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| Share Name | Share Symbol | Market | Stock Type |
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| Greka Engineer. | GEL | London | Ordinary Share |
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| 0.00 | 0.00% | 0.85 | 01:00:00 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
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Posted at 18/1/2013 23:54 by stu31 Glass Earth looking up despite tough environmentBy Simon Hartley on Fri, 11 Jan 2013 The fortunes of boutique gold producer Glass Earth Gold are gaining momentum, as weekly Central Otago gold production surpasses $NZ150,000 and the company confirms private placement funding well beyond a targeted $C3 million ($NZ3.68 million), from investors worldwide. While having spent about $40 million in exploration in recent years, mainly in Otago, Glass Earth's cashflow has run perilously low at times, but in one of the toughest capital raising environments experienced in recent years it has secured further investment funds. Glass Earth has two alluvial (loose) gold recovery operations in the Manuherikia Valley. Recent success in gleaning up to 80 ounces per week from the tenements has prompted it to offer two small franchise operations - one of which has been taken up in the Ida valley. From modest 10-ounce-per-week recoveries beginning in March last year, Glass Earth began recovering up to 70 ounces weekly from August to October and was now ''steadily'' getting 70 to 80 ounces per week, chief executive Simon Henderson said yesterday. He described the potential of the franchise operations, in the Ida Valley and Maniototo, as ''modest'' prospects of potentially ''a few thousand ounces'', which in the Ida Valley might be a year's work for a three-man crew. Glass Earth had borne all costs of exploration, consenting and permitting of the prospects so far, and the franchisee would take an undisclosed minority share in any profits. Mr Henderson said $C3 million had been sought in private placements, with two tranches closed and the third and last closing next week. He expected the final amount raised to be ''well beyond'' the original target. However, ''capital raising at the moment is tough out there'', he said. So far about 50% of the private placement raised was from New Zealand interests, and the balance spread across investors from Canada, London and Europe, Mr Henderson said. The entire private placement would be used for exploration programmes in the Hauraki, central North Island prospects for gold and silver, while in Central Otago the prospects are now cash-flow positive, with potential to grow. Mr Henderson said he hoped productivity of the gold recovery units could be raised by 20% to 85% by the end of March, which should boost weekly production to 100 to 120 ounces. For Glass Earth to access its Manuherikia Valley alluvial gold, it is taking five metres of ''overburden'' from above the target area. The two operations are then ''washing'' up to 1000cu m of material per day, to get up to 10oz or more of gold. |
Posted at 12/11/2012 23:51 by stu31 new presentation outSo: 1) Muirs has gone from 390k to 226k..drilling obviously didn't go so well which is why the results never came out. 2) Placer production is running at around 3600/yr when they said it would be at 5000 by now..although one of the GRU's has gone AWOL which is odd..the target of 7500 by mid next year looks doubtful. I also note that costs have gone up from $800 to $850. 3) They require $5.4m cash next year for their various projects which means they will be tapping/dilluting investors again (explains weak share price imo) 4) They have a new project (requiring $1.7m next year) that they haven't told investors anything about. |
Posted at 29/8/2012 22:36 by stu31 Glass Earth Gold Limited Financial Statements and Management's Discussion & Analysis for the Second Quarter Ended June 30, 2012 PrintAlert Highlights: -- Second Gold Recovery Unit operational at Drybread, Otago -- Strategic review of exploration costs and funding allocation Glass Earth Gold Limited (TSX VENTURE:GEL)(NZAX:GE "Company") announced today that it has filed its June 30, 2012 second quarter Financial Statements and associated Management's Discussion and Analysis ("MD&A") report pertaining to that period with regulatory authorities. The Company had a net loss for the six months ending June 30, 2012 of $8,496,000 versus $323,000 for the same period in 2011. Three months ended Six months ended Notes June 30, June 30, 2012 2011 2012 2011 $'s $'s $'s $'s Revenue 349,000 176,000 516,000 427,000 Cost of revenue (857,000) (116,000) (1,048,000) (238,000) -------------------- Gross (loss)/profit (508,000) 60,000 (532,000) 189,000 1 Administrative expenses (353,000) (290,000) (699,000) (435,000) 3 Salaries (net of exploration costs) (61,000) (56,000) (125,000) (114,000) Finance income (8,000) 24,000 6,000 37,000 Non-cash items Stock based compensation - - (556,000) - Write down of mineral properties (6,330,000) - (6,590,000) - 2 -------------------- Loss before & after income taxes (7,260,000) (262,000) (8,496,000) (323,000) -------------------- Notes: 1. In this quarter, Glass Earth worked hard to bring about a sharp increase in gold production from its small-scale placer mining. Thwarted somewhat by snow of the southern winter, the second Gold Recovery Unit ("GRU") became operational in late May and therefore is only partially reflected in the second quarter's result. The third GRU became operational only in the last few days of June. The negative gross profit for the quarter reflects the difficult weather conditions faced during the mine site preparation, establishment and an extended commissioning period due to some technical difficulties, now resolved. All costs of the mine site set ups and establishment have been expensed and form part of the loss for the quarter. With these two plants operational at Drybread, mining at Gunclub has been suspended and equipment transferred to Drybread. Looking forward, the placer operations are expected to provide a positive contribution to the Company. 2. The second quarter has also seen Glass Earth's team working on a strategic review of cash allocation to priority targets and associated accumulated exploration costs. Management must focus the Company's cash resources towards projects that have the best potential for near-term value creation for its shareholders. Holding costs of all prospects were scrutinised and assessed against the potential for near-term exploration spending. As a result, certain older prospects had the costs of early- stage exploration work, carried out between 2005 and 2008 written-off. Together with other pruning of the prospect portfolio, a total write down of $6.3 million was charged to the second quarter. 3. Administrative expenses for the six-month period include an upsurge in investor relations efforts as commented on last quarter. These IR costs have since been reduced significantly. Commenting on these results, Simon Henderson, CEO of Glass Earth Gold, said: "I would like to thank the Glass Earth team that has worked hard, and is still working hard, to transform the Company into a cash-flow positive enterprise. On the production side, the team spared no effort to complete the placer mine commissioning in spite of difficult weather conditions that have brought about an increase in costs for the period. While these one-off charges have resulted in a loss for the quarter, they will support the Company's ongoing production programme which should generate a steady flow of cash to support its administrative and exploration costs. Similarly, the one-off charge related to the write-off of non-strategic assets was deemed necessary to provide the Company with a better focus and to give a stronger support to the development of projects with the best potential for value creation." The Company's cash position as at June 30, 2012 was $1,579,000 compared to $2,486,000 for the same date in 2011. Operational Activities The Company's corporate and exploration activities for the quarter are summarized in the attached Quarterly Overview. Qualified Person Mr Simon Henderson, MSc Geology (CODES), an AusIMM Chartered Professional under the Discipline of Geology; is a Qualified Person as defined by National Instrument 43-101 and an employee of the Company, has reviewed and approved the technical information given in this press release. About Glass Earth Gold Limited Glass Earth is one of the largest New Zealand-based gold exploration companies exploring a large land position in the North and South Islands (refer to map: In the North Island, exploration efforts are focused on large epithermal gold systems in the Hauraki/Central Volcanic Region. This Region is host to the 10 million ounce Martha Gold Mine, (Newmont Mining). Hauraki Region - Glass Earth occupies a significant ground position around Newmont's currently active Waihi gold operations; The Newmont-Glass Earth Waihi West JV (Newmont earning 60%) and Hauraki JV (North and Central Areas - 65/35) are currently being explored and managed by Newmont. In the South Island, exploration efforts are focused on the Otago Region for mesothermal "Macraes-style" gold targets and placer/alluvial gold. Visit the Company's website