I dunno, but how can you realistically have LGL priced at...

I dunno, but how can you realistically have LGL priced at 4.3??!?

Am I missing something or is this just all sentiments??

LGL has mined a total of 523oz of gold. Assume that it has sold all of them at today's spot prices of $792 (an unrealistic assumption). The cash cost is said to be the upper end of $200, so let's assume $260 to be ultra conversative (it appears they've estimated at about $282).

Profit = 523koz x (792 - 260) for the 3 quarters = $278 mil.

Assume that they can achieve 220koz in the last quarter, and assuming they can achieve the same low cost, then, profit for 4th quarter = 220 x (792 - 260) = 117m.

This gives an annual profit of circa 395m. LGL has 2bn shares on issue. This gives LGL a PE ratio of 28.7 based on today's closing price!

There are some very unrealistic assumptions in there.

1: This is calculated based on today's spot gold prices. In actual fact, LGL has been selling gold progressively throughout the year and the sale price for the gold will be significantly less than today's spot price.

2: The cash cost has only once been below $260 in the 4th quarter of 2006. It is obvious that their cost of extraction is increasing. This is probably due to the shortages on the mining sector. The "upper end of $200" is presumably based upon the average for the year

3: Who honestly believes that LGL will extract 220koz in 4th quarter? There are 66 working days over the 4th quarter (I'm presuming they don't work weekends and do not have time off over xmas). This means they have to average of 3.3koz per day. YTD, they have averaged 523koz / 194 = 2.69koz per day. Likely???

I know, most people are saying that they have higher production in the pipeline in 2008. But they need to expand. How many cost blowouts have we seen in the resource sector? Unless LGL is the exception in that it can secure all these additional resources at a discount, then, maybe the production targets for 2008 is realistic. I don't know. I'm just dumbfounded at the market's reaction at the results. Can someone enlighten me!