Kinross Gold Corporation (KGC), a Canadian based gold and silver mining company, has been operating in North America, West Africa, Russia and South America. The company has more than 9 projects running. The operational performance of the company - as viewed from balance sheet and income statement - is promising’ however, the company needs to reduce operation cost. A company with lower cost of production and lower debt burden ensures financial flexibility as well as financial solvency in long run. KGC, by nature of most other mining companies has incurred a lot of expenses in initial stage which causes increase in negative earnings per share. However, it is expected that the company will recover gradually. Market price of KGC stock has shown a significant volatility in the last one year (high $11.2 and low $4.97). Now the stock is traded close to $5.0 which is reflection of present operational performance. The company also has been facing challenges from peer companies, some of which have low operating cost as well as gold production cost. For example, Pershing Gold (PGLC) expects to have production cost around $700 to $800 per ounce, which signs for good return in future having a possibility of increase in price in market. However, it is not difficult for KGC to do well if it can reduce cost of production.
Holding SA gave 100% gain to some investors and 100% loss to some investors. The company showed net loss of $9.6 million in Q2, 2013 as compared to $2.3 million at the same period in last year. The net working capital also decreased due to comparatively high cost of production which stood at $.29.2 million On June 30,2013 as compared to $49.6 million at the same period of previous year. As pointed out on a Seeking Alpha article, cost of production in gold mining business needs to control as the price of gold has been reduced. The industry average cost of production is around $1200. SA needs to control cost. There are some companies including Pershing Gold (PGLC) which expects to control the cost within $800 to get comparative advantage. It is expected that SA management will be able to keep situation under control to give better return to shareholders by protecting unexpected price illusion of stock in the market. Seabridge Gold, Inc. (SA) is among the stock which has experienced higher volatility of price as well as trade volume in the market. By holding this stock, investors experienced 5 visible up and down in the last one year with a yearly high price $19.96 and low price $8.23. The company has a total market capitalization of 484.07 million.
Barrick Gold’s (ABX), a company having market capitalization of $18.42 billion has been passing slow days in the market. It’s financial performance has impacted on the market price of its stocks to some extent. The company’s business has been on pressure not only for its internal environment but the industry also becoming more challenging than earlier. Participation of new competitors having latest technological advancement has been causing declining of market share of the existing ones. In the market, there are some companies like PGLC, PVG, PPP, FNV are expanding their operation by showing challenges to other participants. However, it is expected that the company will recover its position in the market. According to Jamie Sokalsky, CEO of Barrick Gold (ABX),"[Barrick has] 5 core long-live mines in the Americas. Those mines this year will generate about 60% of our production at All-In-Sustaining-Costs of only $700 per ounce. We also have 75% of our 2013 production at All-In-Sustaining Costs of $800 per ounce. In that 25% that's well above that is what we are working on to either change, reduce or divest."
Goldcorp, Inc. (GG) having Head quarter in Vancouver, British Columbia has been facing challenge in the competitive business environment in the industry. Entry of some new and promising companies has been capturing market share of the existing player to some extent. In the market, there are some companies like PGLC, PVG, PPP, FNV are expanding their operation by showing challenges to other participants. The above has also been reflecting in the market price of shares of the respective company. The company has been considered as a slow item in the market due to its continuous price losing in the last one month. Closing price of GG wasUS$31.25 on August 25, 2013 which is now to US$26.62 with a price loss of US$ 5, this is unexpected to its shareholders. Low priced stock like PGLC are also attracting the investors due to possibility of short term capital gain. However, it is expected that the recent slowdown of GG is a temporary crisis which will be eliminated by its operational results which is expected to improve more in the next quarters. Buying and holding stocks in slow or bearish market folded in the bull market.
Buy pressure creates significant demand of a stock and push its price up significantly. Impact of serial buy of a stock not only simply increase price but also carries some important meanings for this. Today the issue of buying pattern of Pershing Gold Corporation (PGLC) - the rising horse in the gold industry – has been comes as hot topic in the area of investors’ world. Honig Barry C, the owner of more than 10% holding of the company, has also been buying the share to some large scale recently. As PGLC has already passed its primary and middle stage mining steps of some of its field, it is expected that the company will start to produce its so long output i.e. revenue for the shareholders in the coming period. Buying PGLC by Honig Barry C is also a mechanism of cost reduction of existing holding besides picking stocks from the market. This is an indication of supply gap of stocks followed by further price hike in the near future. What will happen if other large investors start buying or Honig Barry C keeps its position in buy side?