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Non-Tech : The Woodshed -- Ignore unavailable to you. Want to Upgrade?

To: Square_Dealings who wrote (4799)	4/24/2004 5:14:07 PM
From: jimsioi	Respond to of 60926

Michael, Miner earnings. You are certainly correct, changes have occurred since HUI 50... I'm looking at some of the earnings of the companies you mentioned...last 12 months, most recent quarter. GSS managed 14 million in net profit in 2003....or 10 cents a share... finance.yahoo.com GSS trailing 12 month free cash flow was negative.... finance.yahoo.com More importantly for the most recent quarter the company reported: "Record earnings of $7.9 million, or $0.07/share" Stock is therefore trading at roughly 80 times the most recent quarters earnings - (20 PE, annualized) NEM had earnings of $1.15 per share and 52 cents of cash flow per share in the last four quarters reported... Trailing PE is therefore 35 times and Valuation to free cashflow is 73 times... finance.yahoo.com WHT In this case let's take the most recent quarter's 6 cent profit and extrapolate that for four quarters and come up with 24 cents. That would render a PE of only 11... biz.yahoo.com GG reported: "Bullion adjusted Earnings for the 1st quarter, 2004 would have been $0.14 per share, which represents an outstanding 75% increase compared with the bullion adjusted earnings for the same period in 2003." Have to admit that's pretty good...gets the stock down to about a 21 PE, extrapolating the most recent quarter's results forward for a year... ( 1.27% of the stock's valuation is represented by the bullion it holds....I'd like to see that get to 20%, but the management with a very good idea, holding gold, that investors seemed to really appreciate, seems uncommitted to that aggressive a program, assuming their dump of their entire stash at $386 is any indication....Why not sell options on some if the price spikes, generate some income??? But.....GG goes on to say, "Cash flow from operations during the quarter was negative $3.5 million, or negative $0.02 per share, compared with negative $14.3 million, or negative $0.08 per share for the 1st quarter, 2003." taxes effected cash flow......I know the problem.... Honestly, overall these numbers are better than I thought I'd find.. PEs are coming down as earnings rise and stock prices fall. Earnings per share can be debated as to whether they are relevant to miners....I think they are, after all they do consider the depletion of the asset....What I'm most interested in as a earnings quality measure is Free Cash Flow per share....After all that's what the company really has at the end of the day to put in the bank, after exploration and development expenses, that's the payoff figure....Those numbers are a bit difficult to dig up and I think erroneously reported by Yahoo for the miners...I'd like to see (or at least dream about) 10% ratios of free cash flow to common stock valuation....about twice the supposed risk free t-bond rate of return. OXY in the oil and gas natural resource sector for example trades at 40 times its most recently reported quarterly profit (10 annualized PE). Has a trailing 12 month 22.5% return on equity and a free cash flow to valuation of 8%. finance.yahoo.com Different industry, yes, but the type of numbers I'd consider representative of "value" if they were generated by a miner... GSS NEM WHT & GG - you suggest, "these are good gold mines." I hope your are right and tend to agree, owning two of the three myself and reconsidering GG. So much for the math exercise for the day....