*** DROOY streaks ahead, shrugs off shutdown threat ***
I have to get myself reoriented a little, my plan of DROOY was selling in the $2.70/80 area, ==============================================================
Zeev, Of interest?
DRD streaks ahead, shrugs off shutdown threat
By: Daniel Thöle 2003/07/21 Mon 12:00 EDT
JOHANNESBURG -- Durban Roodepoort Deep (DRD), the marginal gold producer cemented its position as the world’s premier geared gold stock today (20 July). A higher gold price, which streaked through the $350/oz mark, helped the group’s shares shrug off an earlier announcement that it was considering the closure of its North West operations. DRD’s shares led South African gold stocks higher on the day, as the gold index climbed 2.7 percent. DRD shares rose 5.7 percent shortly after the US trading session began, as gold bugs shrugged off the group’s poor operational news and focused, instead, on the higher gold price. More than 80% of DRD’s shares are held in the form of American Depository Receipts, owned by US investors.
A leading Johannesburg-based mining finance analyst said DRD shares had re-established their close correlation with the gold price, with US investors using DRD stock as a proxy for the performance of bullion.
The analyst said the share risked retracing today’s gains if investors calculated the cost of retrenchments at DRD’s North West division. With just less than 10,000 jobs to shed, DRD has already quantified the cost of the retrenchments. The North West mines, Buffelsfontein and Hartebeesfontein, employ 13,000 workers in total, including 3,500 contractors that the company said will be the first to go.
Although DRD’s announcement linked the possible closure of two of its largest mines to ongoing weakness in the rand gold price, analysts said the announcement was related to an especially tough round of wage negotiations with the National Union of Mineworkers (NUM).
“Its in DRD’s benefit to tell everyone how tough things are – they are playing hardball and we’ll see how far things go. The NUM seems to calling their bluff,” said the analyst.
What’s driving gold?
Traders said bullion was given a boost by the dollar’s slump – the greenback lost ground in early US trade to levels above $1.13 against the euro. Gold was last trading at $351.70/oz at 18:20 South African time.
The analyst said the market had taken encouragement from the fact that gold had held its ground above the $340/oz level, and had not slid underneath this key level.
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