at www.glassearthgold.c GLASS EARTH GOLD LIMITED QUARTERLY OVERVIEW EXPLORATION (please refer to the individual sections following for fuller description of the exploration activities). -- WKP gold project in Hauraki, New Zealand (Glass Earth 35%) Newmont and Glass Earth commenced a further 5,500m drill programme at the WKP gold-silver prospect in April 2012. Three drill holes were completed in Q2 2012; WKP32, 33 and 34. A fourth hole is in progress. Full assay results are expected by early September -- MUIRS gold project in Mamaku, New Zealand (Glass Earth 100%) A 17 hole drill programme of approximately 2,350m at the Massey Reef commenced in late November 2011 targeting the Muirs/Massey gold-silver bearing epithermal quartz veins to bring confidence in the resource to Industry standard (JORC/NI 43 101). -- Drillholes MSDH12, MSDH13, MSDH14 were completed within the quarter, MSDH15 continued into July 2012. -- MSDH12 intersected at a greater depth than expected, expanding the cross sectional width of known mineralisation in the central part of Massey Reef. (Press Release 31 May 2012). -- Compilation of results and subsequent interpretation is anticipated early in September. -- GARIBALDI gold project in Otago, New Zealand (Glass Earth 100%) Glass Earth announced in April 2012, that it had made a new gold discovery at its Garibaldi project in Central Otago. -- Exploration continued in the quarter with channel/panel sampling and detailed ground magnetic (geophysical) surveying to clearly delineate the host mafic schist and attendant structures likely to be the focus of gold mineralisation. 168 line kms of surveying was completed in a 12 day period; data has now been post processed and interpreted. -- Planning is underway to drill this project in the third quarter 2012. PLACER MINING - Acquisition and Growth in Otago, New Zealand -- Mining operations took a major step forward with the establishment of two additional mining units at Drybread in Otago, successively in late May and late June. Site set-up costs and commissioning costs have been written off as incurred. This, combined with lower productivity (expected in the winter) and amortization of exploration costs, has provided a loss for the quarter. -- Lower productivity in July (mid-winter) has improved in August. -- The full benefits of the increased throughput and 100% ownership should become apparent in the spring/summer in New Zealand, with a significant improvement in gold production and cash generated. FINANCIAL -- The Company's cash position as at June 30, 2012 was $1,579,000; -- Trade payables totaled $689,000; -- Current and term liabilities in relation to the placer acquisition comprise twenty four monthly payments of NZ$80,000 (C$65,768); -- Management and Directors are pursuing several alternatives to ensure funding is available to progress the Company's exploration projects. -- Financial results - The net loss for the three months ended June 30, 2012 was $7,260,000 comprised primarily of a non-cash item: the write- off of accumulated exploration expenditures of $6,330,000. These expenditures, incurred predominantly in 2005-2008, relate to prospects that have been superceded, in terms of prospectivity, by targets and projects that now rank higher for available funds. |
Posted at 25/6/2012 19:49 by stu31 Glass Earth Gold Announces the Closing of a C$2.4 Million Non-Brokered Private Placement Glass Earth Gold Limited (TSX VENTURE:GEL)(NZAX:GE announced the completion of its previously announced non-brokered Private Placement financing for gross proceeds of C$2,357,150. The financing consisted of 11,785,750 Units at a price of C$0.20 per Unit. Each Unit consists of one common share and one common share purchase Warrant. Each whole Warrant entitles the holder to purchase one common share at a price of C$0.35 per share, exercisable for a period of 24 months and one day from the date of issuance. Glass Earth paid persons and/or companies who introduced investors to the Company, on the closing date, a finder's fee payable in cash equal to 6% of the amount raised for a total of CAD$50,730 and non-transferable finder's fee warrants ("Finder's Warrants") to purchase shares in number equal to 6% of the Warrants sold under the Private Placement for a total of 253,650 finder warrants issued. The Finder's Warrants have the same terms as the Warrants issued in conjunction with the Units. The non-brokered Private Placement has now been fully completed and the net proceeds from the C$2,357,150 will be used towards financing the purchase of 50% of the placer gold operations announced on March 15, 2012, bringing Glass Earth Gold's ownership