Ann: Saracen Acquires Kailis and King of the Hills Gold Projects, page-13

Ophir

Thanks for the charts.

There could be a good follow on rally taking the gold price over USD1200 a bit later, but first I expect some consolidation/pullback.

Down the track I think a lower low for USD POG is coming, late this year or sometime next year.

The sale of the SBM assets was dumb - like I said there is very little money coming, $3m is meaningless against total AUD debt of $370m (net debt is lower when accounting for cash on hand), and most of that is not due to be paid for several years. If you believe in a higher gold price, which is bound to come at some reasonable point in time, why sell? There was no compulsion to do so and the ounces look good.

Kallis was viable mining option. King of the Hills required some more drilling I suppose to turn resources into reserves, and what they had there required a bit of skill in mining narrow vein ore bodies. The trouble is these guys are not like the NST mob who turned a dead beat deposit at Paulson's into a $billion company because the SBM CEO and others fancy themselves as coming from the big end of town and want to start off with tier 1 assets (which is what Gwalia is). However there is very little tier one assets to be acquired on the cheap - see the price EVN paid to get a mine from Barrick (I think it was).

I think going forward SBM's profit margins will not look as hot as they did the last two quarters, but I never expected them anyway.

Its nice to hold SBM in a rising gold price environment, but it could be painful if the AUD POG really tanks (main issue being the debt and need for capital on a mine shaft and Simberi upgrade).

Good hunting.

loki