Issue100-Intelligent/Investor/Magazine/April/5th/2

Issue100-Intelligent/Investor/Magazine/April/5th/2002.
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Newcrest Mining. (NCM) --6.17c
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In the sharemarket you learn to expect the unexpected. Subscribers wouldn't be happy with our recommendation issue 95 Jan/2002 (take profits switch--$5.00).
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Whislt we knew a takeover was a possibility, we didn't know gold reserves at the Telfer mine would be trebled. But with 1 billion needed to develop it, we're still recommending you sell and switch to Aurion Gold.
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The charts Ive read say a break of 310 per ounce U.S. is significant.
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http://www.goldfields.com.au/dir223/aurionweb.nsf/company_overview.htm?ReadForm
Corporate Profile Overview
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On 17 December 2001 final Court approvals were received for the merger of Goldfields Limited and Delta Gold Limited. The merger was implemented by way of a Scheme of Arrangement. Under the terms of the Scheme, Delta ordinary shares were transferred to Goldfields Limited, with Delta shareholders receiving 187 Goldfields ordinary shares for every 200 Delta ordinary shares held. This brings the total number of Goldfields shares to over 440 million. Goldfields Limited became a public company and listed on the Australian Stock Exchange in July 1995 under the code GLD. The merged organisation has a share market capitalisation, as at 31 December 2001, in excess of $1 billion. Based on production for the year ending 30 June 2001 AurionGold produced around one million ounces making it the second largest Australian-based gold producer.
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The organisations which became AurionGold have a strong and rich history in Australian gold. Goldfields was formed in 1995 from the Porgera, Henty and exploration interests formerly held by RGC Limited and the Paddington and Kundana operations formerly held by Pancontinental Mining Limited. During 2000, Goldfields acquired Gild-Edged Mining NL. Gild-Edged is party to joint ventures which hold prospective exploration tenements that surround the Kundana mine and also holds mining tenements in close proximity to the Paddington mine.
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Exploration activities have since proved up the Raleigh deposit near Kundana, which resulted in the Group being awarded the "Diggers Award" at the Diggers & Dealers Conference in Kalgoorlie in July 2001. On 16 October 2001 Goldfields acquired Centaur's Mt Pleasant gold assets located north and west of Kalgoorlie, Western Australia. The merger adds the Delta history in exploration, Kanowna Belle and 40% of Granny Smith to the group, and a 21% holding in Zimplats which has substantial platinum assets in Zimbabwe. The AurionGold group has extensive exploration tenement holdings predominantly in Western Australia. AurionGold has six major operations located in Australia and Papua New Guinea, with Western Australian operations representing approximately 70% of the Group's gold production, for the year ended 30 June 2001. Major operations comprise: Granny Smith 40% - WA, Kanowna Belle 100% - WA, Kundana 100% - WA, Paddington 100% - WA, Henty 100% - TAS and Porgera 25% - PNG. Goldfield's longer-term growth will continue to come from exploration successes and innovative project development. Strong cash flow from operations will allow the Company to maintain a vigorous exploration programme.
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Granny Smith
Granny Smith continues to be one of the most profitable mines in Australia and the second largest gold producing mine in the country. The Granny Smith gold mine is located in the Eastern Goldfields region of Western Australia, 20 kilometres south of Laverton and 200 kilometres northeast of Kalgoorlie.
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Henty
The Henty mine is located 30 kilometres north of Queenstown on the West Coast of Tasmania. It is a series of high-grade gold orebodies being mined entirely by underground methods. The processing plant has the capacity to treat approximately 260,000 tonnes of ore per annum.
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Kanowna Belle
Kanowna Belle is located 18 kilometres northeast of Kalgoorlie in Western Australia. It is now a wholly owned Aurion Gold operation, following Delta Gold's acquisition of the 50% previously owned by North Limited on 1 October 1999.
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Kundana
Kundana mine is located 25 kilometres north-west of Kalgoorlie in Western Australia, within the Norseman-Wiluna greenstone belt of the Eastern Goldfields.
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Paddington
The Paddington mine and ore processing plant is located 35 kilometres north-west of Kalgoorlie. The mine was developed in 1984 on the basis of a low-grade, large tonnage, open pit mine with the potential to mine underground.
