dwot

What Is Northern Orion Waiting For?

That should have read Q1 for 2007.

What Is Northern Orion Waiting For?

I've been looking at Yamana and I shuddered when I saw that last year their total sales was in the range of $160 million for a $4.6 billion market cap. Grant it Q7 was way up, but I'm not so sure the sell out is because NTO is desperate, or because they perceive that Yamana is over valued. I haven't finished looking at this deal, but my initial conclusions were to sell.

What Is Northern Orion Waiting For?

I hate it went that happens to me.

Galore Creek and Agua Rica - Two High Risk Mining Projects (Part 2)

"Maybe BHP just really messed up selling 72% for $12.6MM in 2003."

Like they messed up selling Northern Orion a 1/8th share of Alumbrera about the same time for $86 million? That one has already made Northern Orion $160m in equity earnings and it has 10 years of cash flow still coming...

Which To Buy -- Gold ETFs or Gold Mining Stocks? (ETFs: CEF, GLD, IAU; Stocks: ABX, FCX, NEM, NTO, RGLD)

I actually think gold stocks are in a gold bubble, and I can back that statement with fundamental analysis.

I did a comparative valuation between NTO and GG, and fundamentals are so grossly different, I find it amazing that the difference wouldn't be picked up by anyone who is making those kinds of recommendations. I'd send it to you, but I couldn't find an email link, but this is a summary of what is working against gold mines these days:

1. The leverage of earnings have grossly decined.
2. The price elasticity of gold bullion to gold stocks, ie, market cap is 3 to 20 times better for bullion than for gold stocks. (Kinross had the best price elasticity out of the gold stocks I calculated.)
3. The increasing cost of acquisitions, from $33/oz at the start of the bull to a max of $175/oz for Glamis.
4. Increasing rates of depletion of reserves.
5. Lower quality gold properties available to replace reserves.
6. Rapidly declining level of reserves to market cap.

Which To Buy -- Gold ETFs or Gold Mining Stocks? (ETFs: CEF, GLD, IAU; Stocks: ABX, FCX, NEM, NTO, RGLD)

Gold stocks no longer provide the leverage performance of the past, plain and simple. Leverage returns decline rapid the further you get into a bull run. Early, leverage returns were 10-fold, and it made gold stocks a great performer. Now at best you can get 1.2 kind of leverage.

How leverage played out early in the bull run on gold and how it can not repeat that performance is really poorly understood.

Furthermore, currently costs for gold stocks are increasing faster than gold the price of gold bullion, so I believe this will result in a negative leverage.