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Lol in that case I would take my gains and wouldn't hang around for the development of the other mines! Learnt some rough lessons from other commodity bubbles.
Our EV/EBIDTA is not super cheap because of all our debt. Hopefully that denominator starts to crank up.
Of course a steady climb would benefit us. I was referring to the scenario where the POG sky rockets to 2K or above on some panic. As we saw with oil, iron ore, bulk freight etc that would bring in excess production which would ultimately be to the detriment of the sector down the road. So I think we want a balance between a price that is high enough to allow us to be profitable but low enough to continue contracting global mine production. We have some tailwinds at the moment from the Indian wedding season and a weaker dollar, but longer term prefer to see tight supply.
If the POG were to sky rocket you incentivize a production ramp up from every high cost producer out there so gold would join the global commodity supply glut. I don't think it would be good for us long term. Personally prefer we hold these levels, which are historically quite high already even accounting for inflation.
http://www.macrotrends.net/1333/historical-gold-prices-100-year-chart
Those were heady days back in mid-2011. The gold price was about to shoot above $1750 and Banro was going to produce 400k oz by 2015.
The observations I posted suggested January was another above normal rainy month for Namoya. We need some improvement! Twangiza was closer to normal.
January Rainfall Estimates
According to satellite rain estimates within 10 km of the mine sites, Namoya got drenched again in January while Twangiza was more moderate.
i.imgur.com/q40uUyH.png
Interesting list. Has anybody looked at Teranga? At first glance, they seem to be even cheaper than Banro with an EV/EBIDTA = 1 and hardly any debt.
Thanks. I was asking because my broker, IB, made it clear they have no access to Oslo.
Thanks.
I am not sure if this has been already covered but for those of us on OTC and unable to access Merkur, I guess there won't be any way to exchange shares in the Aqua spinoff and thus participate in the Aqua story?
iolaplt, I guess IB told you it was not possible? I had actually asked them the same question earlier this month but hadn't had a reply yet.
According to below Namoya had the worst of the rain last quarter.
Satellite Estimated Rainfall (mm) at 10-km Resolution (April-December 2015)
Namoya 127 22 16 22 28 144 189 241 107
Twangiza 159 13 24 1 1 52 155 135 101
I found it thanks.
Anybody know approximate lon/lat co-ordinates for the Twangiza and Namoya mines?
Yes we may be out of luck.
Traderfan, did you say you have access to the Oslo exchange via Interactive Brokers? I ask because I also have an IB account and was told the following: "Since we do not offer trading directly on the OSE (Oslo Stock Exchange), we will likely not offer this new side exchange either. We apologize for the inconvenience."
Perhaps here in the prev Dec column? http://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsYTDReport.pdf
These COMEX default fears have been around since at least 2013 and recur from time to time always resulting in a nonevent. http://ftalphaville.ft.com/2013/07/26/1582712/no-the-comex-is-not-going-to-default/
Jim Rogers has long touted agriculture but if you look at his own agricultural ETN (RJA) it has done miserably for several years. Point being the guy is far from infallible.
Thanks for the info Congo.
In my industry the Chinese have shown a tendency to buy a minority stake in a company with the view to taking it over completely. That is not to say they make wise decisions as there have been some high profile disaster acquisitions. However they do tend to remain committed even in bad times, so I do see this development as derisking the investment.
Here is a satellite estimate of 10-day rainfall: http://www.cpc.ncep.noaa.gov/products/international/africa_arc/africa_arc_10day_af_obs.gif
You can see the intense rainfall near Kinshasa in the west (purple areas = 100+ mm). In the east, there are some small purple spots in the South Kivu area but not sure if they coincide with the mine locations. In any case, anything around 75-100 mm is normal at this time of year so it should not be too dramatic.
I think it is a blessing he has moved on. Since leaving the board he has been promoting a number of falling knives e.g., AEZS, PGN, RCAP.
However if you are still a believer, here are his picks for 2016:http://investorshub.advfn.com/boards/read_msg.aspx?message_id=118853841
"north-east to south-west trending" is the orientation not the geographic location: see http://www.kitco.com/leadgen/companies/banro_corp/images/belt.gif
Anyway while your thesis is not impossible, and I would be glad to be wrong, but there seem to be more obvious candidates like the Moku project which adjoins Randgold's Kibali mine and which Randgold has courted already for some time.
South Kivu is about 1500 km south of Randgold's operation. Bristow said they were looking for joint ventures in the "same part of the country as we are - the north-east." Geographically it would seem to exlude us.
If you are referring to the fact that a small percentage of the open interest goes into delivery, well that is very common for most commodity markets. But the fact a contract can go to delivery, ensures price convergence. Here is how the process works for commodity futures in general: http://www.investopedia.com/ask/answers/06/futuresconvergespot.asp
Your friends have been waiting for an inventory crunch for a number of years already. While registered stocks have declined, look at how many eligible stocks there are. As Barclays bank wrote a few months ago: “It is an easy process to assign warrants to eligible stocks, and in the case of a strong economic incentive, eligible stocks should yield a quick supply of deliverable stocks”.