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Porgera
The Porgera Joint Venture is approximately 600 kilometres north-west of Port Moresby. The Porgera deposit occurs in a complex igneous intrusive situated in Enga province in the western highlands of Papua New Guinea.
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Data as of: 3/28/02
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Company Description
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Aurion Gold Limited Formerly known as Goldfields Limited. Explores for, and develops and exploits gold deposits.
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Competitor Analysis
Aurion Gold Limited operates in the Gold ores sector. This analysis compares Aurion Gold Limited with three other companies in this sector in Australia: Macmahon Holdings Limited (2001 sales of 376.34 million Australian Dollars [US$198.59 million] of which 100% was ), Normandy NFM Limited (226.78 million Australian Dollars [US$119.67 million] ), and Sons of Gwalia Limited (428.94 million Australian Dollars [US$226.35 million] of which 66% was Gold division).
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Sales Analysis
Aurion Gold Limited reported sales of A$339.96 million (US$179.40 million) for the fiscal year ending June of 2001. This represents an increase of 12.7% versus 2000, when the company's sales were A$301.68 million. Sales of Explore and Proj Dev saw an increase that was more than double the company's growth rate: sales were up 8,253.4% in 2001, from A$73,000.00 to A$6.10 million.
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Recent Sales at Aurion Gold Limited 250
289
322
304
302
340
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1996 1997 1998 1999 2000 2001
(Figures in Millions of Australian Dollars)
Most of the company's 2001 sales were in its home market of Australia: in 2001, this region's sales were A$221.42 million, which is equivalent to 65.1% of total sales. In 2001, sales in Asia/Far East were up at a rate that was much higher than the company as a whole: in this region, sales increased 34.6% to A$136.15 million.
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Aurion Gold Limited currently has 411 employees. With sales of A$339.96 million (US$179.40 million) , this equates to sales of US$436,491 per employee.
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Sales Comparisons (Fiscal Year ending 2001) Company Sales
(mlns) Sales
Growth Sales/
Emp (US$) Largest Region
Aurion Gold Limited 339.962 12.7% 436,491 Australia (65.1%)
Macmahon Holdings Limited 376.336 -13.3% 138,973 Australasia
Normandy NFM Limited 226.775 20.9% N/A N/A
Sons of Gwalia Limited 428.939 16.6% 375,375 N/A
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Recent Stock Performance
The stock price has more than doubled recently: For the 52 weeks ending 3/28/02, the stock of this company was up 137.2% to A$3.06. During the past 13 weeks, the stock has increased 24.9%. During the past 52 weeks, the stock of Aurion Gold Limited has outperformed (by a large margin) the three comparable companies, which saw changes between -19.6% and 112.3%.
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During the 12 months ending 12/31/01, earnings per share totalled A$0.22 per share. Thus, the Price / Earnings ratio is 13.91. These 12 month earnings are lower than the earnings per share achieved during the last fiscal year of the company, which ended in June of 2001, when the company reported earnings of 0.26 per share. Earnings per share rose 60.0% in 2001 from 2000.
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This company is currently trading at 3.97 times sales. The three companies vary greatly in terms of price to sales ratio: trading from 0.19 times all the way up to 4.65 times their annual sales. Aurion Gold Limited is trading at 2.58 times book value.
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Summary of company valuations (as of 3/28/02). Company P/E Price/
Book Price/
Sales 52 Wk
Pr Chg
Aurion Gold Limited 13.9 2.58 3.97 137.20%
Macmahon Holdings Limited N/A 1.55 0.19 111.11%
Normandy NFM Limited 14.8 5.52 4.65 112.31%
Sons of Gwalia Limited 12.4 2.67 1.89 -19.63%
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The market capitalization of this company is A$1.35 billion (US$712.88 million) . The capitalization of the floating stock (i.e., that which is not closely held) is A$1.08 billion (US$570.57 million) .
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Dividend Analysis
During the 12 months ending 12/31/01, Aurion Gold Limited paid dividends totalling A$0.05 per share. Since the stock is currently trading at A$3.06, this implies a dividend yield of 1.6%. The company has paid a dividend for 6 straight years.
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During the same 12 month period ended 12/31/01, the Company reported earnings of A$0.22 per share. Thus, the company paid 22.7% of its profits as dividends.
