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Gold/Mining/Energy : Blue Chip Gold Stocks HM, NEM, ASA, ABX, PDG -- Ignore unavailable to you. Want to Upgrade?

To: Stephen O who wrote (434)	6/29/1999 1:35:00 PM
From: Exsrch	Read Replies (1) \| Respond to of 48092

Stephen O, Your comment makes alot of sense directionally but lacks the quantitative bounds that would bring clarity to any dialog. Hence it makes it difficult to judge when your comments would apply and when they would not. Let me explain. First lets recap your comments: <<..Other mining cos will benefit more from a rising gold price than ABX over the short term because they are not hedged. ..>> ABX has locked in US$385 per ounce for the next three years (12.5 miilion ounces as of 12/98). This could potentially be more depending on what cantango they extract from their off balance sheet assets worth $4 billion. ABX also is decreasing their cash cost and total production cost regulary at a rate faster than their peers or juniors (because of Capital expenditure (capes), scale of operations and plane operational excellence). ABX makes more capex investments and than agressively write down depreciation and amortization yielding lower future total production cost. Therefore, "..Other mining cos will benefit more from a rising gold price than ABX.." when the following happens (from a value perspective): 1. Gold must rise to a minium of US$385 2. Gold must increase above US$385 equal to the weighted average total cost of production decreases 3. Gold must also increase above US$385+point#2+Plus the weighted average depreciation and amortization per ounce per mine (numbers will vary from mine to mine) 4. Gold must also increase above US$385+point#2+point#3+plus any additional cantango ABX earns averaged over their total production(each 1% increase in margin nets ABX $40 million in additional earning per year). Over the very, very, short, short term there will be trading fluctuations that might not revel consistency but over the Q2 10Q filings and through the end of the year (from a value perspective) you'll see that unless gold move appropriate to the above discussion ABX will be a better bet. If your definition of short means trading over a daily period and I mean short term from a value perspective meaning 1-2 years than your earlier comment would be correct as is without a quantitative qualifier. Cheers, Exsrch