no capital raising needed, page-39

hi filby,

Can't help but feel excited by what the drilling will bring up. From some of the literature I read there is potential for high grade shoots to be present there, especially at Boabedroo, hopefully the greenfields exploration program will bring up some more targets along the same lines.

For the time being however it is all about sentiment with regard to gold mining stocks. If you go by this article (coincidentally feature BofA-Merrill Lynch analyst) then we could be in for a lean time until the re-rating comes, and quote:

BofA-Merrill Lynch (BofA-ML) analysts are forecasting gold prices could fall to $1,400 an ounce during seasonal weakness in July before rebounding as high as $1,650 an ounce by early fall......

This year's carnage has created a substantial opportunity to buy healthy, gold mining companies at historically low prices compared to gold bullion. Cooper says that "the net result is that gold companies can now be purchased for about their intrinsic value for the spot price of bullion."

Historically, one could purchase about 4.4. units of the XAU for the price of an ounce of gold. That ratio fell to less than 3 units per ounce in the mid-1990s when gold prices bottomed but has averaged 5.2 units during the current bull market.



You can see from the chart that today's level is 46 percent above the historical norm at 7.6 units to one ounce of gold. By this measure, one can purchase shares of gold mining companies at their second-cheapest level in nearly 30 years. The extreme was in 2008 during the depths of the financial crisis; many share values quadrupled off of those levels.....

With gold companies currently undervalued and offering strong cash flows and attractive yields, we think gold equities will be rewarded by the market and rise with strong gold prices. BMO Financial analyst Don Coxe echoes our sentiment: "gold and gold stocks offer a protection that is going to become more valuable in the period of months ahead. It's possible that the long-awaited period, when gold stocks outperform bullion, is coming soon."

With a market cap of $42m with $14m in the bank, the SBL plant and in-ground value of the resource is currently valued at $28m, you would have to say this is even less than "intrinsic" value.

With July traditionally a lean time for the POG, our resolve might be even tested more in the coming weeks but from my readings there seems to be a consensus that Aug/Sept may see a real turnaround for gold stocks.

Hopefully we'll all still be holding by that time if it comes to fruition. I'm sure some are getting nervous by the lack of buying currently, this sentiment together with EOFY selling might be exacerbating the current situation.

I'll be looking for further weakness and picking up some more during the next few weeks if this is the case.

Good luck all.