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Profitability Analysis
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On the A$339.96 million in sales reported by the company in 2001, the cost of goods sold totalled A$199.04 million, or 58.5% of sales (i.e., the gross profit was 41.5% of sales). This gross profit margin is lower than the company achieved in 2000, when cost of goods sold totalled 55.0% of sales.
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The company's earnings before interest, taxes, depreciation and amorization (EBITDA) were A$134.11 million, or 39.4% of sales. This EBITDA margin is worse than the company achieved in 2000, when the EBITDA margin was equal to 41.5% of sales.
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In 2001, earnings before extraordinary items at Aurion Gold Limited were A$47.71 million, or 14.0% of sales. This profit margin is an improvement over the level the company achieved in 2000, when the profit margin was 8.7% of sales. Earnings before extraordinary items have grown for each of the past 3 years (and since 1999, earnings before extraordinary items have grown a total of 136%).
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The company's return on equity in 2001 was 30.9%. This was significantly better than the 22.1% return the company achieved in 2000. (Extraordinary items have been excluded).
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Profitability Comparison Company Year Gross
Profit
Margin EBITDA
Margin Earns
bef.
extra
Aurion Gold Limited 2001 41.5% 39.4% 14.0%
Aurion Gold Limited 2000 45.0% 41.5% 8.7%
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Macmahon Holdings Limited 2001 17.5% 6.0% -8.7%
Normandy NFM Limited 2001 48.0% 46.7% 20.7%
Sons of Gwalia Limited 2001 43.1% 36.5% 14.8%
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During the second quarter of 2001, Aurion Gold Limited reported earnings per share of A$0.16. This is an increase of 100% versus the second quarter of 2000, when the company reported earnings of A$0.08 per share.
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Inventory Analysis
As of June 2001, the value of the company's inventory totalled A$31.61 million. Since the cost of goods sold was A$199.04 million for the year, the company had 58 days of inventory on hand (another way to look at this is to say that the company turned over its inventory 6.3 times per year). In terms of inventory turnover, this is an improvement over June 2000, when the company's inventory was A$30.50 million, equivalent to 67 days in inventory.
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Financial Position
As of June 2001, the company's long term debt was A$174.91 million and total liabilities (i.e., all monies owed) were A$292.24 million. The long term debt to equity ratio of the company is 0.86.
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As of June 2001, the accounts receivable for the company were A$18.69 million, which is equivalent to 20 days of sales. This is slightly higher than at the end of 2000, when Aurion Gold Limited had 15 days of sales in accounts receivable.
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Financial Positions
Company Year LT Debt/
Equity Days
AR Days
Inv.
Aurion Gold Limited 2001 0.86 20 58
Macmahon Holdings Limited 2001 1.79 57 13
Normandy NFM Limited 2001 0.00 17 70
Sons of Gwalia Limited 2001 0.79 29 75
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Gold (XGO)---31/3/2002.
MA's up
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Gold (XGO) has broken up through resistance at present levels but Monthly A/D line falling--150m down to just above 50m.
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31/3/02
The gold stocks paused Thursday. Measures of the 10-13 week cycle are early in the up phase. Short cycles are toppy and need to consolidate however. That could be just a sideways move. This still looks like a very powerful intermediate up phase, in the early stages of a long term secular bull market in gold The weekly chart of the metal looks like it's getting ready to launch. But there are some caveats. The intermediate cycle oscillator needs to complete its upturn, and a price breakout above 310 needs to happen. Otherwise we could see several months of consolidation. But the trend looks like it may assert itself. We'll just have to wait and see.
Nasdaq critical support 1793-1805 area.
http://www.internetstockreport.com/close/article/0,1785,1701_999621,00.html
Blue Chips Gain, But Techs Lag
by Paul Shread
March 27, 2002 - Blue chip stocks led the market higher on Wednesday, but tech stocks were overlooked as mutual funds began their quarter-end window dressing.
The ISDEX http://www.wsrn.com/apps/ISDEX/ was up a fraction to 158, and the Nasdaq gained 11 to 1826. The S&P 500 added 6 to 1144, and the Dow climbed 73 to 10,426. Volume declined to 1.17 billion shares on the NYSE, and 1.61 billion on the Nasdaq. Advancers led 21 to 10 on the NYSE, and 19 to 15 on the Nasdaq.
After the close, Juniper (NASDAQ:JNPR) and Sonus (NASDAQ:SONS) warned.

