Are we in a mood to have a serious conversation about this?So I...

Are we in a mood to have a serious conversation about this?

So I have been expecting the development third of the explorer-developer-producer continuum to blow out in this way for a while. The announcements re GMD last week were another sign this was coming.

Thus I have concentrated on stocks which combine exploration and development with production so that cashflow is available for things to be funded internally.

Not exclusively though.

So the question is what are the company tactics and therefore our tactics from this point?

You can categorise companies and their implicit responses to these challenges in a number of ways:
1. SVY says we are going to quantify a resource and then sell out to a tier 1.
2. ALK says we have the mothership producing and that gives us some resilience. PNR says the same albeit the mothership is relatively small.
3. CAI says we were really lucky and got our development priced at the "old" prices and are probably the last company to start producing with the "old" cost base.
4. BRB says ours is going to an absolute monster, we have lithium as a sideline and besides our American investors with deep pockets and a long-term view will work this through with us.
5. BGL says we are going to keep drilling and drilling... until what.... until the scale economics overpower the rising costs and/or a takeover seems inevitable.

So a variety of different ways of looking at it.

One thing is for sure. If we are looking at developers especially in the locked-down west we have to look for optionality as well. Whats the thing the company is positioned to do that means it will not get caught by these rising costs. Proximity becomes important, i.e. who can we link with to get the synergies. And if not that, then perhaps we need to swim upstram and re-evaluate our explorers. Instead of making them a five-bagger at resource of 8 years and 100k oz per year might have to do that at 15 years and 180k oz per year.

Interesting times.....with consolidation virtually guaranteed one would have thought.