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To: Horgad who wrote (216286)	1/23/2003 4:49:57 PM
From: yard_man	Read Replies (1) \| Respond to of 436258

those are small fractions --

To: Horgad who wrote (216286)	1/23/2003 8:11:09 PM
From: orkrious	Read Replies (1) \| Respond to of 436258

I was just messing around in Excel and thought that I would post some useless numbers that are a half-assed attempt at looking at the POG leverage of various miners. a lot of political risk is priced into the south africans. they are cheap.

To: Horgad who wrote (216286)	1/24/2003 12:04:39 PM
From: Perspective	Read Replies (4) \| Respond to of 436258

That's an excellent way to view the gold investments. So, your $1K buys roughly 1.2oz production per year in DROOY. A $50 increase in POG therefore adds $60 to revenue and presumably income. So, if they were making nothing at $250, they make $60 at $300, and $120 at $350. Now, assign that income a PE of 15 ( PE of BBB corporate debt) and you get 1560=$900. So, it seems to me that every $50 increase there should yield a $900 kick in the value of your $1K investment. Is this sound? For GFI, the same analysis yields $35 corporate income per $1K investment for every $50 increase in POG. For GG, it is only $10 incremental income. Valuing them at PE=15 yields a capital gain of $525 and $150 respectively. If the money were invested in bullion, of course, the number is $1K/$350/oz $50 delta = $142. Interesting how GG has soared to the very point that there is no leverage whatsoever remaining to the price of gold vs. owning the gold outright. But, you still get about 3x leverage on GFI, 4.5x on NEM, and roughly 6x on HMY and DROOY. Of course, we are not considering the potential increase in production that a higher price would yield, as additional operations may become profitable at higher prices. Does this all make sense? BC