Although the results are disappointing, I think they are a long...

Although the results are disappointing, I think they are a long way from a disaster and the loss in revenue should be compensated for with the increased POG in the profit this quarter. (although I have not actually calculated how much their hedging will affect this with the lower production)

There were plenty of warnings last quarter that there was going to be a hit in Gwalia because they were prioritising development of ventilation which was a major bottleneck. I have not had the time to follow as closely as I used to but I think this is the first I have that the production restrictions will be over with the completion of the ventilation upgrade in January 2000. There was no downgrade in guidance yet so it is possible they will make up production in the second half. This may change with the quarterly but from past experience, they would have noted here that guidance was being revised.

In the long term, nothing fundamental has changed, the gold has not vanished. They have a significant growth profile ahead and although management made a couple of poor calls with acquisitions a while back I have found them to be good and honest with reporting. I agreed at the time that Atlantic was a bit overpriced but maybe that is what it took buying into a rising gold price.

Technicals are difficult at the moment, certainly base support is down at $2.50 but I am not convinced it will get there as there was good buying support today and I think this will continue as people digest there were no real surprises. It was always going to be a difficult first half, and sellers did not need inside info to realise this and drop out to invest in gold companies better short term prospects in the quarter. The rising gold price means that projects that were losing money previous quarters may now turn a profit which has a much bigger impact on share price than more established producers.

It may be prudent to hold for the quarterly, but if the buyers push up past the gap next week I would change to a buy, betting a bit that there is no guidance downgrade in the quarterly.

Just my thoughts but don't panic and read more into this than is given in the update.