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  • What It Really Costs To Mine Gold: The Allied Nevada Gold Second Quarter Edition [View article]
    @Bergerac you said:

    <<it would be about $1000/oz., perhaps a little under. Yes that's more than ANV's reported $806/oz - but they are reporting only gold production costs with the silver byproduct as a cost offset. Whichever figure should be used, it's nowhere near the $1387/oz that you claimed.>>

    and

    <<The reason ANV is struggling with cash flow is due to their servicing debt. >>

    That's one of the big difference in cost calculations - I INCLUDE financing costs (interest on debt) while companies do not. That's a difference of opinion and if you exclude them of course the costs will drop especially for a company with debt that is much greater than market cap. Yes the MINE'S operating costs are less than $1300, but the total operating costs are not.

    As for the point that ANV has risen since I wrote the article, I think you're missing my point here. The article wasn't meant to trash ANV, simply to point out that costs are extremely high - there are many other factors involved in the company's success than simple costs. Its just one metric out of many, so i'm not at all arguing where ANV should be.

    You said:

    <<The gains IMO were due to ANV having been misunderstood and mispriced by the market. Perhaps others were making the same mistake of not viewing the mineral deposit separately from the financial structure. >>

    I don't really buy that since there really has been no fundamental change here - why would investors/funds think any differently about ANV all of a sudden? One thing i'd point out is that ANV has a HUGE short position, which is both positive and negative - obviously a lot of investors expect negative things from the company, but short squeeze's can also propel the stock.

    Like I said earlier, I dont mind if you disagree with me and mention catalysts that are positive for the company - this isnt an article about the VALUE of ANV as many non quantiifiable things are involved there. But you can't really disagree with the costs, because we're talking simple balance sheet math here...
    Aug 26 05:19 PM | 1 Like Like |Link to Comment
  • What It Really Costs To Mine Gold: The Iamgold Second Quarter Edition [View article]
    Absolutely Paul - its actually good for gold holders to see mining costs increase as that means gold is becoming more expensive to "produce". It may not be good for miners (at least the ones that cant control cost increases) but it is certainly is good for gold holders.
    Aug 26 10:50 AM | Likes Like |Link to Comment
  • What It Really Costs To Mine Gold: The Kinross Gold Second Quarter Edition [View article]
    Fair enough @azinsd - its tough to judge that risk quantitatively but I do understand your argument and it is definitely a valid one
    Aug 26 10:47 AM | 1 Like Like |Link to Comment
  • What It Really Costs To Mine Gold: The Eldorado Gold Second Quarter Edition [View article]
    I think one basic flaw with these 400 year gold analyses that seem to show gold underperforming and not being a good inflation hedge, is that they completely neglect the fact that gold WAS money for the majority of that time period - it was NOT an investment.

    Before 1971, the dollar (or whatever currency you choose) was backed by gold directly or indirectly (currency converts into dollars which converts into gold). It's an apples-to-oranges comparison.

    But if you compare gold at $35 in 1971 to $1300 gold today and calculate its return, you get 8.5% per annum, which sounds a bit more than what inflation would be over the same time period depending on your inflation gauge.
    Aug 26 10:46 AM | 1 Like Like |Link to Comment
  • What It Really Costs To Mine Gold: The Allied Nevada Gold Second Quarter Edition [View article]
    @Bergerac - I really don't mind criticism and as @in4thelonghaul stated, it is merely a TOOL in providing investors with some insight so they can do further research - That's it. Is it all-encompassing? No, of course not.

    You have the right to your opinion, and as I mentioned earlier I don't mind creative and active discussions, but nothing i'm saying is arguable - these are merely the facts.

    As for ANV's property closing - where did you get that from in this article? All I said was that (1) company gold costs are high and (2) they have a large debt load that needs to be monitored. Again, all of these things are FACTS not opinion.

    ANV can survive and prosper, but either costs have to come down or the gold price has to rise - its that simple. With a large debt load there aren't many other options here.
    Aug 26 10:18 AM | Likes Like |Link to Comment
  • What It Really Costs To Mine Gold: The Kinross Gold Second Quarter Edition [View article]
    Actually I don't think Russia would confiscate their properties - that would be unnecessarily heavy-handed. All they would have to do is bring up some environmental/operating permit issue and force the company to go through a bureacratic nightmare to ease whatever the concerns were.

    We've seen it all over the world so i'm not sure why it would be hard to believe with Russia, especially considering Canada has joined in the "sanctions" against Russia.

    I'm not saying it will happen, i'm just saying it certainly is a real risk that has to be considered
    Aug 22 03:20 PM | Likes Like |Link to Comment
  • What It Really Costs To Mine Gold: The Iamgold Second Quarter Edition [View article]
    Thanks for the comment Jim.

    The mining sector is notably volatile and I wouldn't call IAG out because other miners are having the same problems with costs - some may be a bit lower but they are almost all over $1000-$1100 with all-in costs.

