There has been alot of news media specultation about the rift between the POG and the SP of gold miners. Many dont realise that less than 15% of the 200 odd goldies listed on the ASX produce gold and only about 7 of these pay a dividend. The bottom line is that most ASX listed goldies live off their shareholders which gives credance to the addage:
'a gold mine is a hole in the ground with a lier on top".
KRM is the only goldie that went into production in the past 2 years and has paid a dividend. This dividend payment sends a strong signal to the market that KRM is highly unlikely to CR in the near future and that its policy of funding development out of cash flow is credible.
As a business, gold miners have to perform now given the current POG and this performance is measured by EPS and and a forward P/E of about 14 and not via a load of spin.
Resources in the ground are fine but the important questions to be asked are what it costs to get the gold out, when will that be and what will the POG likely be then and can the SP stand successive CRs/dilutions to get to the pouring stage.
Cheers Moorookamick
KRM Price at posting:
$1.18 Sentiment: LT Buy Disclosure: Held
