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Strategies & Market Trends : Ride the Tiger with CD
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To: E. Charters who wrote (173623)8/29/2009 4:07:37 PM
From: Kaena™  Read Replies (1) of 313059
 
Hello E. Charters. Have you had a chance to read the following article below, and if so, do you agree with the author's conclusion? Are there just a few or are there many mining companies that are exceptions in your opinion? Thanks for any perspective you may be able to provide.

Capital expenditure clouds gold mining profitability

"Analyzing a gold mining company's profitability in the context of operating cash flow performance alone can potentially be dangerous and misleading. I see many analysts refer to a company as having "cash costs in the bottom quartile of industry standards" only to ignore the fact that the project(s) in question are underground operations and ongoing development costs are conveniently excluded. As a rule, underground operations are more capital intensive in nature than open pit mines. Does this mean, from an investment perspective, that open pit operations are superior to underground operations? Not at all. I have seen many open cut operations suffer from higher capital expenditure associated with excessive pre-stripping ratios. All I am saying is, as investors, we need to take all these factors into account when comparing projects and companies. To ignore capital expenditure can be fraught with danger."

321gold.com
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