As the price of gold falls the conspiracy theories increase.
Here is a nice article on GLD's bullion inventory: http://tsi-blog.com/2015/08/the-meaning-of-the-6-year-low-in-glds-bullion-inventory/
The article concludes:
1) Anyone who claims that the gold price has trended lower over the past few years due to the selling of gold from GLD’s inventory is getting cause and effect mixed up.
2) Anyone who claims that gold is being removed from GLD’s inventory to satisfy demand in Asia (or elsewhere) is either clueless about how ETFs work or is telling untruths to promote an agenda.
3) The early-August decline in GLD’s bullion inventory to a new multi-year low was consistent with the price action. It was evidence that GLD traders were getting increasingly bearish in reaction to lower prices. They loved it at $1600-$1900 and they hated it below $1100.
Long BAA, but trying to be short delusion
If only we knew where the bottom was! Even the experts don't. Here is a view from the CEO of Gold Fields whose South Deep mine is ramping up to a commercial production of 650-700 koz/year at an AIC of $900:
http://www.mineweb.com/news/mining-finance-and-investment/is-there-really-a-future-for-gold-mining-in-south-africa/
NICK HOLLAND: We will in the long run. In the long run I’m a great believer in the fundamentals of demand and supply, even for something like gold, which is money in the long run, demand/supply must dictate in the short run, it’s probably macro issues, it’s geopolitical issues. But in the long run if supply is going to come back, which I think it will, and demand continues to increase, which I think it will, then the fundamentals will be positive for gold. But we’re going to have to be patient, I think we could see prices go lower before they go higher, I think we have to get the supply out the system before people believe it and then once that happens we should see fundamentals for gold pointing to a higher price but don’t ask me when or how much, please.
Yes. Draghi didn't mince words today talking about visible downside risks and hence may revise degree of accommodation policy in December.
Lots of Federal Reserve speeches today. Seems to be weighing on gold price.
I haven't been a gold bull but certainly it seems Q3 demand has picked up after that dreadful Q2 12% drop. This a more encouraging and legit sign than comex conspiracy theories imo.
The World Gold Councils Q3 report is out!
http://www.gold.org/supply-and-demand/gold-demand-trends?gclid=CJSqiZWYi8kCFQ0XHwodUB8EiQ
Lower prices lift demand
Gold demand climbed 8% to 1,120.9t as bar and coin demand drove gains.
Jewellery demand grew 6%. Central banks again bought in bulk but ETF
holdings declined. Mine production dipped; total supply edged up (+1%).
Key themes of Q3 2015 (more detail page 2-4)
Q3 was a period of two distinct halves. A price dip buoyed consumer
demand in the first half, before a positive shift in institutional investors’
positions pushed prices back up in the second.
Gold still a favoured reserve asset. Weighty purchases by central banks
almost matched Q3 2014’s record.
Mine production retreats slightly from Q3 2014 peak. Marginal
contribution from a number of newer mines continued to taper off
Excellent post, thanks. On the assumptions, most seem reasonable but I suppose if you trust management's stated targets (per September's corporate presentation) of slightly higher Namoya production at 108,000 oz and cost reductions of 10 million then your balance turns positive. Still not much margin for error at the current gold price.
I just started looking at this company and cannot see why they wouldn't pay a quarterly dividend. With their huge cash pile, giving say 1 mln away a year in dividends paid quarterly would hardly dent the balance sheet yet would mean a ~10% yield at current prices ... which would be very reassuring to an evidently distrustful market.
"A main factor in the gold market is that typically, when gold registered stocks are falling, that means the gold price is falling too. This indicates that gold is being better used off the market, instead of being held on the exchange. As for the total quantity of eligible and registered stocks in CME warehouses, it also tends to track prices higher and lower."
http://www.businessinsider.com/how-gold-actually-gets-traded-2013-7?IR=T
I think a number of us did. I guess we are all still waiting for a reply. Even though I hope he his wrong, Bostonseb has offered a new constructive, perspective to this board.
This chart shows observed daily and cumulative 180-day rainfall in a grid box encompassing Zhongshan (113.35E,22.5N): http://www.cpc.ncep.noaa.gov/products/Global_Monsoons/Asian_Monsoons/click_map_ts/grid_110E20N_180d.gif
May was unseasonably wet, with rainfall since having returned to normal.
Thanks Congo. Really good considerations raised by Braised, Bostonseb, Lib_statist, yourself et al, and getting some reassurance on the matter from IR would be prudent, but agree that management don't seem to be acting like a cash crunch is imminent even if the balance sheet looks a bit scary.
Comex Gold Warehouse Stocks: How It Works
https://www.bullionvault.com/gold-news/comex-gold-stocks-072420136
An informative article from 2013 discussing the plunge in Comex inventories back then. This was probably written in response to the same hysteria on the issue from Zerohedge and others two years ago.