re: *** lhg bullish from strong up channel Mike here is another report from citibank which may shed some light on why the SP is moving up. Seems ther are some major differences in your assesment and what citibank say especially regarding hedging (NOT all their gold is hedged as you say - 10% of reserves are Hedged!).
I really hate looking at fundamentals because I think the technicals have all fundamentals factored in to the charts but this is what I dug up from October '04.
Read on:
Production of 155,002ozs was better than our forecast but still down 6% QoQ. Grade did decline, however the 2% fall to 5.16g/t was less than expected while autoclave availability and gold recovery (up 1.3% QoQ to 88.9%) were above budget. Lihir reiterated its production target of 600kozs for CY04.
Although the adverse impact of rising fuel costs was mentioned, gross cash costs were relatively steady at US$342/oz; but P&L costs rose 20% to US$291/oz due to lower deferred mining charges and a higher inventory adjustment – leading to a 33% reduction in CY04e NPAT.
Hedge commitments of 23.3kozs were delivered, while 26.5kozs were deferred. Hedge commitments represent 10% of reserves / 4.5% of resources.
Overall this was a good result that should further improve investor confidence. Fourth quarter production should be ~170kozs so that a continuation of this rate plus better grade, throughput and recovery into CY05 should produce ~740kozs with a subsequent cost reduction.
Our target price has been increased to $1.46 (previously $1.41) and our Buy (1H) recommendation has been maintained on anticipation of a continuation of the re-rating process. The stock’s appeal should be further enhanced when the scope of the additional geothermal power facility has been quantified later this year and more details are released of the expansion project next March.
LHG
unknown
