congrats on our marriage with keegan, page-28

Disco Stu

Thanks

"Still not sleeping? Try alcohol, it works for me."

lol. I used that method years ago, but the benefits wore off. I use part of a sleeping pill if I am desperate, but am wary of becoming dependent on it. I am getting a bit more sleep now so should be fine.

I do not hold any PVM shares in order to be well cashed up in case the POG or markets cack. In the last 18 months I have had to reconfigure my portfolio 4-5 times and I am getting tired of constantly fighting a rearguard action, so I am 80% in cash for now. I will review things next year, and am thinking of buying during the usual mid year low (or a bit thereafter) when there are often huge bargains.

Given that the US markets have had almost a 4 year bull run, company revenue and profit growth are topping out and profit margins are historically high, I am concerned about a major sharemarket fall. I suspect a lot of people think the same, which is why the small miners/explorers have done so badly.

I just checked what Ord Minnett thought of the merger with Keegan - they are positive but have reduced their valuation to $1.63 (which includes Keegan's project). Interestingly they also think there will be a third project at Kubi at some stage (date unknown) and have no value for this at present. They see only a 170k ounce pa gold operation at Esaase costing only $260m, in which case Asanko should be able to fund it from profits (in my post above I was assuming they would go for the bigger project costing over $500m).

Both the original Esaase project (at $500m+) and the CAS projects are cost intensive. It is just that once you can pay for capital outlay for the original Esaase project to produce 260k ounces pa it should be a cash cow while the CAS project is going to have a smaller level of output (around 150k ounces pa I think). According to Ords, the revised Esaase project will be designed to process ore at an average grade of 1.7 grams/tonne and produce 170k ounces pa. That is much higher than the 1.1 gram per tonne for CAS and will therefore be less costly to construct and operate (if all all other things being equal).

Given how opex and capex costs have risen, PRU shareholders would now face a lot more dilution if it were now seeking to build its mine in Ghana.

I actually like GRY's main project, and think there is value in AMX. I think AMX's project will eventually be developed, but perhaps it may be some other party if the markets are difficult. GRY and AMX are worth buying for a punt in the right circumstances. I am not game enough to get back in at present. Bernanke did not manage to fire up the markets or the POG last night, perhaps QE is losing its punch. We need a bit more inflation to help gold and goldies along, especially in India and China as well as in US.

loki (please no hearts for me - I am a one trick pony and get it wrong as much as anyone else.)