I sold my remaining 20% stake in OGC on the open today to raise cash because I think the gold price could head down to around USD1280-1250 in the coming weeks/months and I need to raise more cash (have far too many goldies and not enough cash).
I will consider buying back in once I see gold price bottoming and I have a better understanding of OGC's capital spend over the next 3-4 years. OGC is going well generating free cashflow, but it also seems to have a high capex in the near term
I hold both AQG and RSG. Both companies are also in transition and if they meet their targets should do well, depending on the gold price not going sub USD1250 permanently. Since they should have completed most of their transition by the end of this year they future capex will be a lot lower and hence I feel more comfortable hanging onto those shares in the face of a goldie downturn. They should re-rate higher sooner this year as they come closer to completing mining transitions and reducing their future capex spend. No doubt there will be short/medium term downward pressure on their share prices in the face of a lower USD POG.
DRM is a turnaround story and I have not followed it closely in the last few months since it closed one if its mines. I have never owned them as it seemed fairly spec and my understanding of its potential is weak. It needs to clear debt. I like their exploration potential at their current gold/copper mine but have no way of valuing it and I am not a geologist so I am staying away from it. This mine has to provide enough free cash flow to cover a lot of things (ie repay debt, interest payments, exploration costs, admin costs, any capex) so I suspect it will be a bit of a straggler unless they have a lot of exploration success. I think DRM should therefore be bought as a trade when the market tanks and sold every so often - that is how I would handle it, but others have a buy and hope mentality.
Good luck.
loki
OGC Price at posting:
$3.19 Sentiment: None Disclosure: Not Held
