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Gold/Mining/Energy : Barrick Gold (ABX) -- Ignore unavailable to you. Want to Upgrade?

To: Zardoz who wrote (240)	12/12/1997 2:55:00 PM
From: Cascade Berry	Read Replies (1) \| Respond to of 3558

Hi All...I'm long the ABX Leaps (25 strike for 2000). I think the stock is now beginning a recovery...With ABX's 31 million buyback, and an 11 million short position, this is a recipe for DYNAMITE, representing 40 million shares of demand. And I believe gold will recover to at least 310 by April - that demand will soon kick in...Hope I'm right... Cheers.

To: Zardoz who wrote (240)	12/15/1997 12:04:00 PM
From: Zardoz	Read Replies (1) \| Respond to of 3558

Subject: Canaccord Capital Daily Letter Date: December 15, 1997 From: Canaccord Capital <news@canaccord.com> We are pleased to deliver an electronic version of today's Canaccord Daily Letter directly to you. For a more complete version that includes tables and graphs please visit our web site at canaccord.com NEWS * SENIOR GOLDS INDUSTRY UPDATE Barrick identifies options if gold remains weak. Barrick's chairman, Peter Munk, blames the central bankers for wiping out about US$32.0B of value from their accounts in the past few months on gold sales, and on raising concerns about additional gold sales ahead. Mr. Munk plans on going to Europe next month in an attempt to instill some sense into the bankers, whom he believes are out of touch with the impact they are having on the gold market. Essentially, what he would like is for the European central banks, using one voice, to determine and clearly state its gold policy. Note that we believe additional gold sales are likely to occur (and Mr. Munk seems to concur with this assessment)-which is at odds with some commentary from other analysts recently quoted in the press. If additional gold sales occur, it is not necessarily bearish for gold. It depends on how much, and over what time period the sales take place. We believe the gold market can absorb 5.0-10.0M ozs. of central bank gold sales annually, and rally from current levels. Moreover, if gold prices remain at current levels for a few years, the amount the gold market would be able to absorb would likely grow to 20.0-30.0M ozs. as mines close. If Barrick determines that the central banks are willing to create a multi-year structural imbalance in the gold market, during which time gold prices trend sideways to lower, Barrick has several options available. The more conservative option is for the Company to alter its hedge position, which currently stands in excess of 10.0M ozs. at US$410/oz. One scenario outlined by Mr. Munk is for Barrick to deliver half of its gold into the spot market, and half against the hedge. This would result in a US$347/oz. gold price realization at current spot gold prices of US$283/oz., but it would enable Barrick to roll its hedge and extend the hedge's life to approximately nine years from the current three years. We estimate that Barrick would remain profitable, realizing positive earnings and cash flow in this example. A far more radical approach that Mr. Munk touched upon would be for Barrick to liquidate its hedge, sell its gold assets, and enter a new business. He mentioned nickel, but we do not believe he was referring to a potential bid for Inco. Rather, according to Barrick, a reporter discussed the recent press regarding a possible takeover of the nickel giant, and since this example was fresh on Mr. Munk's mind, he used the nickel industry as an example. Moreover, we believe Barrick would need to be convinced that a real multi-year structural change has occurred that will keep gold prices at current or lower levels in order for this scenario to occur. Mr. Munk does not currently believe this will happen, and neither do we. Rather, we both agree that current gold prices do not appear to be sustainable for two or more years-unless central banks have an agenda to keep gold prices depressed-which neither of us believe is the case. He compares this cycle to the one that had sent gold to US$850/oz. in 1980-just in reverse. His rational for believing that central banks do not want to keep gold prices depressed appears to be linked to the negative effect current weak gold prices are having on Franco African countries, South Africa, and other third-world nations. He notes that these are the very nations the central banks are attempting to support. We believe that if gold prices remain at current levels for 6-18 months, many mines would close, which would enable the gold market to absorb an enormous supply of central bank gold. This scenario is why we have chosen Barrick Gold, Freeport-McMoRan Copper & Gold, and Placer Dome as BUYs, and Newmont Mining as an ACCUMULATE below US $30.00/share. They are all well positioned to survive the current downturn with positive earnings and cash flow expected. In addition, we believe that they each may be within 15% of their respective bottoms, and that a long-term, multi-year investment could yield 50-100% returns (not annualized) and potentially outperform the broad market averages.