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Gold/Mining/Energy : Precious and Base Metal Investing -- Ignore unavailable to you. Want to Upgrade?

To: Taikun who wrote (34140)	2/1/2005 2:42:19 AM
From: E. Charters	Read Replies (1) \| Respond to of 39344

I know bonds can be bought and sold, but people do not buy stocks these days for dividend yields. This is so much so, that one can often buy stocks these days just before the dividend, register and collect the dividend and make good money where their market is underappreciated. The balance is supposed to be the liquidity of the markets verus the liquidity of long term bonds. If you are after yields, you buy bonds when the bond market is bad. In the old days when there was no capital gains tax in Canada, dividends were major in Canadian mining companies. Even back in the 30's 40's and 50's, companies like Noranda paid 100's of millions in dividends. Today the tax structure is so bad that companies cannot make the profits necessary to pay large dividends. Environmental costs are too high, and profit margins are low. Why do mining at all? Because where metal prices are high, they represent a relatively easy to market, easy to predict steady cash flow. You do not have to compete in a retail market and fight to make a brand and a market share. You mine the metals and sell them at set prices. In gold mining, you can do a feasibility once and predict your profits ten years out. If you can do that in a small cap company as we can do, then it forms a unique opportunity. No other type of business can do that. People like to say risk is high, but if you are mine planning, it is no higher risk than any industry. Really if one is making new widgets and selling them to the public, where is the guarantee that you can do that? Whereas if one says, OK we know there is so much gold there, and a mill, we know we can mine at X dollars, and get so much price based on trends that are manifest in prices, and well known mature engineering principles. Where is the risk in that? Very low actually, or Canada would have no mining industry at all. Now exploration is a different animal. That is strictly a poker game or geological roulette. You are just betting on how the market reacts to drilling bets and info and cachet of the players. If the survival of jr explo grass roots players is bad in terms of drill play to mine status that is one thing, but real mining is another. Don't get the two confused. Real mining is a very stable industry. And don't let the brokers tell you that underground mining is not profitable. Placer Dome was built by one mine, an underground low tonnage narrow vein mine that ran in Timmins for 100 years, and it is still running. Placer Dome's best money maker? An underground mine in Canada, Red Lake to be exact. The Campbell Red Lake Mine. The best gold mine in the world? The money makingest? Goldcorp. Also a deep, narrow vein, gold mine in Red Lake Ontario. You would think the only place to be in the world would be Red Lake. I would not say no, but so far, Zenda Gold has not been able to capitalize on that idea. Mining and mining engineering, --- exploring near a mine structure, is much different than grass roots exploration, or paper flurries that we see on the exchange. Much different. There is risk, but it is dependent on much different criteria. grade, metallurgy, mining competence, vein structures, ore hardness, etc.. and money risk.. can the mill money be found? Mill money and grade stopped 70 or more operations getting going in Canada in the last 30 years. The geos drilled them down the greatest tonnage and the lowest grade possible. This was a mistake. Economies of scale cost too much in capex to get going. They amplify the risk. Mining was never approached that way in the past, and with good reason. Open pit mining often has to be. It is all up at one scale or nothing usually. Underground can be approached in different ways and scaled according to accessible grade/capital. EC<:-}