Heavily burdened with debt? High-cost mines? Cadia is one of the...

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Happy!Days!

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13/04/18

16:54

Post #: 32444272
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Originally posted by TerribleTadpole ↑

It's very unlikely that you'll see any kind of catch-up.

View attachment 1057252
Your chart shows Newcrest lagging sadly behind the other gold miners. My chart – from the same platform it would appear – show Newcrest is almost completely disconnected from the price of gold.

You've interpreted this divergence as tension, assuming that Newcrest's value is both connected to gold and naturally in line with other gold miners.

I'm interpreting the divergence as disconnection, inferring that the price of gold no longer influences Newcrest's financial outlook very much and that the company's operational parameters are out of line with the other companies you've compared it to.

Your interpretation leads you to expect a short term, rapid recovery. Mine leads me to expect continuing disappointment for at least the medium term.

The problem goes waay deeper than the current operational problems, although they are a factor. I believe that Newcrest is so heavily burdened with debt and high-cost mines that a few dollars here and there on the price of gold make little difference to the bottom line profitability of the business. The capital size of Newcrest means it has so much financial momentum that any turn-around could take years; possibly many of them.

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Heavily burdened with debt? High-cost mines? Cadia is one of the cheapest producing gold mines in the world.... Even at 50% utilisation Cadia will still be cheaper than any other Aussie gold mine. Their gearing ratio is ~16%. Maybe you should have a bit of a deeper look at their financials.

NCM Price at posting: $20.10 Sentiment: Hold Disclosure: Held
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Heavily burdened with debt? High-cost mines? Cadia is one of the...

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