I listened to the entire call and made notes. A summation follows:
Earnings were impacted in 4/4 by a 28% decline in silver prices..the company sold at an average of $10.49 per oz in the 4/4.
The 65 million write down was related to the junior holdings and were valued at the Dec31/08 value of the stocks. The break down is BCM $29 RVM $10 Aqualine? $.8 SBB $7 MGT $6.8 ..In millions..rest not mentioned. I may have misheard the Aqualine #.
Peter Barnes says the write down has no effect on Cash Flow and the co. still believes in the merits of the junior miners.
There are now(since bought deal) no concerns re debt covenance.
G+A for 4/4 was $3 million..For 2008 G+A was $16.448 mill G+A was higher due to the GG sale of it's holdings in SLW and they were carrying part of the costs so SLW had to hire and take over reponsibilty for that portion. In 2009 G+A is expected to reduce to $11 to $13 million not including options.
Current debt is $157 million due July 2014 at 1.25%
Revolving loan of $213.5 million
Barnes says the co. has strong CF at $14 silver and he is bullish "LONG TERM" on silver prices. In 2009 production of 15-17 mill ozs expected is conservative in his view. By 2013 30 mill oz production is expected. He states co. has low debt, $400 million revolving debt facility and best growth prospects ever seen.
Production in 2009 will be back loaded. 1/4 of 2009 expect 3 million oz prod'n. Expect 7 mill production in first 1/2. 9-10 mill in 2nd half as penasquito kicks in 4/4 09.
Barnes says the company is not focused on debt payment with CF at this time and will instead stock pile cash to make accretive aquisition(s) in the next 12 to 18 months..low cost producers that can contribute to the stream at outset.
The company will pay no income tax until Keno Hills project comes on in a few years.
That's a summation of what was said by all parties including questions asked.
It sounds positive but I believe in fundamentals. The risk warning stated at the outset of the CC included the fact the company has no control over the rate of production by the contractors and has of course no control re price of silver.
The media will put a spin(negative?) on this in the press tomorrow and the analysts are now working to see if they need to regrade the stock up or down or not at all. The company does seem to be getting an overpromise under deliver reputation but that is just my opinion...let's see what the press says and what the analysts do. The volatility is pretty amazing and that's what I'm doing now is in and out with good averaging for LT hold.
That's what makes a market...different opinions....other countries debasing their currencies doesn't necessarily mean those people will run to silver and gold..they may run to the US$ and that pushes the dollar up and PM's down...we saw that with funds buying T-Bills a month or so ago. It is easy to move rates up and can be done outside of FOMC meeting if they want to...any sign of inflation and a stable slow growth economy and they have the green light...that attracts more buyers of US$'s as interest payments increase.
You make it sound so easy...Raise the rates a little...curb inflation.....
You forget there are 3 billion people in china and india alone....People around the world dont trust their currencies...There government s are trying to debase them...
USA wont be able to pay interest on debt soon.....12 trillion and counting.....Gold and silver are and always have been money....Its just now its the only real money..
My opinion is that inflation is a long way off..at least a year..you will know the economy is recovering when housing inventory numbers stabalize and housing prices stabilize and start a slow move up...the housing market is where this all started and that is where it will end....signalling new growth...the Fed has lots of room to fight inflation...with interest rates at zero they can move them up a bit at a time so as not to hurt employment and gdp numbers...that will set the tone that they are willing to act and that can scare people out of PM's...I don't believe all the hype cause you never know who is behind it...funds trying to push prices higher...look at PM's..when you watch CNBC or listen to the radio..Where are the bears? Even the bus driver is telling passengers to "buy gold"....to me..that's the top.
So I think the self fulfilling prophecy of $1000 gold may be attained but only because new buyers emerged and bought into the story.....that's usually when the big boys pull out and leave the retail investor holding the bag. I remember the analysts and bubble heads on CNBC screaming $200 oil in July...then the bubble popped...The reason the oil bubble popped was I believe due to the rumors that they might change margin requirements on oil contracts....that scared the speculators out...the govenment could do the same to gold and silver..put out a statement that they are looking at upping margin requirements on Comex contracts...and down she goes.....They did that to the Hunt brothers in 1980 cause the Hunts were almost successful in cornering the silver market...They aren't as motivated to do that as gold and silver prices don't hurt the average consumer like energy prices do...but you never know what the government might do...people hoarding money hurts the economy...they want money flushed out and spent on consumables that drive the economy.
The herd can do almost anything and if it runs to silver and gold it could explode even with inflation at zero..and I will be wrong...and surprised at the fear that is out there (bank failures...California bankrupt)....Or the fear could come if funds are forced to sell everything again as in Nov/08 and all will go down..The PM's are the only sector out there worth playing but I see them as a trade...not an investment at this time.
This market is totally unpredictable and has little to do with fundamentals and technicals..it is driven by sentiment..but I do use fundamentals as a guide to not pay ridiculous prices for anything...As you can see I, like everyone else, can't say with certainty where prices are going..that's what makes a market.
I don't recall a 14 Mill production target. I believe they always said something like 11 to 13 for 2008 but I could be wrong..The actual was 11.1 million ozs....250,000 oz more or less was not delivered on time for 2008 and went into first 1/4 2009.