Great Expectations, page-11

Hi Jakeb,
There are only about 6 gold miners on the ASX with a P/E at present based on last years price/earnings.
and even our biggest gold miner, NCM, has no P/E for 2013-14.(i.e., it made a loss)

The ASX 200 has an average P/E of 15 which is generally the benchmark for F/A.
While some investors like high P/Es because that may mean that the market expects
higher earnings/dividends over the next year or so, others prefer to look for low P/E
bargains like Warren Buffett. Its all about forward earning guesstimates and percieved
value buying.

Technical Analysis relies on past price action and uses graphs paterns to predict the future which is another kettle of fish.

My P/E guesstimate for a goldie such as KRM usually starts at 10 for safety and convenience
and moves closer to the ASX200 norm as the company proves its earnings and mine
life expectancy over a 3 year+ period.

But everyone have their own yardsticks and may I suggest that you study the history
of Aussie gold miners P/Es before you make any decisions on the forward P/E
for any company. Mine life is also another important consideration.

KRM's competitive advantages over other ASX miners are:
(a) its starting from a very low base due to mining stoppage for 20 months
(b) its mine is located in Indonesia
(c) low all-in sustainable costs forecast (ASIC)
(d) low rupiah vs the AUD for lower cost inputs
(e) POG trending higher in AUD (currently $1530 / oz)
(f) its earnings are realised in AUD
(g) high grade ore with no overburden (UG narrow vein) (10g/t with prospect of higher grade from splay vein feed)
(h) only needs to mine/process 385-500 ton/day
(open pit needs to mine 12 times that -7 times the ore + 5 times overburden.-

There are some drawbacks to UG narrow vein mining, however:
-difficult & expensive to JORC drill.
-usually small mines

KRM like other narrow vein miners normally drills minimally from surface to define the vein
and then pursue the vein UG via UG drilling. This usually means that the JORC
reserves are lower than that of an open pit and, consequently, a theoretically lower mine life.

At present forward fundamentals for gold miners are speculative primarily because
of the volatile POG and its perceived prospects.
Hope that helps.

Please note that there is a vast difference between past P/Es and forward P/Es and given that the market looks forward, the forward P/E is arguably the more important.

Moorookamick
PS: Please do your own research and consult a licensed financial planner before investing. MM