40 c, a new low, page-52

Perhaps Sunburntland? But he has not posted here for over 1 year.

The last few days has reminded me of what it was like being in MCO and AAM (now re-badged as SHK) and watching my gains evaporate. I was lucky to get out of MCO at a reasonable profit and broke even with AAM (not so lucky with RED).

I too am very tempted to buy for a bounce because much of the impetus for the selldown is that SLR will get booted from the ASX200.

However, when I look at the costs of the company and how it has consistently failed to meet targets I worry that in a falling POG environment things will just get worse.

Murchison is not going to be profitable and Mt Monger 120-130k ounce production will have to carry the company for an extended period.

At best costs may come down another $100/ounce but gold can easily fall by more than that and stay down for an extended period. Mt Monger was a loss making operation before SLR bought it so why should it be profitable now? The IGR operations were clearly loss making. Marry two loss makers and what do you get? Some savings for a smaller overall loss.

Mt Monger was supposed to pumping out 300k ounces now (perhaps 350k ounces if the Randall's mill was upgraded) but instead we are going to get 120-130k ounces. SLR sold us a dream which is not going to happen, even if the POG goes up to AUD1500.

Imagine another two to three years of gold at AUD1200-1350 and SLR will have run down its gold reserves for nothing and need a heap of money for more development and exploration. And if there is a significant mechanical failure resulting in extended mill downtime where would they find the funds to feed everybody?

So every goldiebug will hope to be saved by a falling AUD, India coming back on the international market in a big way, or that inflation takes off in developed countries to stimulate investment demand.

loki (you are a doomsayer)