Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Ken Benes who wrote (70919)	5/31/2001 5:13:33 PM
From: Box-By-The-Riviera™	Respond to of 116756

what else are you interested in might i ask? never seen a mono=poster before

To: Ken Benes who wrote (70919)	5/31/2001 5:55:25 PM
From: long-gone	Read Replies (1) \| Respond to of 116756

And I guess you would have us believe this $0.40 was the massive downdraft about which you spoke? What % is it? I think I can handle it.

To: Ken Benes who wrote (70919)	5/31/2001 9:00:38 PM
From: goldworldnet	Read Replies (1) \| Respond to of 116756

<<Bring on the bourbon, drinks are on the house.>> Ken, You seem to be fixated with this topic. This link may be some help. Alcoholics Anonymous aa.org All the Best, josh

To: Ken Benes who wrote (70919)	5/31/2001 9:46:55 PM
From: Alex	Respond to of 116756

A race to the bottom???????????? Hedged gold producers reward shareholders best By: Tim Wood Posted: 05/30/2001 02:00:00 PM \| © Miningweb 1997-2001 NEW YORK – Investment opinion is bitterly divided when it comes to hedging; to the point of religious intolerance. So confirmation that hedged producers have done more to satisfy shareholders in recent years is sure to pour more fuel on the fire. -- Speaking at the London Bullion Market Association conference in Istanbul, Franco-Nevada president and joint CE Pierre-Lassonde showed that without hedging, a lower gold price accelerates the destruction of shareholder value. The counter argument is that hedging is responsible in the first place for the lower gold price. That's not true though since hedging was a clear response to sagging metal prices and an opportunistic move to capitalise on central bank gold reserve activation. However, there is a good deal of validity in questioning the classification of the companies. It's a rather hoary argument by now, but Lassonde makes the point forcefully: "The top three companies have now become financial companies making more money managing the float on their hedge book than on mining!" He does have a vested interest in presenting an unhedged company as the best option for shareholders, but there's a lot of sympathy for treating these "financial engineering" companies like banks. In other words, if they behave like banks then they should pay dividends and offer returns like banks. 80 per cent of Barrick's earnings come from hedging operations; and roughly 50 per cent each for AngloGold and Placer Dome. Australian producer Normandy, now a Franco ally committed to slashing its hedge book, attributed just under a third of its profits to hedging. Homestake would have suffered a loss without forward sales. There will be no reconciling the view that gold miners must earn the bulk of their income from mining rather than treasury operations. But there's every reason to exploit treasury services that are the physical outgrowth of active investment decision-making that every new gold project is subject to. The consequence of the purist versus pragmatist approach can be seen in the returns on capital. Including hedging, AngloGold is the standout performer with better than 13 per cent. Franco Nevada is second with over 12 per cent; Placer with 11 per cent; Barrick with just over 8 per cent; Normandy with just less than 8 per cent and Gold Fields with 7 per cent. Excluding hedging the picture changes. Franco ranks first, then Gold Fields; AngloGold; Normandy; Placer; Barrick; Newmont and Homestake (negative). The reality is that without hedging, the industry would be a desert for investors. Financial engineering or not, a thirst has been slaked to at least retain interest. Only Franco stands head and shoulders above the others and that's because it is a royalty company. However, fair is fair. If gold producers are satisfied to be judged based on the inclusive gains from hedging, then they must be prepared to rank alongside a royalty operation. What next? The real problem is in determining a viable future for any operation, hedged or unhedged. Lassonde's own words are the best: "At US$270 an ounce gold… projects in their present form will have paybacks of capital in the 13 to 14 year-range and return on capital in the very low teens. At those levels of returns, management has a tendency to look at the acquisition costs as sunk costs, write-off the asset and then justify construction on the capital to be invested alone. Of course, if you do that too many times, guess what - you go broke or you devalue your share price if you've used your paper as acquisition currency!" As was the theme at this year's PDAC in Toronto, gold producers are under increasing scrutiny to produce returns that are competitive against many sectors, not just their peers. Part of the solution is the sort of consolidation that has benefited aluminum, copper, nickel and coal. The problem is that with a low gold price it is virtually impossible to justify consolidation in the absence of fire sale prices. As much as it makes sense for AngloGold to acquire Gold Fields, it simply cannot justify doing so at a premium. Naturally shareholders are somewhat averse to giving up control without a premium. Lassonde notes that with gold at $275 an ounce and using a 5 per cent discounted cash flow, the best multiple to net asset value is just 2.6 for Newmont. (These valuations parallel Miningweb's own rankings). Now that's not necessarily a bad thing if you consider: "Another way to look at the current share price using the same 5% discounted cash flow is that it's discounting a US$325 gold price. In effect, the public is willing to pay on average double what a stock is worth in the hope that gold will rise to US$325 in the short term." Lassonde says the effective premium rating should be prodding management to use stock to acquire junior or intermediate companies. But the acquirers cannot offer any cash sweetners to secure a deal and even if they prevail, they don't have the resources to develop any projects acquired. Exploration is not a better option despite being cheaper because there is such an element of unpredictability. Exploration success is more often than not the combination of luck and skill. Skill alone doesn't do it. It's the worst attrition scenario imaginable. Without a stiff improvement in the gold price it will all come down to stamina and that has to favour hedgers in the long run. Overall, it looks like the banks are the real winners. mips1.net

To: Ken Benes who wrote (70919)	6/1/2001 6:00:40 PM
From: long-gone	Read Replies (1) \| Respond to of 116756

What's the matter Ken, the boyz not paying you for posts today?

To: Ken Benes who wrote (70919)	6/4/2001 10:27:34 PM
From: long-gone	Read Replies (2) \| Respond to of 116756

remember this one? "of 10255 Bobby: You have made a mistake by selling BGO. The new drill results indicate they are on the verge of proving up a world class ore body. Bema is destined to become a 20.00 stock. Aside from the Cerro Casale, they have recently become a producer at the Refugio project, and they have additional blue sky with other properties in the Maracunda area of Chile. Bema is fast becoming a takeover candidate at a minimum price of 15.00. Ken"