Bottomed and Going to Run? Mega Proxy for Gold and Iran, page-14

Fangk

Thanks for the generous comments.

OGC has tended to move well ahead of where I think it should be and subsequently fall back a long way, probably 40-50%. I got interested in again OGC as a possible momentum play rather than for its fundamental value (which I find difficult to work out due to the various stages that the mines are at), and bought at $3.00 and then reconsidered my position in the light of possible further falls in the USD POG to around 1400 (which did not happen). It was a smallish position for me and I accepted the loss and moved the money into EVN after it dropped. I feel SAR (which I should have also recently bought but did not), RRL and EVN are better longer term plays than OGC. SAR has had a very good run from its recent low of $2.80.

OGC's current main issue is that Dipidio is not delivering anything to offset the cost of its care and maintenance (I think they may still be paying all the wages of the employees there, but I have not checked this) and can not fund its capex/exploration from the mines that are still operating. Hence its going to go backwards financially for a time at least until Haile is running at 200k ounces pa and Haile's main capex is done (I don't know when that is) plus the new Waihi underground mine.

My view is that OGC management is a lot more professional then RSG and believed by the market, hence its frequently sustained over-valuation. I do not expect OGC to need a CR so long as the USD POG holds up, and it should be fairly safe once Haile is operating at peak capacity and Waihi has its new underground mine operational in early 2021.

For people that like to take higher risks in the hope of getting a bigger reward, KCN is one to consider. I hold over 500k shares and got in at around 24 cents. Its the sort of play one enters early and gets a buffer as the share price appreciates - however, if things go pear shaped (mostly to do with an adverse decision via by the Thai FTA arbitration process, then the share price will tank badly and I expect to lose most of my initial investment. I have been fortunate in holding a range of goldies from lower levels (AQG, PRU, WGX, SBM, MML, RMS) so if they retrace on me I will lose some of the paper gains but probably not any of the initial outlay. I hope to exit these sometime this year at temporary peak in the gold price during a bull run. Generally I feel the best way to play the goldies is to try to trade them over the annual gold price cycle, but there may be exceptions such as holding PRU during its expansion phase or AQG at it ramps up low cost production.

I find trading goldies across the annual cycle fairly challenging since I do not have a crystal ball and no technical analysis skills. One reason for holding gold in the last 12 months was expectations of lower Fed interest rates possibly over-riding all other factors.

loki