Was speaking to a couple of analysts/fund managers yesterday. They are buying gold miners as they think gold has bottomed. They see it somewhat similar to oil a couple years ago.
Gold price reached the point many producers were no longer making money, which reduces overall new mine investment and existing capex reinvestment, which means reduced future supply coming online. Same thing with oil a couple years ago, only took a couple years to flow through to prices reaching a more sustainable level.
Its not as simple as just looking at AISC though, that can be made pretty for a short period of time by mining higher grade orebodies (see BLK). Need a consistent high grade ore body to be able to maintain low AISC, as well as reserves sufficient to have a long mine life, otherwise profits need to continually be spent on capex to bring new ore online...
Its why Newcrest trade at such a premium EV/EBITDA multiple.
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