hi thds, I echo most of your thoughts, except for SARs current dept position. I am fairly confident that they are already very close to being in the black, due to the huge amount of cash-flow they are generating per month.
As of Dec 30, 2019, they had net cash/bullion of $284m, with $385m in debt. I estimate they are producing approximately 54,000 ounces per month from their 3 operations, or they have produced approx 108,000 ounces since the start of the year, (using the last quarters AISC of AUD $1100), and a realized gold price of, lets be conservative, $2100, including the hedging, SAR, before capex etc, will have generated over $100m+..... yep... so by the end of the quarter, they should be net cash positive (a very wise poster -
@nordesmic recently noted that SAR will no longer be buying 3rd party ore, so that should also ensure that SARs march quarter is going to be a ripper). Not that I have a problem with debt for growth anyway, but.. I am just trying to show that SAR is a absolute monster with basically no debt. I think some of the brokerage firms are forecasting SAR will start paying a dividend in FY2021 (I seem to remember one said $0.12 or so, or around $130m p.a). That would see SAR on a 3% dividend at current prices.
I do think that many around the globe are not realizing that the current situation is very different to 2008. This is not a debt driven crisis (although that could potentially follow), but instead.. the global economy is freezing up due to a perception that the C19 virus will basically stop all operating businesses.. forever and that most will die (both of which is not going to happen, but... perception is everything right now). After some discussions with friends over the past week or so, I see only a few avenues available to Central banks around the world. Lower interest rates... yep, that is done... and only those that are leveraged benefit, who will likely only pay down debt.... undertake monetary stimulus, the likes of which we have never seen, including huge infrastructure projects, and finally... I am going to call it, the 'Rudd' solution, simply give people a handout and spend... its pure and unadulterated fiscal suicide, but... the Central banks have made it very clear, there will be no debt implosion, there will be no recession, or depression. The only other outcomes are either a barely noticeable equilibrium where fiat currencies spur enough demand to keep things ticking over, or... outright inflation.
The falling/rising stock markets are interesting to watch, as... money has very few places to actually go now!
I would rather own part of a business that is making a profit, is growing and will soon provide a income that is hopefully going to able to outpace inflation (or whatever comes its way). I won't go into property, its has its place, but... I do wonder if its going to struggle, due to the recession that is without doubt going to occur in Australia.
