gdo to acquire rand uranium, page-124

Hi all
I am going to reduce my GDO posts for a while until we have more clarity of the deal.
I want to leave everyone with a few thoughts.
1. On current spot - rand gold production is 440 odd dollars . With the first round of savings it will icrease to 600 plus. Second round it goes to 700 per oz. ( Ilja has commented this is a profitable business already)
2. Due to above the payback will be quick, every month that passes means risk ( which is very small IMO) will diminish and upside will become greater
3. The current owners have spent lots of Money upgrading facilities. What people dont factor in is cash costs comparisons can be very deceptive. The degree and extent of develolpment costs impact true free cash flow. Modder east true costs for this year are 800, next year 550. Therefore if for example rands total costs are 1100 after savings , the real cash accum difference between the two is alot narrower than using simple headline figures.
3. When Looking at new debt, one needs to subtract assets to determine GDO real debt profile and wether it's an issue. 210-68( golliath ) - 20 million cash = 122 net debt. This equals at worst 18 months cashflow.
4. GDO has gone from being a very low cost producer 460 with 120-150k oz production profile to a 300k oz producer with a 800 oz cost profile dropping to 700 short term ( 12 months) amd then to about 670 after second round of savings. By no means is the cost profile dangerous. As mentioned a drop in USD gold will result in a increase in zAR and thus a drop in cash costs. People incorrectly assume gold usd fall will not impact ZAR costs which is wrong.
5. Production profile / cost profile improves further with Vburg and again with uranium.

I think analysis of costs and margins is generally simplistic on hotcopper. I have been surprised that in the last 6 weeks no one actually picked up on the point that ZAR gold has increased at about half the rate as USD gold. In addition now the fear of a gold price drop is also looked ST simlistically as a) asset being purchased in a higher ZAR/ Aud environment. B) fall in gold means increase in USD making asset worth more, and gold Aud margin worth more therefore a natural hedge to the debt.
In summary, debt levels are not a concern given cashflows and assets. Buying usd assets that generate USD margins is a natural debt hedge. Rand gold is profitable now. Cost reductions are based on real savings including in-house processing and staff reductions. Massive uranium asset bought for free..GDO has flexibility with debt levels due to Goliath asset.
Once I get more detail on debt, costs, margins, Vburg etc etc I will come back, until then over and out.'