Ann: Board and Management Changes-NST.AX, page-37

I'm not convinced it is a better metric than many others one can produce (when I'm finished I'll include some GPS metrics in my list for the 2015 to 2016 period for the companies 14 companies I'm following).

The GPS is what I call a relative metric. You can have 3 types of metric to compare companies that I can think of.

1) Absolute metrics Examples:- the size of a company's annual production or resources or Market Cap etc These metrics don't tell you much about a company other than its "size" relative to peers. Still useful metrics when comparing companies and deciding if you want to be invested as companies don't generally get big without some success at either a mining level or corporate level, through takeovers etc.

2) Relative metrics examples:- Resources/Reserves per share (GPS), Gold Production per share, Earnings per share. These metrics can be internal to the company or relate internal company metrics to external metrics like the gold price. You often see sensitivity analysis that try and measure a company's profitability sensitivity to changes in gold price (external relativity) or mine/mill head grade etc (internal sensitivity). I don't like these metrics so much when it comes to comparisons between companies, particularly when it comes to resources/reserves as most people just take the headline numbers as gospel. There are far too many variables and assumptions that come into evaluating the quality of a company's resources/reserves which the average investor is not capable of knowing so using them in comparisons is fraught with danger IMO unless you are a professional geologist or mining engineer and have spent the time analysing the assumptions behind the resource calculations and considering the depth, mineralogy, mining charactrersits and many other factors behind those resources. Proven and probable reserves are probably better numbers to do comparisons on as they contain less inherent assumptions and less risk for the investor. I'd go as far as to say only the professional "insiders" truly know the quality of the resources/reserves and the robustness of any mine plans. I could go on at length on this subject but suffice to say resources and mining reserves can not be easily compared and comparing on headline numbers alone is not a method I'd place much faith in.

3) Value metrics examples:- Market Cap/Annual Net profit after tax or Market Cap/Annual Gross profit from Production, Enterprise Value/Annual Production or EV Value/YoY change in (metric X). These are the type of metrics I prefer as they can flesh out real value  opportunities as the numbers are "market based". The Market Cap or EV is a reflection of the premium or lack of premium the market places on a companies shares. There is very little point investing in a company whose Market Cap/Net profit after tax or Market Cap/Gross profit from Production is very large unless as an investor you can see a very clear path by which the company is going to drastically improve these metric. What's the point in investing in a company when it might take 50 years to realise the companies current market cap based on its current after tax profit or some recent average of its after tax profits or if its gross profit from production in the last few years would still see the investor waiting 50 years to realise the companies present market cap.

I've been thinking about some new metrics around asset utilisation which could give insight on the way companies utilise their existing assets and how they apply the proceeds from their gold production or capital raisings. Take Net Assets/Annual Gold Product for example. Net Assets take into account the book value of the producing assets together with cash and cash equivalents that might be the proceeds from mining or capital raisings (and all liabilities). I'm thinking a gold producer should be more like a manufacturer than an investment company so in theory the more gold they produce for an equivalent asset value the better. If a company's asset per gold production ratio is large it means the book value of their assets is over stated or they are building up cash reserves that are not being invested back efficiently into producing gold (or not being distributed back to shareholders). If a company is in this situation it means it is neither happy investing its excess cash back into its own mines and can't see a better opportunity than holding cash. In this situation if the company won't invest more in its own mines and can't see a better investment (than holding cash) out there in the mining asset market place it should be buying back its own shares if it believes the long term return on its own equity will be better than the return on cash. The problem with this is that if you don't invest in your own mines or someone else's mines or in exploration the likelihood of your rate of return being better than that of cash will be small in the long run. The only other strategy a company can take in this situation is to wait for the cycle to turn and for assets to get cheaper again but this is not a viable strategy in my opinion as cycles are not predictable and tend to be very long run judging by historic norms. Anyone have any thoughts around looking at this type of metric or a variation thereof. Eshmun