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

To: Claude Cormier who wrote (2179)	9/18/2001 11:03:58 AM
From: russwinter	Respond to of 4051

<Have you done some sort of calculation on productions cuts to happen in the next 3-5 years.> If we stay below 300, and just based on standard depletion I calculate about 30-35% within five years. It kind of looks like about 6%-7% a year pretty steadily. Could be higher if you get force majeure episodes somewhere or big energy spikes. Poor company financial condition is going to be a factor too. I've called that the "slumlord thesis": just use it up until something breaks, and fail to fix it. There are some real marginal mines out there. This list is representative and I found more after these posts: Message 16111414 Message 16114018 Note that recent successful (Pipeline for example) exploration results have usually been at the good longer life mines and do little for the half decade picture. There could be some increased production from these sites, but I really wonder if that makes sense below 300. I don't think so in most cases.

To: Claude Cormier who wrote (2179)	9/18/2001 11:25:20 AM
From: russwinter	Read Replies (2) \| Respond to of 4051

<new ounces coming into production in the next 3-5 years> One of the notions that made the rounds before is that once we get a run towards 300, people like ABX will run out and start hedging again to bring a project like Veladero on line. I don't think they can do it, as the contango (only 1-2%)is now next to nothing. In fact if you look at forward futures right now they are nearly in backwardization. That means if you use a POG of 290, and look to hedge out to 2005 for this production, you would be lucky to get 310. Personally I think there is a lot of incentive for large hedgers to close out books now. Selling forward doesn't make any sense because of the scrawny returns. Look at forward rates: kitco.com