Any fool knows when you borrow money to buy a house the bank always insists on having mortgage insurance in case something unforseen prevents you from being able to meet your repayments. I don’t know, perhaps you have never bought a house ?? Similarly, when a mining company borrows from a bank the bank insists on the company hedging a proportion of its production in case the price of gold drops significantly which would create difficulty for them to meet their repayments. Hedging is a recognised form of insurance in the mining industry (some others too).
As PGI are moving towards refinancing they are very aware that the new lender will of course also require a hedge (insurance) so it is astute (not strange) to begin acquiring this hedge while the price of gold is high. If you check out XAUAUD you will see gold at $1,634 is now only $200 from its all time high in AUD ! Past performance suggests that after the gold price peaks it usually comes back down sharply. If PGI wait until they are ready to sign the paper work on new financing it is quite possible the gold price could be lower than what it is now. Personally, I think there is a good chance that the gold price will soar straight past previous peaks without any major retracement for some time, but I could be wrong.
A, you tell more porkies - I never said PGI would miss target by 100 oz’s ! In my opinion they will miss their target but it is not of great significance to long term holders because eventually they will get there or get close. If they only do 900/wk this qtr it is still 100 better than the Dec qtr.
These are the calcs using figures from the qrtly and they show profit increasing x 4 in a relative short period of time. That is why PGI is a buy !!
Dec Qtr: Au, 173,823*3.65/31.10348*.466, 9,505.5 oz/qtr
Ag, 173,823*41.9/31.10348*.341, 71,618 oz/qtr, or 1,023 GE oz/qtr
Tot oz's GE, 10,529 oz/qtr, or 810 oz/wk Revenue $US, 810 X 1185 = 960 $K/wk or $12.48m/qtr
Cash Costs: 847 $K/wk Profit: 960K - 847K = $113K per week or $US1.47m/qtr.
$144.9K AUD pw or $1.88m AUD /qtr less capital works, royalties, finance & deprecn.
Mar Qtr and onwards: Au, 193,000*3.7/31.10348*.498, 11,434 oz/qtr
Ag, 193,000*38.6/31.10348*.332, 79,520 oz/qtr or 1,136 GE oz/qtr
Tot oz's GE: 12,569.5, or 967 oz/wk Revenue $US, 967 X 1185 = 1,145.9 $K/wk or $14.9m/qtr
Cash Costs: $650 $K/wk Profit: 1,146K - 650K = $496K per week or $US6.45m/qtr.
$635K AUD pw or $8.2m AUD /qtr less capital works, royalties, finance & deprecn.
I will be quite surprised if they can deliver this on time but if it takes until the end of June so be it, it is coming !
As somebody pointed out recently the Chinese now acknowledge that PGI is worth $US100m. If you divide this figure by the number of shares and convert to AUD it is close to 15c per share (old shares). If we sign a contract with the Northern US company to supply concentrate BJ says it adds 100m to the value of PGI. This assumes PGI will only make $100 per oz that it processes (for 1mill oz’s over 10 years) which is most likely very conservative, but that is another 15c of value to add to the share price.
PGI Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
(20min delay)