    You're right, at these gold price levels you are treading water and a gold investor needs to believe in higher gold prices to invest in miners - otherwise it simply isnt worth it. Having said that, each specific miner has its own catalysts over and beyond the gold price, and I think IAG could surprise investors positively with Westwood production. If it wasn't for the fact they are above our investment debt threshold we would own this stock.
    Aug 22 03:17 PM | 1 Like Like |Link to Comment
  • What It Really Costs To Mine Gold: The Randgold Second Quarter Edition [View article]
    To be honest with you there are few miners under-priced at current levels, I dont think there is that many opportunities in the sector at current gold prices (or with a significant correction to the miners). There profits are simply not high enough to justify the "under-valued" tag

    Having said that, I think there are much better opportunities in the explorers as many of the miners will have to replenish reserves and high stock prices encourage M&A in the sector (primarily of the all-stock variety). That's why we're heavily weighted towards explorers.
    Aug 22 09:20 AM | Likes Like |Link to Comment
  • What It Really Costs To Mine Gold: The Kinross Gold Second Quarter Edition [View article]
    Thanks Paullev for the comment, I wouldn't say EGO has their mines in safe jurisdictions (Greece, China, and even Turkey can have major political issues), but they definitely have been performing well on a costs basis.

    I agree with your assessment of KGC on the Russian mines and the debt load - its actually a bit of a conundrum because if the Russia situation heats up that pushes up the gold price BUT that also heightens risk to KGC's Russian assets. That's why the company has been lobbying the Canadian government to ease up on all of the sanctions, but their core costs have been improving recently so the company is cutting back on expenses in a real way.
    Aug 22 07:57 AM | Likes Like |Link to Comment
  • What It Really Costs To Mine Gold: The Kinross Gold Second Quarter Edition [View article]
    Not following you @6034700 - Goldcorp actually had very good costs relative to other miners.
    Aug 22 07:53 AM | Likes Like |Link to Comment
  • What It Really Costs To Mine Gold: The Eldorado Gold Second Quarter Edition [View article]
    @Skip - You're absolutely right that if CAPEX would be included that would be double expenditures. No I only use income statement expenditures - basically that quarter's income statement. It is that simple so it definitely is not double-counting or else their GAAP income would also include double-counting. CAPEX or straight cash flows would also be an interesting way to calculate costs, but that's not what we do here.

    As for the historical trends, that actually is extremely useful as you mentioned. It surprising because most retail investors really dont look at the 2-3 year overview to see these trends, they stick to YoY (which is sometimes important) and they miss the big picture.

    Thanks for the comment!
    Aug 21 01:57 PM | Likes Like |Link to Comment
  • What It Really Costs To Mine Gold: The Allied Nevada Gold Second Quarter Edition [View article]
    @Bergerac - i've written a lot of SA articles and I try my best to interact as much as I can with readers and based on my experience I find that critical readers fall into two categories. There are those that are critical and have good points (which are terific to have comment) and those who are critical but have really no point other than someone is criticizing a stock they own - I hope you're in the former category and not the latter category.

    So instead of us going in circles here, just answer this simple question:

    ANV reported an adjusted cash cost per ounce of $806 dollars and the gold price in the quarter was around $1300 per ounce, after producing 64,000 GE ounces then we would expect a profit of around $30mm in the quarter. We got GAAP net income of around $4mm - 90% LESS THAN your cash cost predict.

    If we just concentrate on straight cash flow (its called"cash costs after all") then the picture is even worse as we got NEGATIVE $35mm in the quarter as opposed to an expected PROFIT of $30mm.

    How would you respond to that? What is your "All in cost" that you'd use here?
    Aug 20 03:50 PM | 1 Like Like |Link to Comment
  • What It Really Costs To Mine Gold: The Allied Nevada Gold Second Quarter Edition [View article]
    @Bergerac - did you even read the definition of the all-in costs I'm using?

    Start at the paragraph and I think it will answer a lot of your questions. I don't mind if you criticize but at least take the time to read what you're criticizing, who knows you may learn something new...

    <<In the previously mentioned article, we gave a thorough overview of the current way that mining companies report their costs of production, and why it is inaccurate and significantly underestimates total costs. Then, we presented a more accurate methodology for investors to use to calculate the true costs of mining gold or silver. Please refer to that article for the details explaining this methodology, which is an important concept for all precious metals investors to understand.>>
    Aug 20 11:28 AM | 1 Like Like |Link to Comment
  • What It Really Costs To Mine Gold: The Allied Nevada Gold Second Quarter Edition [View article]
    @Bergerac - did you even read the definition of the all-in costs I'm using?

    Start at the paragraph and I think it will answer a lot of your questions. I don't mind if you criticize but at least take the time to read what you're criticizing, who knows you may learn something new...

    <<In the previously mentioned article, we gave a thorough overview of the current way that mining companies report their costs of production, and why it is inaccurate and significantly underestimates total costs. Then, we presented a more accurate methodology for investors to use to calculate the true costs of mining gold or silver. Please refer to that article for the details explaining this methodology, which is an important concept for all precious metals investors to understand.>>
    Aug 20 11:28 AM | 1 Like Like |Link to Comment
  • Update: Pretium Drill Results [View article]
    @User195396 (aka Bernanke) - very important situation to monitor for BC investments with projected tailings ponds.
    Aug 19 04:23 PM | Likes Like |Link to Comment
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