Hello viper;
Good morning, to you, just to show you that I do take in all things regarding this play, here some food for you, have fun with it??
The following research report from Wood Gundy may
help to explain why some think it reasonable to go short on KRY!
CIBC Wood Gundy: Research Highlights - Placer Dome
Bill Belovay 416-594-7292
"Placer Dome: Las Cristinas a Dilemma at Low Gold Price"
"The deliberation of the Venezuelan Supreme Court in passing clear judgement over the title of Las
Cristinas has caused Placer Dome's share price to decline and Crystallex's price to appreciate. Las
Cristinas is an important component of Placer Dome's future gold production growth strategy. The
dilemma faced by Placer Dome and Crystallex is that at the current gold prices, Las Cristinas does
not give a sufficient rate of return to entice financing, and thus could be worth
almost zero. If the Supreme Court rules against the Placer Dome joint venture, then theoretically,
because Las Cristinas is worth very little, the share price of Placer Dome should not decline. However,
investor emotions could cause a sell-off
of Placer Dome, lowering its price. On the other hand, if the Placer Dome joint venture receives a
favourable judgement, then investor emotions could drive the price higher. However, since Las
Cristinas is worth very little at the current gold price, the risk of not obtaining financing is high, and the
project would be delayed, causing more uncertainty. It appears, therefore,
that Placer Dome is a larger hostage to the gold price than most other gold companies, and the price
of Crystallex asumes a high value for Las Cristinas, where there is none. This dilemma has
resulted in us lowering our premium to net present value for Placer Dome to 1.5, which lowers our
12-month target price from $26.20 to $21.00. Placer Dome remains a STrong Buy. (PDG $16.50,
Strong Buy; KRY $10.40, No Ranking)"
This will be real interesting??
With regards,Frank |
