Member Info for Tornadotony

The Acacia deal does include some proven ounces as I quoted those figures in pounds but not a lot.

Sotolo

The takeovers and sales of gold assets were using those kind of figures up to 2017. The Barrick Gold takeover of Acacia was abnormal because of particular circumstances which amounted to around £975M for an asset they significantly owned percentage wise to start with. I think the share bought was just £320M which is just £32 an ounce. So the entire 30M ounces they had was equated as just measured and inferred. The point made by Elf on CEY board is correct that during the elevated phase of gold price increases, gold miners can be temporary inflated. I recall Acacia rising from 410p and going to 615p approximately in September 2011. By Christmas Acacia was back down to 510p. Those buying into the stocks need to know when its manic an went to get out. Its a lot easier to do in H2 and a lot harder to predict the pattern when occurring at the end of seasonality for gold. I am only holding Centamin at this time. If Volcan could be developed more quickly and they could declare proven resources HOC would be a far more promising stock to hold. Its a complete gamble on this one and really need silver to rocket up in price so Arcata comes back on line. All the best Tony

Knowing the reserves, resources, cost of acquisitions, cash in bank I found the valuation metrics does fit the current share price.

Apologies for typos in previous. The article gave $160 PP but the $190 PP I gave was in part for new plant in place.

I completed my evaluation. If the current shar price had 2.5M ounces of gold classified as proven at Volcan it would be worth its current share price. My valuation metrics gave a value of 134p at the current gold and silver prices. I include the $56M acquisition made in October 2019. It does exclude the Arcata mine. The plant and equipment purchased has a resale value that I could not add into that share price. I conclude that HOC is not overvalued. Zachs rated the company 220th out of 255. The key issue here is the low proportion of proven and probable resources the are given a $190 per ounce stock rating per ounce as of December 2019. Measured ounces only get a weighting of $30 per ounce.
http://www.munknee.com/how-to-value-a-junior-miners-gold-in-the-ground/
For silver I calculated the same way but divided by 85 to give a ratio to gold value.
As a result, I will pass on HOC but wish you all the best. All precious metal miners can go up if gold is in a manic buying phase.

There is weaker and then there is major capital flight to cause a very serious liquidity issue. The upshot is that Venezuela and Turkey only sold gold when their currencies were under major pressure. I am not so sure the second largest global economy would react the same come 1 am on Monday morning.

Sotolo

I do not own HOC but want an excuse to buy a truck load of their shares. The only issue stopping me is reserves and resources. I will go through all the HOC paperwork. If I buy this stock I will post the trade here. I will then post my analysis why if I do so. Best regards Tony

I have done more research on the Chinese Central Bank. They were heavy buyers of Gold up to October 2019 and have since stopped. The reason being was that the yuan was very stable and started to appreciate. My guess is that central banks would support the yuan to a degree if it tried to fall off a cliff. Overall a liquidity crisis on Monday in China is considered an unlikely event.

Dave

It is a breakout out the chart to the upside.

The big question now is whether the Chinese Central Bank sells some of its amassed gold reserves and silver as well to deal with their national crisis caused by the coronavirus. The Chinese Central Bank is fully on line on Monday. If China sells expect a big drop in the precious metals. I won't be happy about it either if they do it but that is a primary reason to hold precious metals in the first place.

As the crisis of the coronavirus builds up with so many factories remaining closed and with schools and the like shutting down, I wonder if the Chinese Central Bank will actually use gold for its real purpose and sell some of its stock build it has amassed over many years. The Chinese central bank appears to be open for business on Monday. I just wonder if the high command will give the order to sell and use the resource to keep the country going. It is certainly a possibility I would consider if faced with their national predicament.

The average future price was $63.59 Brent. So for January Tullow was above its $60 a barrel on spot/futures. I will report this every month. We do not know the day to day fluctuations but the Ghana fields would have been less active today as top side issues were being addressed.

Hi Sotolo
Thanks for the data from last year's report. The value of 95M ounces of gold at the inferred level can only be 10% of the proven level. However lets be generous and give it 50% with an AISC of $12. Lets ay the net value is $3. This gives $285M at the most optimistic end as it will involve investment to get from inferred to measured and proven. At the very best it gives around 42p and gets us much closer to the current price. If anyone is aware of other treasure to add into the valuation, I am seriously open to be persuaded. Feel free to post a link for me to read myself. Tony

https://www.dallasfed.org/research/economics/2019/0521

Some of the wells may close off when hedges State side get exhausted. Tullow hedge can cover for 7 months.

Thanks for sharing that pen picture of Uncle Sam. Its quite impressive and he seems very competent and breeds success in West Africa in particular. SDA is clever and Tullow is 11% in good hands.

I have to agree about a possible bid but it has to satisfy bond holders, board, and other major equity stakeholders. The current share price is just over $1B. I suspect the buy price might be 1.50B, 1.75B or 2B. That equates to 75p/87.5p or 100p.

Or you can look at a monthly chart and say we have hit resistance with the monthly support line is around 114p. I agree the weekly has completed an inverse head and shoulders. Do you now get the cup and handle play.

UK gets its first two cases of coronavirus in Newcastle in same family.

Does the yuan depreciate in the coming weeks? Will USD increase in value? Will Chinese purchases of gold fall off a cliff? Does investor buying of gold continue to fill the gap from Asian buyers? Do Central Banks sell some gold to support equity and bond markets? Do Central banks do the opposite and just buy more gold and sell USD and Yuan and the FIAT currencies? I wish I knew the play book as 2018 led to multi-month pull back on gold.

Centamin quite often has a low production for Q1. They are not the only gold miner in that regard, but for Centamin it has a lot to do with inspections and maintenance schedules where they are undertaken annually. These are often quite critical and impact on miner safety and efficiency of operations whether it is equipment or aspects of mine walls, platforms or whatever. I faintly recall this being a response given years ago. The second quarter often gives a lowish gold price compared to other quarters and it makes sense to have richer grade ore when either physical or investment demand is at its best.

If there is a pull back on Centamin we know 112-114 was the late December low from which the current rallied started. It is doubtful if any retreat was going to fall below that range but that depends on any correction on gold prices. My concerns are the COT positioning which is the most bullish it has ever been and physical bar, coin and jewellery sectors have seen minimal public demand for many months. At some point there could be an adjustment and allow a longer rally than the usual six weeks which it will be after tomorrow.

Fresnillo is sitting on the resistance line that travels down for months. It either breaks out tomorrow or it doesn't and goes back to support. I hold no positions at the present time and I am grateful for 14% of all my profits since 5 April have come from this stock. I believe in the company long term and wish everyone success here. A lot is riding on fears about coronavirus. It is interesting that Thailand have recovered 5 of the 14 cases already. Hopefully other countries will get good recovery data as well. China had the disadvantage of being on the frontline of all this but high population densities will always make them a higher risk source for this event. Out of the first 99 patients in China hospitalised, 40 worked in the market source so God's knows what the infection dose was when they got it. I just hope it was a worse case at the source and secondary breakouts are less serious.

Auson
In a way you have answered my question in that using the hedge on 45,000 barrels is not mandatory.
They have 60% of the 2020 supply hedged and the first 3 weeks let say no hedge was used as prices were high 60's. They may want to start using some now as more than 5 months of the year would probably be above $56-57. If it was really low all year a lot of shale production would be off market. The battle against Coronavirus can only be contained until mid February. The virus either runs out of hosts to infect if they have isolated parts of the population effectively. After that things need to get back to routine although a lot of caution is exercised. Food supplies also get rather thin on the ground by that time. So oil would then go back up.