Technical analysis, page-111

Hi Blacks

I question myself and therefore I think everybody else should as well.

I have concerns about the direction of the USD POG - I think it is range bound and west African goldies share prices will move with it. I think it will be some while before the USD POG gets its head above USD1250, let alone USD1300 and that after the Chinese new year it could head down again possibly under 1100, especially if the USD goes up as some believe it will once Yellen raises interest rates. Oz based goldies are not as affected by a rising USD because the AUD would decline and thus help maintain profit margins in AUD terms. In addition PRU is not a low cost producer (but it is improving in that area) and its excellent hedges expire at the end of this year so its profit margins will fall. It will still have some hedging in place at lower prices.

I do not mind holding PRU into next year because it is pretty safe bet with all its cash and once it gets its next project up in the Ivory Coast it will have that as a low cost operation to keep it afloat should the gold price continue to be depressed. If I ever see the gold price tanking badly then I will exit PRU.

PRU is not the animal people thought it was when it went to $4.00. The Edikan mine life is much shorter now (only about 8 years) during which it will only have good profit margins in the last 3-4 years of operation. In the light of the lower USD POG and higher production costs PRU has had to high grade its mine (going from an average of 1g/t to 1.2g/t) and the Ivory Coast LOM and production level are much lower than what had been expected by the market.

But I have to admit I am mostly wrong and tend to be a bit conservative.

Have you checked out what MacBank and others have to say about PRU? Here is a link to the valuation range of some analysts (no idea who these were), and I note the medium TP is 46.5 cents with a high of 74 cents.

http://markets.ft.com/research/Markets/Tearsheets/Forecasts?s=PRU:ASX

Good luck.

loki (I still ride my bike with trainer wheels)