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Gold/Mining/Energy : Naxos Resources (NAXOF)
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To: carl who wrote (8736)1/30/1998 4:05:00 PM
From: GlobalMarine  Read Replies (1) of 20681
 
Carl: These analysts always give a rosy price target to generate sales commissions. The runup in PGM price last year wasn't accompanied by a rise in SWC stock because people felt the price move would be fleeting in nature. At it was. Something major would have to happen to drive the stock price to $50.

The company is probably sitting on a resource of some 200 million oz of PGMs altogether (the US government surveyed this area back in the 1960s or 1970s (I forget when) and came up with this resource estimation. The mineralization is narrow but extends for many miles lengthwise and to great depths. The problem is that the underground deposit is expensive to drill and assay. You can't just poke holes from the surface and prove the whole thing out at once because the PGMs are at great depth and extend to great depths (too bad...the stock price would have been worth hundreds of dollars). So they must drill from a mine shaft underground to add to p/p reserves. Their past policy has been to drill and assay enough reserves to replace what they produce each year. But more recently, they've been proving out more oz than produced, thereby increasing total p/p reserves. They do hedge because they're in business to try and make a profitable mine, not speculate on future PGM prices.
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