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The Bigfella
10-08-2008, 08:30 PM
I just received a note from a broker discussing a local small cap gold producer. At its price yesterday and the current gold price - it is trading at a projected PE ratio of ONE. Yep - it is likely to make a profit this year equal to its current market capitalisation.

There's plenty of bargains to be had.

Andrew Craig-Bennett
10-08-2008, 08:32 PM
That could be a long P/E for a gold mine, you know.;)

The Bigfella
10-08-2008, 08:34 PM
I'm not buying - then again, it does get tempting...

shamus
10-08-2008, 08:42 PM
That means the price is equal to last year's earnings, not next year's... Perhaps they broke a shovel handle, and need to raise capital to buy a new one.

The Bigfella
10-08-2008, 08:56 PM
That means the price is equal to last year's earnings, not next year's... Perhaps they broke a shovel handle, and need to raise capital to buy a new one.

Given they are ramping production from 50,000 oz to 70,000 - that's a lot of shovel handles. (No I don't own any of these shares)

skuthorp
10-08-2008, 08:59 PM
Bought some US dollars at near the top, should have bought more!
Not in the market yet, not going to be fun though. Anything could happen here.

Lew Barrett
10-08-2008, 09:04 PM
It's tempting, but this is a falling tide. Everything depends on your horizon, but overall, we're going to be looking at dead money in here for a bit unless you are a speculator. I don't have the stomach for speculation anymore, and would prefer a nice, clean orderly market. Something we haven't seen for awhile, and won't anytime soon, I think. A lot of shaking out still to go, even though we're oversold. It's gonna take a lot of reassuring to get Main Street to trust Wall Street anytime soon, I think. You could see this one coming though, so only inertia could have kept people from lightening up over the last year or two.

Paul Fitzgerald
10-08-2008, 09:05 PM
Plenty of time Ian, the market goes down by the escalator, and up by the stairs.

shamus
10-08-2008, 09:12 PM
70000 ozs - at what cost of production per oz?

The Bigfella
10-08-2008, 09:13 PM
btw Paul - I've got your wet weather gear and broom here. I'm heading in to town tonight, but by bus (planning on downing a few with some mates at a reunion). Fear not - they will find their way to you soon.

The Bigfella
10-08-2008, 09:16 PM
70000 ozs - at what cost of production per oz?

As for Silver Lake which fell 3c yesterday to 18c per share, giving it a market cap of $27.5m:

Our estimates were 50,000oz to June 2009 for an NPAT of ~A$11m (based on a gold price of A$957/oz [ being US$900/oz at an A$ of 94USc])
50,000oz at a A$400/oz higher price = an additional $20m in revenue (or $14m after tax)
And that does not account for the additional open-cut from Jan 2009, or the increase in production to 70,000oz, or the possibility of higher grades, etc
That puts SLR on a PER of 1 - yes it could make its current market cap this year.

(I'm not recommending this - I haven't looked beyond the brokers note

Rigadog
10-08-2008, 09:55 PM
Just got a really good deal on some turnips.

The Bigfella
10-08-2008, 11:33 PM
Just got a really good deal on a new boat