NOT REALISTIC...

[THRESHOLD]

How can the market value this thing at 1,4x "normalised" trailing earnings? Typical market dysfunctional ("efficient?") market. If the risk is that great then our whole market should crash without further to-do!

[kwagga]

First impression when I read the company prospectus was RISK, stay away. Secondly, what is management's long term mandate for Sibanye ? With current assets this company will die a slow death. You might be rewarded handsomely in the process with generous divi's, but share growth will suffer as a consequence. Zero sum game if you ask me.

[THRESHOLD]

Resource of up to 85 million ounces with some expansion prospects (CONTRARY TO THE PRESS REPORTS)... And they should create up to R6 billion cash a year with which to make things happen. NOT that I love the business model but this is simply too cheap. This must surely be a takeover target for a black magnate PERHAPS - Patrice, Cyril, Sam....

[#4]

first of all, try to waft through the cash flow BS. Number 1) they actually only generate around R3,5bn cash through operations. But they spend around R3bn per year on capital expenditure - normally aimed at mine extension. So not a lot of cash left over. Number 2) declining yields. 85m ounces is nothing but a competent persons report, and the current CEO (Neal Froneman) is notorious for having screwed up the interpretation of these things before (just google the dominion mine saga). The real question is yield - because that determines the cost that they can get the gold for. Number 3) gold price. Not exactly rallying right now, is it?

[#5]

number 4 - back on the yield story. Apparently mines are designed to cater for certain expected yields. When the yields are no longer there, the plant becomes obsolete. And then there is number 5) Management. I think that the way Froneman handled the dominion mine saga was borderline criminal.

[THRESHOLD]

First of all - the cash flow: it is not BS - that is how they are required to show it in terms of the IAS's. That cash flow was based on six months - the 2nd six months was a mess due to typical SA events. Their capital investment levels are typical of this nasty industry - so nothing too unusual there. Their resources are as reported under GFI - so pretty trustworthy (compared to DRD, PAN... and other small ops.) Resources are mostly MEASURED and INDICATED. Only 10 mil oz. are INFERRED. This is actually enormous. It implis a 30+ year life-of-mine. Their production costs are about 15% higher than the rump of GFI. That huge cash generation could be used to simply buy other operations instead of working their own. Other players are trying to exploit huge inferred resources (often fictitious) with no money.

[THRESHOLD]

Gold has pulled back 25% - with world events as they are one must expect fluctuations. The RAND is a basket case of a currency (but it has strengthened recently.) I guess it is all about your call on the RAND price of GOLD.

[THRESHOLD]

FRONEMAN - I agree. That said - this thing is priced for risk - the other Goldies are trading at 5 x higher rices. I think the market has got this completely wrong. I can't resist - just a dab, ok a clump, a lump, a heap. Oh hell - I had to take... now I need forumites to validate my move so that I can sleep better.

[keng]

I have a very simply point of view. If GFI thought (having spent a LOT of money) that the prospects were good, they would not have ring fenced this company. To me I can only see value destruction.

[THRESHOLD]

GFI was being discounted for her South African exposure. She was also exposing her other assets to South African risk (hence the discount.) She did the right thing. I was waiting for this and I took back my GFI's in the low 60's. I had no real interest in her South African assets and believe they deserve to trade at a steep discount to the rest of the world (just about) - BUT... this is too cheap!

[kwagga]

You have a knack for spotting value, so stick to your guns. I bought a few Harmony's last week because I share your feelings on the SA gold industry. It's been hammered way too much. Electricity costs also piped down this year, so these guys should start getting a handle on operational costs eating away at profit growth year on year (I hope).

[SimonPB]

a gold miner getting a handle on operational costs ?? that'll be a first

[kwagga]

Compared to other years - maybe not that far fetched. Difference between 8% electricity increase and 20%+ in previous years should make quite a difference on their balance sheets.

[klapka]

$1400 to dig an oz of gold in South Africa as opposed to $1200 an oz World average. That is a problem and none of us know where the gold price is going.

[THRESHOLD]

$900 odd cash costs for this company. AND she is being valued for yield (BUT actually way below) so you have to use the cash cost.

[THRESHOLD]

OK! Ouch! I'll buy some more though.

[kwagga]

That Goldman Sach downgrade on Gold set the wheels in motion for this sell-off. Thank goodness I sold out of HAR at 5555 when things started turing south. This is a real nasty sell off.

[#18]

you also have all kinds of chart breakdowns in gold. If double tops are anything to go by, gold should sell off to the 1300 level

[kwagga]

My fingers are itching to start buying into this resource sell-off. My problem is I only have one titanium coated ball and not two. This sell off is scary.

[THRESHOLD]

The problem is: resources, gold, retailers, construction, banks (small,) even foodies... It looks like this market has about thrown on the towel. So - what now? A bounce?