buck or POG going up to $400. By then there will be dozens of really interesting undevelopped mines.
The real problem with BGO is that it has been the largest undeveloped gold deposit in the world for to long now, and might stay that way for a while yet... The market knows that well...
The Prefeasability study was slim in its content, BGO is anorexic with news sine last April and the market is very efficient mid-term.
I would not be surprised to see BGO reach 3$ and under before Xmas(tax loss season, maybe poor resul from Refugio due to El Nino, low cash, no takeover, no JV, you name it)with some spikes, but I could be wrong...
Good luck to all whatever you do,
cut your losses and run your profits...
Philippe |
