chance to pick up cheap, page-8

extract from Robin Bromby...

"ONLY two Australian goldminers provide a decent return to their shareholders. That's the startling take from the latest gold sector review by London brokers Whitman Howard.

The broker sets a tough standard -- a 25 per cent annualised return on shareholders' funds.

However, it needs to be: as this column has whined about over the years, the gold sector as a whole has been a mediocre performer. Gold stocks have not mirrored the gold price. And don't get us started on dividends, or lack thereof.

Whitman Howard surveyed 85 global companies. It argues gold companies have focused for too long on per-ounce valuations and not enough on shareholder returns.

Of the 85, only 10 came up to scratch. The two Australian companies to get a big tick are Northern Star Resources (NST) and Teranga Gold Corp (TGZ).

NST did not quite get to the 25 per cent, but has been given the benefit of the doubt due to a strong track record. Whitman Howard sees growing pains catching up on NST, with rising costs of administration, depreciation and exploration. However, on Thursday the company reported more good drilling results at Ashburton including an intersection of 24m at 8.6g/tonne. Its Paulsons mine's output has been expanded to 100,000 ounces a year.

As for Teranga, its Sabodala mine in Senegal produced a quarterly record of 71,804oz in the three months to December. The report said TGZ was previously considered as mediocre but roared to life in the third quarter of 2012 as Sabodala was ramped up. The analysts are puzzled why the stock price plunged late last month from about $2.20 to as low as $1.63."

http://www.theaustralian.com.au/business/opinion/most-gold-stocks-not-up-to-scratch/story-fnciihm9-1226574910126