to 100%. It will also provide additional working capital. About Glass Earth Gold Limited Glass Earth is one of the largest New Zealand-based gold exploration companies exploring a land position of approximately 10,000 square kilometres in the North and South Islands. In the North Island, exploration efforts are focused on large epithermal gold systems in the Hauraki/Central Volcanic Region. This Region is host to the 10 million ounce Martha Gold Mine, (Newmont Mining). Hauraki Region - Glass Earth occupies a significant ground position adjacent to the Waihi/Martha Gold Mine; The Newmont-Glass Earth Waihi West JV (Newmont earning 65%) and Hauraki JV (North and Central Areas - 65/35) including drilling at the WKP discovery, is being actively explored and managed by Newmont in concert with Glass Earth Gold. Central Volcanic Region - Glass Earth has defined several significant epithermal gold targets in this region including the Muirs Reef project (Mamaku district). In the South Island, exploration efforts are focused on the Otago Region for mesothermal "Macraes-style" gold targets and expansion of the placer/alluvial gold mining operations. To receive Company news via email, contact anne@chfir.com and mention "Glass Earth news" in the subject line. |
Posted at 11/5/2012 15:14 by stu31 hir, another way to stay up with events on GEL is to email Jeanny So, CHF Investor Relations, jeanny@chfir.com to be put on their mailing list. They handle the company's publicity. |
Posted at 10/5/2012 20:42 by stu31 you may want to put this link in your favourites hir..it's a board with a well informed investor (elZorro) who has a good understanding of this company..unfortunate |
Posted at 25/11/2011 17:34 by stu31 Wellington, New Zealand, November 25, 2011.FINANCIAL STATEMENTS and MANAGEMENT'S DISCUSSION & ANALYSIS for the Third Quarter Ended September 30, 2011 Glass Earth Gold Limited (TSXV-GEL; NZAX-GEL) ("Glass Earth" or the "Company") announced today that it has filed its September 30, 2011 third quarter Financial Statements and associated Management's Discussion and Analysis ("MD&A") report pertaining to that period with regulatory authorities. Glass Earth is a gold exploration company and therefore classified as being at the 'development stage', as it currently has modest mining income. With all general and administration expenses being expensed, Glass Earth records losses each quarter/year arising from the expensing of these cash operating costs as well as other non-cash expense items. The Company had a net loss for the nine months ending September 30, 2011 of $993,000 vs $1,132,000 for the similar period in 2010. The Company's cash position as at September 30, 2011 was $4,579,000 compared to $1,322,000 for the same date in 2010. Three months Three months Nine months Nine months ended ended ended ended Sep 30 Sep 30 Sep 30 Sep 30 2011 2010 2011 2010 Revenue 180,000 196,000 607,000 467,000 Cost of revenue (114,000) (97,000) (352,000) (266,000) Gross Profit 66,000 99,000 255,000 201,000 Administrative and Personnel expenses (403,000) (369,000) (952,000) (786,000) Write down of mineral properties (327,000) - (327,000) (574,000) Results from operating activities (664,000) (270,000) (1,024,000) (1,159,000) Finance income (6,000) 4,000 31,000 27,000 Loss before Income Taxes (670,000) (266,000) (993,000) (1,132,000) Income taxes - - - - Net Loss for the period (670,000) (266,000) (993,000) (1,132,000) Operational Activities The Company's corporate and exploration activities for the quarter are summarized in the attached Exploration Overview and Near Term Outlook. 2 Placer cash generation was down as Gold Recovery Unit #1 came off lease and has not yet been redeployed to another mine site. GRU#2 remains operating at Gunclub and GRU #3 is currently being commissioned at Drybread (all in central Otago in the South Island of New Zealand see attached map). Expansion of alluvial/placer gold mining in the Central Otago region is a strong focus as mining operations bed down. About Glass Earth Gold Limited Glass Earth is one of the largest New Zealand-based gold exploration companies exploring a land position of approximately 10,000 square kilometres in the North and South Islands. In the North Island, exploration efforts are focused on large epithermal gold systems in the Hauraki/Central Volcanic Region. This Region is host to the 10 million ounce Martha Gold Mine, (Newmont Mining). Hauraki Region Glass Earth occupies a significant ground position around Newmont's currently active Waihi gold operations; The Newmont-Glass Earth Waihi West JV (Newmont earning 60%) and Hauraki JV (North and Central Areas - 