Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Exsrch who wrote (1245)	6/5/1999 12:07:00 AM
From: Ron Everest	Respond to of 3558

<<- ABX has the option to cancel contracts (and pay a penalty); however, they also have the option to defer the CB/GB contract up to 10 years while paying the contractual interest rate.>> The ABX contact stated that it was not entirely a deferral, but a cancellation with penalty arrangement. I will let this ride for a time and get back to him on that point. Thank you for your response. Monday I will take the comments and forward them to ABX for their consideration of inclusion on their web site. My read is that ABX is a very safe investment with a solid income/production stream. Their future is very bright as these lower gold prices may force out smaller players who are not hedged in this manner. This will allow the larger players to cherry pick the best development prospects. Thanks for your response, Ron E

To: Exsrch who wrote (1245)	6/5/1999 10:06:00 AM
From: GTC Trader	Read Replies (2) \| Respond to of 3558

<< We have to remember that ABX does not actually sell their gold above spot. >> Correct me if I'm wrong, but when they borrow the gold, isn't ABX short-selling the gold at the given price, in this case $385. Thus, if the current market is $285 and ABX returns x ounces of gold to the CB/GB, didn't they just Short at $385 and Cover at $285 for a profit of $100 per ounce above spot? This may or may not be good for the price of gold, etc., but it sure looks like a good trade to me. Regarding the risk of higher gold prices, POG would need to increase over 35% from present levels just to make this a scratch trade for ABX. If gold does jump that much (or more), then ABX could increase production on higher cost reserves and make a killing with everyone else. Meanwhile, the extra $100 per ounce is not a bad little bonus. Forward-selling may be bad for the market, but it sure seems to have been good for ABX. Am I missing something?

To: Exsrch who wrote (1245)	8/3/1999 3:22:00 PM
From: Daniel Chisholm	Read Replies (2) \| Respond to of 3558

Hi Exsrch, 3. ABX takes proceeds from the sale of gold at spot and invests the money in Money Markets (hope nothing with a higher beta). and 4. The accumulated interest they earn (so far about 7.5% on average...[snip] 7.5% sure ain't no money market return. This is a little detail of their hedging program (i.e., what do they invest their cash proceeds in) that I've long wondered about. Knowing the answer would help me analyze what the upside and downside of their hedging program is. - Daniel