During the day, Manugistics (NASDAQ:MANU) surged 12% on better than expected results.

Adaptec (NASDAQ:ADPT) gained 11% on a deal with IBM (NYSE:IBM).

Qualcomm (NASDAQ:QCOM) fell 5% on concern about CDMA growth in China.

Parametric (NASDAQ:PMTC) fell 17% on a warning.

Storage stocks were strong after Merrill Lynch reinitiated coverage of the sector. QLogic (NASDAQ:QLGC), Network Appliance (NASDAQ:NTAP), Emulex (NASDAQ:EMLX), Brocade (NASDAQ:BRCD) and Adaptec (NASDAQ:ADPT) received Buy ratings.

Amazon (NASDAQ:AMZN) fell 4% after Lehman analyst Holly Becker said the stock is 10%-30% overvalued.

And finally, Bernstein analyst Paul Sagawa's call on the telecom sector earlier this week was an interesting one. The stocks most likely to benefit from a coming rebound? Lucent (NYSE:LU), WorldCom (NASDAQ:WCOM) and Qwest (NYSE:Q), according to Sagawa.

Some technical comments on the market: Note: To see the charts in the text email newsletter, click on the internetstockreport.com story link at the top of the newsletter.

If we tighten up that lower trendline on the Nasdaq (first chart), we get a bullish falling wedge here, with support right in that critical 1793-1805 area. A break above 1840-1845 would look pretty bullish. That said, there is nothing more bearish than a falling wedge that breaks to the downside, but given the bullish seasonal characteristics just around the corner, a rally soon is probably the most likely scenario. The next two days in particular could be good ones: tomorrow is the end of the quarter and the month and the day before a market holiday, and next Monday is the first of the month, all of which result in more up days than down ones. However, as we've pointed out the last few days, quarterly rebalancing from stocks into bonds and Japanese banks marking-to-market could put some pressure on stocks tomorrow. Hence the mixed picture for the market the last couple of days. The Dow (second chart) has support at 10,400, 10,350, 10,300, and critical support at 10,275, and resistance at 10,450, 10,475, 10,500 and 10,550. The S&P (third chart) has support at 1138-1142 and 1131, and resistance is 1147-1148, 1152, 1155 and 1160.

28/3/02



Special report: For a free introduction to technical chart patterns, visit http://www.internetstockreport.com/guest/article/0,1785,2571_500051,00.html..

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15/4/02

AVO - Avoca Resources Ltd - to list today.

Avoca will list on the Australian Stock Exchange (ASX) today with one of the world's biggest gold producers as a key investor. South African mining giant Gold Fields Ltd will hold a 13 per cent stake in Avoca when it hits the boards of the ASX, a position that fuelled interest in the junior explorer's IPO.