There's also a jurisdictional aspect to this conversation as well, the West African producers such as PRU and WAF are really sticking it to the WA producers both in terms of their sp performance and lower AISC's. I agree with your comments re leadership as well - this is a critical factor. When sizing up gold producers, I'd be looking at the following factors (not necessarily in order):
1.) AISC - Is it below AUD $1,000/oz for a West African producer, or $1,400 for an Australian-based producer?
2.) Sovereign risk i.e. geopolitical risk. Tier-1 locations such as Australia and North America are clearly out in front.
3.) Corporate leadership and reputation. Guys like Bill Beament and Mark Creasy attract a following.
4.) Orebody quality, scale and grade (g/t). Has the company uncovered a hidden gem (e.g. BGL), or are they flogging a dead horse that has been worked over many times before (e.g. OBM)?
5.) Free cashflow generation. Needs to be healthy and sustainable, clearly linked to point #1.
6.) Environmental and regulatory risk. Even the most alluring orebodies are potentially worthless if the environmental hoops and hurdles are overly demanding. E.g. SBM's Atlantic gold acquisition in Nova Scotia, and OGC's WKP prospect in the Wiahi district New Zealand.
(Not intended as investment advice, opinions are my own. Please DYOR)
RRL Price at posting:
$2.06 Sentiment: None Disclosure: Not Held
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