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Gold/Mining/Energy : SOUTH AFRICAN MINING -- Ignore unavailable to you. Want to Upgrade?

To: EZbeliever who wrote (242)	9/22/1998 7:18:00 PM
From: sea_urchin	Read Replies (2) \| Respond to of 472

You too, EZB. In fact, I now detect a slight hint of scepticism about Rangy in YOUR voice ;o)) Could be the "lady doth protesteth too much" about sceptics! As you say, comparing Randgold with Anglogold is really the nub of the investment dilemma for someone seeking a way into gold. I have always been one for slow but sure --- particularly when I'm not so sure! On the down days there is also the reassurance of quality. One needs to look no further than the Dow to see confirmation of that policy. In fact, the run to quality US shares is evident from all over the world. Big money doesn't (generally) go to small cap stocks even though the theoretical returns are so much higher. This realization, in fact, was the basis for the reorganization that both Anglo and Goldfields did on their SAf gold mines recently. All marginal shafts were virtually given away. And, I needn't tell you that it is in these shafts that the biggest gearing of reserves to gold price occurs. Moreover, these were largely the shafts that Randgold bought for a song. So, who is right? Anglo or Randgold? The answer to that question goes far further than this forum. It goes to the root of contemporary gold investment. Accordingly, the investor has a simple choice. High quality or high gearing. Low speculation or high speculation. Unquestionably, AngloGold has a selection of the best mines in the world at a proven mining cost of around $200-220 per oz. And, the listing on the NYSE means they want the same investment rating for those mines as for North American mines ie about $25 per oz of gold in the ground . I think that's about X5 on the present price, but I could be wrong. In SAf, the present dividend yield is also about 7% --- which pays for the share's keep. Randgold, on the other hand, appears to own a selection of unproven, low grade mines and ore bodies all over the place. (From Hoover's report, I'm now not even sure if it does actually own them) And, I understand, most of these mines are not yet at production stage so estimates of costs and profitability etc are no more than that --- estimates. Furthermore, I'm not sure what arrangements are in the pipeline for share swaps and mergers etc and who will benefit from these. It is impossible for anyone, other than those directly in the company, to really know what any of these properties are worth so it is likely that one's investment is not, and certainly will not be, what one thinks it is. However much homework one has done. I'm not knocking the share --- it could be the most undervalued investment in the world --- only, for me, there are too many imponderables. And, too much reliance on the directors is required for whatever "fortune" one might receive as a shareholder.