Monday, February 16, 2009

Gold price - $1,200 Cdn

At least we can say we finally touched it (regardless of where it goes in the short term). With the overwhelming fear currently out there (globally), and the foregone conclusion of severe inflation in a couple/few years (as the economy gets reflated), I'm sure many institutional investors are visualizing that $1,200 gold price to be US dollars within the next couple of years. Those are the type of institutional investors that would be interested in Century's offer. It's a compelling offer - with both short-term (shares) and long-term (physical gold) benefits - for those who truly believe that this is the direction the world is heading in.

Gold is in a good place right now, and going forward. If fear continues to overwhelm then gold will act as protection (who knows, there could be a phase 2 of massive deleveraging, somewhat similar to October, but gold will be alright again once it stabilizes, if a phase 2 selling happens to occur). If the economy picks up (and the Dow Jones begin to recover) it means prices will reflate. The governments of the world will not be able to remove all of this massive amounts of money from the global system for many many many years into the future (if ever at all) - they will also need to move at a slow place for fear of sinking the economy again. This naturally will lead to inflation, and possibly hyperinflation (if reflation happens quickly enough).

US = $959.90 ($960, rounded up)

4 comments:

roxy14 said...

Good points Production. One would
think that the only concerns any
potential investor would have at this point is whether or not Century can actually produce the ounces. As I would imagine that
the 15,000 oz's/year could be forward sold now at a tidy profit.

production05 said...

Hi Roxy,

With regards to delivery of the ounces, Century has a nice little contingency in San Juan. With financing for Lamaque, the San Juan profits can then be reinvested directly back into San Juan. This should enable San Juan's production ounces to increase from 16,000 to 30,000(+) by the time Century is required to deliver the Lamaque ounces. If all goes well, it means that San Juan should easily be able to deliver the 15,000 committed ounces (of the gold-based financing program). This would allow 100% of the ounces from Lamaque to remain with Century. It would also act as contingency just in case there are any unforseen delays in ramping up Lamaque - investors would still get their ounces in time (gold is gold, regardless of location).

I don't know if the potential institutional investors will consider any of this, but they should. San Juan is already in production, and has a 25 year production history. Also, with proper funding, we have seen 70 years (or so) of successful mining from the Lamaque underground, and at much much lower gold prices. In addition, the Gorman report highlights the high probability of economic viability (success) of restarting Lamaque (with proper funding and mine development).

I don't know if they would but I think it would be wise for the institutions to consider all of this as part of their overall assessment of the offer.

I guess only time will tell.

Take care

Anonymous said...

So here we are with Au going through the roof on 2/17/09 but CMM is losing ground on the day ....Why?
Answer: We have not yet mastered the art of the spin. Don't believe me! Just go to the web site to see what is conspicuous by its absence:
• Upcoming Events – “There are none…..Everything is ‘08’….dah….This is an IMMEDIATE RED FLAG TO ANY AND ALL POTENTIAL INVESTORS…drop back 10 and punt - NOW!!!!!
• No answer is convincingly provided to the question, “Once you get the $’s what are you going to do with it? Answer: We need to provide an inch stone Project Schedule leading to a Lamaque First Pour. It is not about size. It is about perceived progress that counts.
• No exploitation of investor greed / fear psyche that is at the heart of all investment decisions is even attempted. “So Pete what does this mean?” ….We need a graph showing progress towards the total financing of the Lamaque Project. It is analogous to a ‘shark feeding frenzy’ with the ‘blood in the water’ being provided by the first to invest. No one wants to be left out of a great deal that makes them look and feel like a true futurist.
There you have in nut shell we need to be proactive or send the ‘For Sale’ message to AEM. Now, they know how to promote!!!

Peter 562 824-6106

Carib said...

Pete, spin is not going to do it for this company. They've been there and done that. They have been the poster child for over promise and under deliver. That's why we have a market cap that is a tiny fraction of the value of its assets. It's the ability to convert that value into a share price that reflects asset value that is in question. Just getting the financing would be a giant first step.

The detail you are asking for is all in the Fortis Technical Report that is posted on the website so not everything is old news.