Hi Dew
I won’t argue with your premise or with the article except to say that production costs of $1200 to $1400 for an oz of gold seem wildly high. I think 600 dollars is much closer to the truth. Last quarter GORO reported production costs of $191 per Au Eq. and they are expecting it to decrease as they ramp up production albeit they are a very low cost producer. Nor would I guess where gold might be in the future. But in recent years it has risen. Approximate prices in January of the following years were:
2007 -- $ 650
2008 -- $800
2009 -- $850
2010 -- $1150
2011 -- $1400
2012 -- $1600
Present --$1620
My interest in gold was GORO. I first mentioned it on the board in June 09 when it was 5.18. It had significant reserves, lots of unexplored territory, and substantial silver and base metal reserves. In fact, I opined that it would be profitable solely on the basis of its silver reserves and whatever gold fetched would be icing. Last quarter, silver contributed more than twice gold’s contribution. At any rate, GORO doubled a year later and though stagnant the past year it still managed to close at 25.77. So it has been a good investment and though I think its best days are ahead I sold most of my shares to increase my positions in Africa Oil (AOIFF or AOI on TSX.V), ONCY, and SGMO.
AOI should finish its Kenya well, Ngamia, and report results in 4 or 5 weeks. It has a chance to be a monster well and even with what is known it will significantly derisk the 7 other large prospects in the same tertiary rift basin several of which have higher estimates.. With Ngamia they expected to find 17 meters of net pay for about 45 mbo (million barrels oil). They already announced more than 100m net pay before hitting primary target which they are currently drilling. They have 3 other independent basins in Kenya and Ethiopia with a total of 80 leads/prospects. The CEO recently said that there is a 75% chance that the two Puntland wells in Somalia w/b discoveries, perhaps 200mbo, and only 57km to port. The 2nd well should spud Monday, 30 to 40 days drilling so results should be known by mid July. The stock looks very strong, rising from the 2s in March to the 9s currently. Barring a market collapse I think it could double by year end. In 4th quarter they will have 4 rigs drilling with Tullow calling the shots. Next year another doubling wouldn’t surprise me.
ONCY – you know that I’ve been touting this Canadian biotech with the viral oncolytic drug, Reolysin, for a long time. Admittedly, I’ve been disappointed that results on part 1, ph 3 randomized head and neck trial, and the ph 2 pancreatic trial haven’t yet been announced. The H&N trial should have been unblinded last week so results are expected before the AGM in late June. Results from the panc trial and 5 or 6 other trials are also expected soon. The market has been waiting for randomized results; they’ll soon have them. Reolysin has been given to over 600 patients and has shown an excellent safety and side effect profile so the potential for palliative and off label therapy is considerable assuming eventual FDA approval. The company thinks there is a chance to market the drug next year.
SGMO – I’ve also been buying Sangamo BioSciences, SGMO, the holder of Zinc Finger ( a gene modification technology) IP. Results from two ph 2 trials, aiming at a functional cure for HIV/AIDS, are due in Dec. Shire several months ago licensed zinc finger rights to 7 genes, several dealing with Hemophilia and blood clotting, with a potential payout to SGMO of 1.5 billion dollars. There is a long list of monogenic and other diseases where ZF gene modification could prove efficacious, Parkinson’s, Huntington, sickle cell, to name a few.
As you know, I’ve certainly had my share of losers. ERHE and HDY both came up empty demonstrating the high risk nature of exploratory wells in virgin waters. I took big losses in both. Interestingly, the CEO and board members of HDY bought significant shares recently from personal funds as they think they’ll have better luck next year in the deep water prospects. KBLB, the spider silk company, and Opel Technologies, the optical microchip company, are also down a lot. Both have breakthrough technologies which take time to advance. Lots of upside if they are successful so I’m patient.
John
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