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Gold/Mining/Energy : Gold and Silver Mining Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Andrew who wrote (498)	12/30/2000 4:46:33 PM
From: russwinter	Read Replies (1) \| Respond to of 4051

I have a philosophical problem with investing in companies that in a total cost sense are just liquidating their capital. However, the high cost companies have large fixed costs in place, so a strong price movement in gold translates into virtually 100% potential to the bottom line. That is unless they are heavily hedged. Hedgers lose the leverage to the bottom line and thus have no appeal at all. In my work I'm looking more at companies that are already on the right side of the curve. One smaller producer that has really been overlooked is Iamgold (IMG.To) trading at $2.50 CDN. Maybe it is because it takes a few brain cells to do the DD, but I don't think people realize how much they have deleveraged and paid back their Sadiola project (38% owned with ANGLY and Mali govt at 125 cash cost, IMG's share 200,000oz, long lifed) debt. US mkt cap is about 120 million and their share of the project is generating cash flow of US 32 million a year. As of 9/30/2K they had built up 83 million cash, and reduced debt and liabilities down to 64 million (35 is debt on Sadiola). Project debt is being paid off at a clip of 2 million a month so it will be debt free in May, 02. That leaves enough left over to internally fund another smaller project at Yatela (40% again with ANGLY, Mali, $175 cash cost). They also have some excellent exploration efforts in Ecuador (ANGLY spends 6 1/2 million), South Africa and Senegal and Brazil. Yatela will be complete in mid-01 with IMG's share of capex at 24 million and will generate 8-9 million in cash flow. So by this time next year IMG will be cranking out 40 million cash flow (@ 275 POG) and will have a substantial cash horde on hand with most debt paid down. They are only hedged for 45% of production over next four years and at good prices ($335). They are like the old Stones song , "time, is on my side, yes it is". And time is on the IMG investors side cause the stock is a giveaway. Management owns a big stake and obviously they are a defacto exploration and production arm of ANGLY, which is a huge advantage synergy, resource and talent wise for a mid tier producer. I think it is the best producer buy in the market, and if they have another exploration success could emerge as one of if not the best "growth" gold mining company in the world. Incidentally they would be the natural buyer of Nevsun. Incredibly there isn't even a thread on IMG so I'm starting one today.