If you look at a 6 mo chart, you can see that 2.39 is on the shoulder of the H&S, so I think you're spot on with that point being the first tough resistance ahead. That would be a 12% move and my guess is that we'll get there on a fairly modest move in pog over the next couple of weeks.
They don't seem to specify the prices at which they hedged both oil and currencies. In their report they state:
Approximately 60%-70% of the Company's costs are denominated in US dollars.
A 10% change in foreign currency exchange rates would be expected to result in an approximate $14 impact on production cost of sales per ounce9.
Specific to the Russian rouble, a 10% change in the exchange rate would be expected to result in an approximate $11 impact on Russian production cost
of sales per ounce.
A $10 per barrel change in the price of oil would be expected to result in an approximate $1 impact on production cost of sales per ounce.
A $100 change in the price of gold would be expected to result in an approximate $3 impact on production cost of sales per ounce as a result of a change
From what prices.....? I guess you'd have to go by the date of the report then check what the prices where on that date..... So, if on 12/31 oil was at 70, if the average for 2015 comes in at 45, they would benefit to the tune of 2.5M x $2.50 = $7.5M. If that is in the right ball park, they must have hedged almost all their expected use at a high price...... If anyone can actually find the simple confirmation as to what price and how much they hedged, it would be helpful!
I'll have to take a look at the extent of their hedges but I do believe KGC has been crushed more than the other majors and they're still making $ based on current POG/AISC.
and still, the CB's cannot curb deflation..... They will soon ask Ben to fire up his helicopter for Janet! Funny thing is, messing with rates has no effect any more. The banks can charge what they want on credit cards and they now have the entire APR as their spread. The subprime borrowers are obviously completely maxed out, so even if the banks are paying nothing on the fed funds rate and a subprime borrower is willing to pay 30% APR on a credit card, the banks evidently realize that they'll never get the principle back and with deflation taking hold, the upper middle class will put off purchases, even if they have the cash, because they will expect lower prices in the future..... The fed is completely screwed. Continued ZIRP = no effect other than perhaps maintaining higher stock prices and that simply does not put enough $ into enough pockets; ZIRP exit and the stock market goes down, which is the only source of increased income keeping the upper middle spending. CAPEX plans have been lowered in every sector. CEO's have been financially engineering their EPS numbers for the past several years. The only thing that will boost the economy now is debt forgiveness. I hate it because I am not entitled to it but it's the only way the government will improve GDP. I despise the student debt forgiveness plan because I have paid out 40K in school fees in the past few years but I know of one person who just had 35K of student debt written off. Single parent but making a good salary. Those extra dollars will all be spent in the economy. Again, I hate these policies and I surely hope they desist but the government probably already know that this is all that will work - cash hand outs. Checks in the mail for everyone in the next 12 months - mark my words. Bush tax credit 2.0. Hold on to your gold stocks. The fed will throw the kitchen sink at the deflation problem and the $ will surely crash.
What do you like about KGC? I think it's undervalued relative to the other majors, producing over 2M oz's/year. However, as with the other majors, they have a lot of net debt - 1B. I think their CEO has made some blunders too. Curious. Thx.
I'd say gold is doing well in other currencies IN SPITE OF the strong dollar. In other words, holders of other currencies want to get out of those currencies and they're willing to pay the higher cost due to the strong dollar.....
Hedging some of his gold holdings and anticipating a possible move down to 1K. Says gold could be down here for several years and he's long the USD. When one of golds biggest bulls is getting quite bearish (relatively speaking), could we perhaps have seen the bottom....
I was looking at an overlay of IAG/KGC just yesterday. Very close correlation. KGC shareholders have been feeling as much pain as us over the past several years!
I am still hoping that IAG gets bought out for at least a 50% premium to current pps. The company is worth far more but the pps is there for all to see and if the company itself is not willing to buy its own shares at this price then who can argue that it is worth more than a 50% premium in a buy out..... If a similar sized miner bought IAG, I'd let me shares ride anyway. I can only assume that Letwin has been willing to pay several million a month in interest because he knows how attractive that cash is to possible suitors. With talk about buying the Sadiola stake and now mention of Alamos, I think anything and everything is possible but it's disappointing that nothing concrete has been done yet. Letwin has had about 6 months (since niobec sale was announced) to get something done and the only deals mentioned are barely worth the risk, so who knows, maybe the debt will be paid off after all. If profitable mines are not available at the moment, clear the debt, buy back your own depressed shares and while you're at it, get rid of some of your own mines (Rosabel & Westwood). What would they get for those two mines? Focus on West Africa for now, buy an accretive mine if one becomes available and you've got Boto coming soon regardless of POG, then Cote if POG gets back to all time highs. Letwin is surely finished in this business if he doesn't get it right this time.....
The presentation from 2009 anticipated average cash costs including royalties of $490/oz for the LOM. I don't know if those costs have gone up, down or remained about the same but I think AISC are usually about 25% higher, so that would put the AISC at about $612.50. At 600M paid for the mine, they'd be paying about $272/oz for the ground. Put the two together and you get $885/oz. This is the only way it is feasible and I suspect this is the reason why the stock hasn't been killed. At 1200 gold, they'd make 126M each year on the 400K oz's. The 2009 presentation suggests it would take 18 months to start pulling he 400K oz's out of the mine.
According to slide 29, it will take 18 months from successful feasibility to new plant operating...... Was hoping any purchase would be accretive within a year at least but......
Maven - if you can put a date on this report, we can deduce how long it would take, from now, to start producing the 400K oz/yr.
Take the option of paying down the debt off the table (which it is) and I think my fellow investors on the board (who's opinions I do very much respect) are being a tad unrealistic. Buying LSG would be a far better option but unless someone is aware of it being on the block, you cannot compare Sadiola with LSG. The only deal you can compare with Sadiola is Cripple Creek and any others which you know are for sale. When was the last time their was a hostile takeover of a gold miner.....? I think they are very rare because they are very messy. Maven - you state that the benefit will not be felt for years but I don't see a timeline to production anywhere. I would like to see that.
Uni, I hear what you say but you're being unrealistic because no one is selling mines in more stable regions with lower AISC. Any junior that is still profitable would take at least a 100% premium to pps to be acquired. If the street thought Letwin was going to pay off the debt, the pps would be over 3 right now, so that disappointment is baked in and if you're still holding, you've accepted that. If he's paid no more than 100M, I'll be fairly happy and I think the street will be too.