On the bright side Westwood can't really disappoint anymore since AISC will probably be $1,300-$1,500 and there is minimal production there. We should start taking a guess when the next 'rock burst' will occur I say in September this year!
I think they will definitely end up buying the other Sadiola stake to 'make up' for lost production from Westwood. The Westwood problems will make them more desperate to replace those lost ounces and they probably will overpay for Sadiola.
I changed my mind on my next buy of IAG to trade. Based on the 6 month chart it says $1.74 area is support and likely to test so I lowered order. After that its the $1.42 (all time low) area I believe and would be a buyer there for a third buy trade.
Yes lee one can't buy a company just for its assets as the CEO and management can more than offset great assets (high cash, Boto potential). I picked up more trading shares in the low 2's and will do so in the mid to upper 1.80's. There is always the hope that Letwin will get fired or resign and the stock goes up 30% that day! The sad thing is Letwin and co will continue to throw good money at Westwood to save face in the hopes that it becomes viable rather than just wait until a new design is in place or just sell the thing! One could argue IAG would be better off if the whole Westwood mine collapsed thereby they wouldn't be able to sink more money into it!
Yes, I believe the note was taken out for Westwood even though at the time they had a billion in cash. They burned through most of that cash on Westwood. I think IAG would be better off burning their cash in Westwood to stay warm versuses using it to develop it!
Good point acampora which is why the the parts are worth well more than IAG staying intact. However, IAG would probably not be willing to sell without at least a 50% premium if not more. If the same shareholders that voted the BOD and Letwin back in get to vote on a take-over expect them to reject anything at a minimum under a 150% or $3 per share.
Based on grade, potential production 600-800 million is a reasonable price IMO. However, like I said bambem, if $1 is the highest bid (only means mine is more of a disaster then we realize) get rid of it and be done with it!
They can use the money to expand Rosabel and Sadiola and pay of the %$&%! debt with the rest so no will worry about them blowing the cash!
Now the big question is would Agnico want it and if so for what price? I say sell to the highest bidder what ever that may be. If the highest bidder is $1 then that's what its worth! I think they can fetch anywhere between 600-800 million based on potential production and infrastructure. That is a far cry from the 1 billion I thought it was worth a little over a year ago.
It appears what really happened here is the original explosion/rock burst that delayed 'commercial' production by a year was a lot more serious than what we were led to believe. Weather or not it was in a different part of the mine as the most recent rock bursts is irrelevant because the whole mine is 'unstable'. It clearly appears that Letwin and the BOD rushed through opening the mine to 'commercial' production well ahead of when they should have. Not having a life of mine plan is one example, having several 'incidents' is another and having to redesign the mine mid cycle is yet another.
IAG is not capable of efficiently mining an underground mine much less a difficult one like Westwood. They should stick to what they know and sell Westwood and do only open pit mines which they have a lot of experience at. Letwin and the BOD think by throwing more and more money at Westwood will solve the problem. Time will tell but it is not looking good!
"Is the perception of him being stupid and inept so widespread, that we now have to pat him on the head like an obedient dog for not flushing even more shareholder money away?" My answer is YES it has gotten that bad IMO!
stockmaven, that is one of the most accurate depictions of Letwin there could be!
I think gold in general will start to move north in late August going into September and the possibility of China accouncing their reserves and currency being backed by gold, etc...
As far as my long term shares I agree with you and in time we will get much higher. However, it is a little frustrating even in the short term to move $25 in gold up and trade unchanged! I think some technical resistance was reached at $2.43 based on the 10 week 60 minute chart I ran. I based a short term trade on that resistance and so far its proving correct. However, if we break $2.43 then we could be off to the next level what ever that may be (2.60 or 2.80...)?
Thanks for posting that excerpt maven. The way it reads I agree Sadiola seems to be a done deal in at least buying the other half. Now what IAG does after that (sell half or whole thing or develop on own) would be the bigger question. I just don't see how they can justify paying hundreds of millions in CAPEX for at most 3 million OZ!
I think people like us are expecting a big move up or down for gold real soon thereby it will do the opposite and stay flat! ; )
Anyway, when the market starts assigning a value to Boto other that $0 to IAG it could move the stock even with gold flat. Their money would be better spent there with a lot more potential then dumping it in Sadiola with limited potential and high ramp up costs to process the harder rock.
Well lee if gold were to go to $1,000 my best guess for IAG trading around that 52 week/all time low of $1.42 area +/- 10 cents with a drop into the $1.20's briefly. I am with you in that it will stay over $1. After all, if gold should go that low and stay there that means there is deflation thus cheaper labor and energy costs in the future for miners so only the ones without the cash or credit lines will go BK. Since IAG has the cash and LOC they will be fine.
IAG's cash balance and manageable debt with current cash keeps them from breaking $1 and most likely not get into the low 1's with a quick drop there IMO. I do agree with you on Westwood and they would most likely halt expansion thus keep production at 80k ounces and not risk money expanding it with gold at $1,000. Sadiola would be a no go and Rosabel expansion may be put off for some time. Essikaine would still run full steam ahead IMO
I agree angie that IAG with its cash position will easily survive and if it hit the $1,000 level it would be very briefly like you say and then most likely 'rocket' back up to where it is now IMO At that point it would be on its way to $1,400 1 year later or less IMO
I am with you lee and that is my main point to him in that since costs are fixed short term (hedges, labor contracts, etc.gram per ton) a short term move to $1,400 or $1,500 should see IAG in that $8 at $1,400 and $14 range at $1,500 as you state depending on company operations and ramping up Westwood, etc.
I also agree with you in that the next major moves are either to $1,000 or $1,400 as both are major support/resistance. Low prices $1,000 will indeed cure the demand side and dry up the supply a bit!
You are basing gold on $2,500 per ounce then. I thought you were basing it on $1,300 an ounce! There is your decimal point! $2,500 per ounce is out in la la land (as long as central banks manipulate the paper market) and can't realistically be expected anytime soon IMO. Also, if at $2,500 per ounce cost of labor would have risen a lot and oil most likely as well. Do not forget that Letwin and the BOD would of most likely hedged 80% of gold well below that $2,500 per ounce mark!
Remember miners were making lots of money with gold at $700 per ounce yet are struggling at $1,200 per ounce.
I got $.20 per share earnings but what is in a decimal point right! ; )
However, that still brings IAG to the $4.00 pps so a double from here more or less.
800,000*100 profit per ounce is 80million divided by about 400 million shares #$%$20
Good point about buying up Anglo's share on the cheap and holding or flipping it but definently not sinking money in it. Boto as you say is getting closer each day and they should concentrate on that if anything. IAG may go up another 10% easy if they just give up on Sadiola and Yatela. Neither of them are worth the risk IMO.
The good news about Cripple Creek is it shows there are buyers for less than stellar assets at decent prices and the buying company can issues shares for cash to buy so even if a company does not have the cash on hand there are investors willing to take shares for cash which not long ago seemed almost impossible in the gold sector!
Now that Cripple Creek is off the auction block its my opinion that some are relieved IAG will not be buying it as there was a chance they would since they were one of the companies looking at it. Now if only Sadiola and Yatela are sold by Anglo to someone else we don't need to worry about spending all the CAPEX on our own for 3 million total ounces at best!