65/35) are currently being explored and managed by Newmont. Exploration at the WKP gold prospect is ongoing following the very encouraging 2010/2011 drilling results on that prospect. Central Volcanic Region Glass Earth has defined several significant epithermal gold targets in this region including the Muirs Reef project (Mamaku district). In the South Island, exploration efforts are focused on the Otago Region for mesothermal "Macraes-style" gold targets and alluvial gold. Otago Region Field programmes to support drilling targets is underway. Placer/alluvial mining operations continue into the 2011 year, coupled with an acceleration of alluvial exploration and resource definition; Glass Earth / Dunstan Mining (placer mining 50/50 partner) anticipate a significant increase in gold output in 2012. For additional information on the company, please contact: Simon Henderson, President and Chief Executive Officer, at +64 4 903 4980 or info@glassearthlimit Jeanny So, Director of Operations, CHF Investor Relations, at +1 416 868 1079 x225 or jeanny@chfir.com; Visit the Company's website at www.glassearthgold.c To receive Company news via email, contact jeremy@chfir.com and mention "Glass Earth news" in the subject line. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) nor New Zealand Exchange Limited has reviewed this release and neither accepts responsibility for the adequacy or accuracy of this release. 3 GLASS EARTH GOLD LIMITED for the three months ended 30 June 2011 QUARTERLY OVERVIEW Successful Fundraising the Company raised a gross $2.9m by private placement in late Sep/early October together with an additional $0.25m upon the exercise of warrants and options. The Company's cash position as at September 30, 2011 was $4,579,000. Exploration WKP gold prospect in Hauraki, New Zealand (Glass Earth 35%) Diamond drilling results from WKP 30, a 720m hole below WKP 29, have been recently received and will be the subject of a separate press release. Ophir gold prospect in Otago, New Zealand (Glass Earth 50%) Additional drilling was undertaken (17 holes for 446m) across 8 shear zones. Assays are awaited. Plant design and mine design advanced. Mining Operations - cash contribution from the Company's placer mining operation totaled $85,000 for the three months ended September 30, 2011 (September 30, 2010 - $61,000). Financial results - The net loss for the three months ended September 30, 2011 was $670,000 ($266,000 3 months 2010) including a non-cash write off accumulated exploration expenditures of $327,000); nine months loss was $993,000 (9 months to September 30, 2010 - $1,132,000). Near Term Outlook WKP South additional step-out drilling planned. Muirs Further drilling being undertaken. Ophir Plant and mine designs to be finalized. Placer production Mining commencement at Drybread in November with rebuilt Gold Recovery Unit #3. GRU#1 off lease and being reconfigured for mining at Drybread in early 2012. GRU#2 continuing mining at Gunclub. Resource definition on several other prospects is continuing. |
Posted at 17/10/2011 17:05 by stu31 Wellington, New Zealand, October 17, 2011.GLASS EARTH CLOSES SECOND TRANCHE OF PRIVATE PLACEMENT Glass Earth Gold Limited (TSXV-GEL; NZAX-GEL) ("Glass Earth") today announces that it has closed the second and final tranche of its previously announced non-brokered Private Placement. A total of 602,000 Units have been sold at a price of $0.55 per unit for gross proceeds of C$331,100. Each Unit consists of one common share and one half of a common share purchase Warrant. Each whole Warrant entitles the holder to purchase one common share at a price of C$0.80 per share, exercisable for a period of 24 months from the date of issuance. All securities issued pursuant to the second tranche closing of the private placement are subject to a hold period and may not be traded until February 5, 2012. In total, 5,319,184 Units have been sold for gross proceeds of C$2,925,551. Finders' fees of $190,992 have been paid in cash in connection with the two tranches of the Private Placement. In addition, 347,257 finders' warrants have been issued, each finders' warrant entitling a finder to purchase one Unit at a price of $0.80 per Unit for a period of 24 months. Each Unit issuable pursuant to the finders' warrants shall have the same terms and conditions as the Units issued to investors. The proceeds of this financing will be used for drilling, mineral exploration and general working capital purposes. In addition, 338,000 stock options and 306,200 warrants have been exercised for proceeds of C$183,130. |
