We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon
Investor in the best interests of our community. For example, here is how to disable FireFox ad content blocking while on Silicon Investor.
Concerning the Pascua Lama operations in Chile and Argentina. Does anyone have a feeling for the intentions of the environmental activists and the indigenous peoples' case against ABX? Is it a general complaint for all gold miners? The industry? Capitalism in general? In other words, is the issue more than just the water quality and glacier preservation? Have the rules changed out from under ABX since the planning stages and approval process .. $8billion later? I know environmental issues can be fixed but political issues sometimes can't be fixed. Well, I am sticking with ABX in spite of recent downgrades and lower price targets :(
Agreed, MAX would be nice if ABX could find $100 million to spend. South American politics is very unstable ie: Argentina and Chile. I am concerned it is not the environment that is Barrick's problem. All gold miners are under some form of "anti-capitalist-environmentalist complex" pressure. I am studying the possibility of a lateral move from ABX to AEM AGNICO EAGLE MINES LTD ( AEM ). AEM's interests are in Canada, Finland, and Mexico. Mexico is developing into a great economy. Possibly the "Canada of the south" from USA perspective.
Well anyway, lets see what the new ABX people do in Chile after Barrick cleaned house.
Added to ABX and SGGDX (401k) today. Stock market euphoria and gold panic have arrived. People are more comfortable buying stocks after a market has demonstrated upward momentum and euphoria sets in. They also like to jump out of diving planes as panic ensues. I am adding to gold and moving a major part of my portfolio to muni bonds. As I get older I can not tolerate a new generational low in equities. We have had a nice run since 2009. ABX is an equity but it is contrary. SGGDX is 20% physical gold. So, ABX is a long term holding. Gold is my lottery ticket and muni bonds will pay my bills.
Problems at the Pascua-Lama mine were already factored into Barrick Gold’s ( ABX-2%) share price, and the slide after today's construction halt should be considered short-term, Gold Newsletter's Brien Lundin says. The $16M fine imposed by Chile is "immaterial" when contrasted to the $8.5B currently allocated to the project, Cowen analysts say.
I think you are right. I get a little too worked up over this issue. I escaped out of Argentina bank stock BMA at break even after the president hurt them with strict capital requirements and killed the dividend. And also got out of YPF (Repsol Spain) with slight gain when Argentina nationalized their Argentina holdings. Dangerous places to invest in. ABX is in both of the countries on the same project :) I know I am too cycnical and try to not let my emotional responses get in the way of investing.
What a mess. Sold at 20 and bought 1/3 back at 18. To scary to buy more. Really getting hammered. ABX just isn't responding as well as GG or AUY (for example ) to Gold spot price or industry news. I will hold.
Barrick borrowed a TON of money, just like ALL of the companies founded by that Canadian guy, Peter Munk. If you look up Peter Munk you will notice that all of his companies were sold or mergered for pennies on the dollar because he tends to borrow money like crazy to make acquisitions but never really creates any value.
Anyway, the problem now is that Barrick has HUGE loans equal to 1.2x the value of the company, and even though they have $2.03B of operating cash flow every year, they need EVERY SINGLE PENNY to pay the interest on the way-too-many-loans that the company is carrying. If you look at the stats above, even though they have $2.03B in operating cash flow, all but $17M of it goes towards paying their loans.
They hired a whizkid CEO from the vampire-squid company, goldman sachs, and he took a close look at company finances and said, "I want $10M a year in salary to run this turkey" and the investors said "no". So they are faced with selling off assets to try to reduce debt. The only way they survive is if they can sell assets for more than they are worth. They either need to swindle the purchasers, or perhaps gold goes back to $1500 per oz and they survive. Every time they sell an asset the stock goes down because now you own a smaller company. It looks good because there is a bump in operating income but they immediately pay off their loan and all that operating income disappears in a poof of smoke! When the last asset is sold they will have $0 of operating cash flow and $0 of loan service, and the company will be worth $0, apparently.
So it seems like a very poor investment. Peter Munk ruined the company half a decade ago, like he did with all his other (e.g. Realty) companies. They will need a miracle to get out of their death spiral.