Exited PRU this morning based on a few things. Firstly I like...

Exited PRU this morning based on a few things.

Firstly I like the macro trend and outlook for gold, as long as gold goes up so will gold based equities - so if that is all you care about then you probably need to stop reading here.

Reason for getting out of PRU:

1. Whilst I think PRU is a decent company, I think there is better value out there now. Eg, MLX, MML, KCN

Why? Because after this acquisition of Amara PRU has and will be essentially left in no mans land for 1.5-2 years

It will be a minimum of 36 months before it can develop one of Amaras projects which will require ~330m capex. Until then PRU will be left operating one low grade asset and draining any FCF and cash on hand into the Amara project which it will not see a return on until the time period mentioned above.

In the short term any increases in SP will be difficult even if the price of gold goes up as the deal is a script deal which will dilute all existing holders in PRU. So until value is realised by the operation of the Amara project all PRU holders will be exposed to a relatively stable NPAT and FCF (current operation) but on a highly diluted holding base.