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AuRico Gold (AUQ -2.2%) reports two deaths at its El Chanate mine in Mexico, which it says will...

AuRico Gold (AUQ -2.2%) reports two deaths at its El Chanate mine in Mexico, which it says will impact production for the balance of the year and thus reduce full-year gold production to 70K-75K oz.
Comments (3)
  • Rickthegeek
    , contributor
    Comments (118) | Send Message
     
    It is a big surprise that Gold Miners are doing as well as they are. It has been determined that Gold Miners have been stating their projected earnings on what was in the ground before actually spending the money to extract it. The cost to extract has excalated beyond what is profitable for the company. Most all of the Miners have understated the cost per ounce by HUGE margins. The actual cost per ounce for some is in the 2500 dollar range. This means now they are all losing money. I would stay away from any gold miner at this point.
    14 Nov 2012, 10:03 AM Reply Like
  • Teleprompter
    , contributor
    Comments (10) | Send Message
     
    Rickthegeek
    It's always useful to have such insights. Your view makes sense if indeed the determination you have can be validated. Perhaps you could reference this source?
    14 Nov 2012, 12:03 PM Reply Like
  • Rickthegeek
    , contributor
    Comments (118) | Send Message
     
    It is no secret that Gold Miners count their land and projected reserves as an asset. If we look at ABX for example, you will see on their balance sheet for December 30th, 2011, they show 30.132 billion for Property Plant and Equipment, as an asset. We will have to wait 6 weeks to see what it is for 2012. When these miners include reserves as assets, they skew the numbers in their favor. It makes it look like they are more profitable than they really are at producing on a per ounce basis.

     

    ABX has a total of 140 million ounces of reported reserves. What Wall Street sees is this big number of assets. What they don't know is the true, accurate amount of money that has been spent obtaining these reserves. When you calculate the amount of money spent on obtaining these reserves and the amount of ounces that can be extracted and the cost associated with it, most all of the gold miners are way over the current price of gold now, per ounce. If you get a calculator out and figure it out ABX is in the over 4000 dollar range per ounce.

     

    That is why when you look at ABX's key statistic page on Yahoo, you will see a Debt of 13.94 Billion this year, right now. I am just surprised that nobody has picked up on this.
    14 Nov 2012, 06:17 PM Reply Like
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