future budget, page-7

Wow, I have no idea what you just said, gself.

I simply said... if one feels long term pog is 1200, then dont buy KGM. KGM is a good company if you believe POG will be over 1500 over the years.... because...

1) they are low grade, but LOTS of it
2) they are open pit for the low grade

So, if you end up having 'unlimited' 1200 oz mining you can sell at 1500+, then you are fine.

NST, if they are very low cost, that means their share price should be much less levered to POG. Just do the maths

KGM cost 1200... sell 1300, profit 100 on 1300 or 7.5%
KGM cost 1200... sell 1500, profit 300 on 1500 or 20%

NST cost 700... sell 1300, profit 600 on 1300 or 46%
NST cost 700... sell 1500, profit 800 on 1500 or 53%

So, you get the idea... a $200 fall in gold price makes:

KGM go from 20% profit to 7%. It has fallen 60%
NST falls only 15%

So KGM is extremely leveraged to POG. If POG doubled, then KGM would likely increase 400 to 500%. NST, I guess would at best 'double' as well.

So, your comment on they were already worth NIL before POG fell makes absolutely no sense. However, if you are believer in 1000 or 1200 gold you would never have invested in KGM in the first place.

I was looking for low grade, open pit, high costs... so I could buy cheap.... expecting POG to be 1500+ up to $2000... to get the big leverage. Currently I have big leverage.... DOWN!

My sentiment is LT Buy as I believe POG will come back. If I thought it would be $1000 in the years coming, then I would sell.

Another point. If the mining boom tapers off more, then the cost of production will fall - but in OZ, I bet not too much. It would be nice to reduce costs from 1200 oz to 1100 oz. But can they?

re hibernate, I meant not mine for nil profit. I agree with Focus saying 'we will not deplete resource for NIL profit'. So if POG ended up at 1000 or 1200 you will find KGM shares will fall to next to nil as they sit waiting for a price recovery.

So, I am back what I wrote to start. KGM is very, very, very much levered to POG. You are buying futuer POG with KGM. That is the decision you need to make for yourself.