Question. Two gold companies, A & B. Company A has a reserve of...

Question. Two gold companies, A & B. Company A has a reserve of 1m ounces @ 4g/t. B has 2m ozs @ 2%. A produces 100kozs/annum. B produces 200koz/a. A has an AIC of $2000/oz, B has an AIC of $2500/oz. (Resources are also similarly proportional). Both are unhedged and both receive $3000/oz for their gold. Thus both have Net Cash flows of $100m/a. (Proportional D&A etc). Which would you takeover, or which would you invest in, which is the better investment?

Answer, of course, depends. If POG is steady or falls, then A is better, but if POG is on the rise (as is now, and, IMO, will continue to do so for the medium term) then B is better.

For the Newbies. If POG goes to $3500/oz, then A will have a NCF of $150m. Whereas B's will be $200m/a. Theoretical? Not really. POG started the year at $3028 and finished is currently $3552/oz. More than the forementioned $500/oz.

Now let me state I know nothing about Karora and will add or otherwise when I do more research, but I feel it's a relatively cheap buy, if, as I suspect, gold will continue to shine a while longer. Gold is gaining favour, but gold stocks haven't followed much as yet. As an example, this time in 2022, the gold/XAU ratio was 11.89. This time last year the ratio was 14.48. Currently the ratio is at 17.35. With the magnificent seven techies becoming five, and even they are stabilizing, money will follow gold into gold stocks.

Could WGX have done better? Dont know. What's done, is done. But on a personal level I have a soft spot for Lake Cowan and surrounds.

One more thing, I am totally unfamiliar with WB and most of the current crop of leaders in the mining industry. (Last annual meeting I attended in WA was the one in which BB, of NST, announced he had sold a bunch of his stock that morning to various institutions for $1.28(?) when the stock trading above 1.40) But feel that WB has a gambler's instinct. Finalizing the hedging could be testament to that. I like that.in him.