Posted at 03/8/2011 02:59 by stu31 Science-Driven Exploration Leads Glass Earth Gold to Major Discovery at WKP WestA field trip to New Zealand has confirmed that one of Glass Earth Gold Limited's (TSXV, NZAX: GEL) projects has the potential to deliver the goods for investors, CHFâs Director of Operation, Jeanny So said this week. A detailed review of the WKP West project in Waihi with Glass Earth Gold's joint venture partner Newmont verified the enormous potential of this previously understated project. The WKP prospect is a 2 km mineralised alteration zone hosted in scrubland and regenerated bush 10 km north of Newmontâs own Martha and Favona mines (10 million oz gold production to date) and 5 km northeast of the Golden Cross mine (634,000 oz gold production in the 1990s). Newmont has a 65:35% joint venture with Glass Earth and on the drill core table Jeanny So was shown the results from the WKP 27 drill hole. The several hundred metres of hard-silicified core sample is further evidence of broad widths of gold mineralised rock, potentially hosting more than one million tons of gold. This is not just an isolated drill hole, but follows up from four previous drill holes in the area, each returning broad widths of potentially economic mineralisation (consistently greater than 150 metres with narrow high-grade zones in the 1 oz to 2 oz range). WKP 27 was a 200 m step-out to the southwest, and provided promising confirmation of these significant intersections with results of 1.4 m @ 30.7 g/t Au and 77.7 g/t Ag, within 152.4 m @ 1.16 g/t Au and 2.22 g/t Ag. With WKP 27 indicating strike continuity of 600 m, and results from further step-out holes pending, the programme continues to suggest open-along-strike potential for several kms southwest. Results from a completed fifth drill hole are now being analysed and a sixth hole drilling into a new adjacent system is nearing completion. CSAMT geophysical survey is working well and is generating many more drill targets. An additional three CSAMT lines will help target the next round of drilling. The WKP West discovery is a direct result of Glass Earth Gold's targeting process, and significantly validates this scientific approach to gold exploration. With results from drill holes WKP 28 and 29 eagerly anticipated and regional exploration on several other high ranking targets continuing, Glass Earth Gold is enjoying a positive and proactive joint venture in the Hauraki region. This is underpinning the Company's wider ambitions and activity throughout New Zealand and investors should look out for more news to come in the near future. |
Posted at 31/5/2011 21:52 by stu31 For gold miners, success has been anything but fun lately.Everything these companies prayed for a decade ago, they got. Collapsing global currencies. A gold pricing rising from US$250 an ounce to more than US$1,500. Incredible earnings and cash flow growth. It played out exactly as the gold bugs said it would, and then some. Yet you won't find many gold CEOs with smiles on their faces these days, because over the last 12 to 18 months, their share prices have barely responded to the accelerating gold price. Barrick Gold Corp.'s 12-month return (including dividends) is about 5%. Newmont Mining Corp.'s is 2.6%. Goldcorp Inc.'s is 8.15%. Kinross Gold Corp.'s is minus 17%. The story has not been much better of late for the junior and intermediate companies. While their shares did very well in 2009 and 2010, they have had a rough ride the last couple of months. The weak stock prices, which seem to have little to do with the actual operations of the miners, has left investors wondering if and when these companies will start to perform in line with the commodity they produce. The overwhelming theme for gold equities in recent months is that as earnings and cash flow go up, trading multiples go down. Charles Oliver, who co-manages a gold fund at Sprott Asset Management, says that Barrick and Newmont traded at 40 or 50 times earnings a decade ago (though they had much less in the way of earnings in those days). Today, Barrick's price-earnings multiple is a little over nine times, he says. A key difference between then and now is that investors who want bullion exposure have the option of going to exchange-traded funds. Many of them have taken that path, getting exposure to gold with none of the risk of having to operate mines. While that has helped mining companies by boosting the price of gold, it has taken some investor capital out their stocks. "That's a process that has gone on for six years and I think still has some impact on the markets. Though at this point, anyone who wanted to own gold ETFs should have taken a position," Mr. Oliver says. The ETF