The high debt is the issue - net USD250m. Also had about USD100m in accounts payables, which is too high IMO.
If POG heads back down to USD1100 level the share price will be under 50 cents. USD1000 POG would result in the share price under 40 cents.
The management do a good job managing the mines but have taken on too much debt and have refused to hedge a significant level of production at a reasonable level, eg 60% of production for one year at USD1280-1300 would have made them a reasonably safe bet for me and I would not have sold out.
Such is life.
The Hounde project looks good but they do not have the USD320m to develop it. Perhaps they could sell it for USD150-200m and clear a heap of debt. I dunno, but I would not sell it, just hedge production at the right time and eventually they could clear most of the debt and get the funds to develop Hounde.
I will have another look at the company mid year or later in the second half.
Good luck all.
loki
EVR Price at posting:
58.0¢ Sentiment: None Disclosure: Not Held
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