Past mine acquisition records, page-20

There is a difference between profit and profitability. A simplified example:

production is 1,000 oz, gold price is $1,550 per oz Company A costs: $1,500, Company B costs are: $1,000.

Profit for Company A: $50,000 Profit for Company B: $550,000

Gold price goes up to $1,600 per oz and everything else stays the same. Profit for Company A: $100,000 Profit for Company B: $600,000 The increase in the gold price results in the profit of Company A going up 100% whilst the profit of Company B goes up 9% even though the actual profit of both companies only increased by $50,000.

Which do you think the market will be more impressed with, particularly as the company with the lower costs should have that already built into its share price? Of course it is a double edged sword though as the profits of the company with the high costs can be decimated with even a small drop in the gold price.