proliferation cannot be held entirely to blame, as the underpeformance of gold equities is a more recent event. From 2002 to around 2007, the equities outperformed bullion (though there are exceptions, such as Barrick). The relationship got disrupted when financial markets went haywire in 2008, and the equities have been mostly disappointing since then. So what happened? When analysts talk about why gold equities underperform, they often cite lack of production growth, execution problems, political risk and a host of other reasons. But none of those factors adequately explain why the whole sector has done so poorly. Some industry sources have another theory: that the analysts themselves are pricing in numbers that are much too low when they calculate what these companies are worth. While most analysts are using a gold price of roughly US$1,500 an ounce for 2011, their long-term targets are closer to US$1,000, which affects their earnings estimates. "I think what happens is that people rely on net asset value [to value gold companies], and the calculations don't seem to rise so dramatically because the long-term gold price [used by analysts] is at a deep discount to the current price," says Peter Marrone, chief executive of Yamana Gold Inc. "So I think there's a tendency to say, 'I'm not taking advantage of the equities because they're not reflecting the current gold price." If gold miners want to convince investors that their stocks are a better investment than bullion, they have one obvious ace in the hole: yield, which you can't get from physical gold. Every significant gold producer in the world has either introduced or increased its dividend in the past year. It is genuinely the first time in history that these companies, which made no money for decades, have spare cash to burn. Their theory was that paying dividends would suddenly make gold stocks appealing to value and income investors, but experts say that it still has not happened to a significant degree. Part of the problem is that the yields are still very puny 1% is well above average for the sector. And that isn't good enough to attract new investors, Mr. Marrone says. After listening to the Street, he decided that a 1.5% yield represents a threshold at which income-based investors will start to take a gold company seriously. Yamana thus hiked its dividend 50% earlier this month to get it into that range. As gold miners continue to accumulate absurd amounts of cash, Yamana's rivals will also be hiking dividends in the months to come. The question then becomes, will that be enough to convince investors to buy these stocks? The views from inside the industry are mixed. Ian Telfer, the chairman of Goldcorp Inc., says that one of the unique things about commodity stocks is that a dividend or cheap valuation is not necessarily enough to make fund managers jump in. Ultimately, they're only going to do so if they believe the price of the commodity is going to go up. And that might explain in part why the gold stocks are underperforming. When gold was trading at US$250 a decade ago, investors could imagine the price doubling to US$500, which made the potential earnings growth very attractive. Today, it is probably a little tougher for people to get their head around a price of US$3,000. Thus, multiples can decrease even as earnings dramatically increase. "People pay more for these stocks when they see the chance of a big run-up. Once that run-up happens, there's going to be fewer people seeing that high upside ahead of them," Mr. Telfer says, though he himself believes that the price will move far higher than it is now. History shows that these trends do not last forever, and at some point the tide will change and the equities will start to outpace gold again. But it seems that some catalyst is going to be required for that to happen. Ironically, many experts think that catalyst might be a cool-down in the price of gold itself. If owning bullion suddenly becomes a little less attractive and investors want to put money to work elsewhere, Barrick's nine times earnings multiple might catch some attention. "I've always believed that as the metal price continues to appreciate, there's a higher probability that people will gravitate to the metal than the equities. But as the gold price stabilizes, that's when the equities begin to show cash flow, earnings, and improvements in margins, and the result is that people begin to invest in the equities," Mr. Marrone says. The gold miners can only hope he's right, or the not-so-good good times could continue for a while. pkoven@nationalpost. |
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