record breaking volumes

The volumes on the ASX and NZSX have been staggering. My hope is that we see another change in substantial holding report indicating that Ospraie has unloaded another substantial chunk - this in my opinion would be an extremely bullish sign for OGC, as much of the selling pressure would be explained. However, there was a significant amount of stock also traded at and near the lows, so there could be some profit taking that is taking place.

I find it hard to believe that the cash cost per ounce is down near $300, but the exchange rate is much lower than what OGC forecasted for the fourth quarter. Also, input costs appear to be lower than expected for most gold producers. And if OGC is working hard at improving efficiencies than this is a perfect storm for low prices, and with gold sitting around 900 $USD the margins are growing. If the fourth quarter wasn't an anomoly of low costs, then the first quarter might be even better, as input costs should decline even more and the FX has averaged even lower so far. I just never saw OGC as a less than $400 cash cost per ounce producer. Will also be interesting to see what the cash outflow was for capital expenditures on the producing properties - the press release provide this information for exploration and development activities.

I hope that there is sufficient cash flow to both handle short term working capital deficits and maybe over the next year they can look to buying out some of their hedged positions. This is a good time to start cleaning up the balance sheet, as this has been depressing on the share price.

As for Dipidio, I am encouraged that they are weighing all options, but the recent rumours that they might consider a smaller scale operation indicates that some of the offers have not been palatable to the company. This is less encouraging, but it could also be positioning by the company. Something should happen soon, but I suppose that has been the sentiments for half a year now. Until OGC can comfortably handle development costs out of internal cash flow, they need to be focusing on a partner or an outright sale - the asset has to be more attractive than it was a few months ago, as the gold price has climbed and I believe that the capital costs will be less than the last study indicated.

In closing, if it is Ospraie who has been making up most of the selling volume, once they are out of shares - then I really believe OGC will have some strong legs moving upwards. They appear to have had a successful fourth quarter and are well positioned for this first quarter - but I will refrain from jumping with joy until I see the financial statements, listen to the conference call, and get some further management input.