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Yesterday was COFFEE day in the U.S.
Today is TEA day
Tea party day that is. Can you believe that so called intelligent individuals
can be so irresponsible.
I can’t wait for the day when CRUZ loses his Canadian citizenship, the U.S.A.
is welcome to all of him, every last ounce. R !
Comment by Bert — September 30, 2013 @ 3:19 am
From : Danny Deadlock
Sunday September 29th – 6:45 pm EST
Industry Shake-Up Means the Old Way of Looking at Junior Golds No Longer Applies
I am trying to have faith in the junior gold stocks but in light of the following insight from Evy Hambro, we will have to be “overly” selective on mining stocks for the next year.
I have been extremely careful in 2012 and 2013 with gold stocks but going forward this sector requires a very different approach than what has been used in the past (at least until price and volatility improve significantly).
If a different approach isn’t taken, the risk is that these become dead (idle) money . We have already seen this with companies like VIT and CFO – regardless of how low the gold valuations have become.
THE PRIMARY PROBLEM….
In the past juniors could depend upon two things: 1) Financing and 2) Acquisitions or Mergers with mid or large tier producers.
Now financing is few and far between because of gold’s price volatility and high capital costs to develop a mine.
But More Important…. Large mining companies have HUGE problems of their own. This is highlighted in the interview below with Evy Hambro. The majors (who in the past would buy juniors to build ounces) must now focus on controlling costs and generating a return for their investors.
In addition, the industry has seen a dramatic shake-up at the CEO level. A new incoming CEO is not going to risk his job by acquiring a junior – simply to build ounces.
The acquisition target would need to be high grade with low capex to generate quick cash-flow and a high IRR.
This is dramatically different from what we have seen for decades on the TSX and TSX Venture and unless the Chinese get aggressive in their acquisitions (to build cheap ounces) we cannot depend upon “typical” sources of the past.
We are seeing this across the gold sector but it is affecting many other mining industries. The rate of return needs to be high with quick payback.
______________________
Bloomberg – Sept 26, 2013
BlackRock’s Evy Hambro, who manages the $8 billion World Mining Fund, expects more heads of gold producers to exit as companies book further writedowns after the metal’s biggest quarterly drop in more than 90 years.
“It’s very clear to us that there will be further writedowns as we go into the full year, or the results season at the beginning of next year,” Hambro said in an interview, declining to name any companies. “I would be very surprised if we didn’t see more change in CEOs across the gold industry.”
Producers from Toronto to Melbourne are pledging to curb spending and halt expansions after taking $26 billion in writedowns since July in the wake of the price decline and an acquisitions boom.
“Companies have been chasing ounces instead of profitability and return, and now those decisions in the past are coming back to haunt them,” Hambro said yesterday by phone from London. “There are lots of ounces still being produced that aren’t profitable. The gold price fell six months ago, what’s going on?”
Optimistic assumptions on gold prices used to calculate the value of reserves mean some producers probably face new impairments.
The industry shake up has claimed at least seven CEOs of North American producers in the past 18 months, including Aaron Regent as the head of Barrick Gold Corp. (ABX), the world’s largest producer. Investors needed to see the industry move to cut costs and stop unprofitable production, Hambro said in June.
“We have seen this train smash coming,” he said yesterday. “The majority of gold companies have been like rabbits caught in the headlights – they are not moving out of the way.”
Comment by Bert — September 30, 2013 @ 4:14 am
Trading Halt – Proper Gold!!!!
Comment by Dan — September 30, 2013 @ 5:43 am
PGX HALTED THIS AM PENDING NEWS! LET’S HOPE GOOD NEWS!
Comment by STEVEN — September 30, 2013 @ 5:44 am
I will predict that the Government will not shut down. The Senate
will take up the Republican bill at 2 p.m. est., will delete everything
except a choice to vote for or against a shut down. The bill will then
be sent back to the House, who will have no choice but to do the right
thing, that is, vote against a shutdown or suffer the wrath of the
American people, in particular, during the next election for the
rascals. The threat of a shutdown is even having a negative bearing
on our denture exchange. R !
Comment by Bert — September 30, 2013 @ 7:00 am
James
It takes a moron to write such a post. It takes a drunk to state that someone else
is drinking. You are wrong on both counts my buddy. Do you think the 3 stooges
you mentioned are comedians, i don’t ! Go Obama go !
Comment by Bert — September 30, 2013 @ 7:41 am