Personal and undiluted views
oilbarrell.com

3010 days ago

New Guest Post by Sam Bottell: The Major Gold Producers – a sector “steeped in mediocrity”

I spent two years working along Sam Bottell as he worked with minesite.com and oilbarrel.com and he is a good, honest and clever chap. Now that he is starting his career freelance writing as well as an organiser of the UKInvestor Show I have no hesitation in helping him along via this blog as a guest contributor. As such I bring to your attention a share tip from TradingResearch Point on the major gold producers across the globe (85 of them). It is very interesting indeed.

Did you wonder why when gold was racing ahead to $1,700 most gold stocks failed to follow suit? You would think that operational gearing would have seen gold stocks racing ahead across the board. As a believer in gold heading past $2,000 within 12 months you would have thought that I would be universally bullish but those who have read my work will know that I am not. As such I thought it worth reprinting an excerpt from a note published this week by analyst Roger Bade of Whitman Howard who makes a very valid point.

Reviewing 85 gold producers from across the globe he finds just 11 that manage a 25% return on capital. That is truly dismal. Bade’s conclusion is that the obsession with stock promotion has led to an increasing focus on production targets and valuations based simply on per ounces in the ground rather than on what return investors might actually generate. He writes:

---

3014 days ago

Guest Post: Sam Bottell says Buy Centamin

I spent two years working along Sam Bottell as he worked with minesite.com and oilbarrel.com and he is a good, honest and clever chap. Now that he is starting his career freelance writing as well as an organiser of the UKInvestor Show I have no hesitation in helping him along via this blog as a guest contributor. As such I bring to your attention a tip from TradingResearch Point on Centamin. For what it is worth I disagree with his conclusion!

Centamin Egypt (CEY) has been in the spotlight for six months because of the well publicised political difficulties in Egypt where it operates the Sukari gold mine. These problems have seen the shares fall sharply to 61p today which values the company at £669 million. Ignoring this backdrop of poitical strife and excitment – the underlying fact is that Sukari is a world class, cash generative and growing operation. That is not discounted in the share price and with a sense that stability is returning to Egypt the shares are a buy.

---

3025 days ago

Guest Post Sam Bottell: Sell Petra Diamonds

I spent two years working along Sam Bottell as he worked with minesite.com and oilbarrel.com and he is a good, honest and clever chap. Now that he is starting his career freelance writing as well as an organiser of the UKInvestor Show I have no hesitation in helping him along via this blog as a guest contributor. As such I bring to your attention a share tip from TradingResearch Point on Petra Diamonds. I happen to agree with his conclusion. In fact I’d be more damning.

Mining in South Africa is clearly not easy – something a trading statement from LSE listed Petra Diamonds (PDL) makes explicitly clear. The numbers for the six months to December 31st will be a bit disappointing but, worse, Petra guided investors to reduce their expectations for the year to June 30th. The shares now trade about 10% ahead of 12 month lows at 110p valuing Petra at £562 million but it appears hard to judge this company as the investor’s best friend at this level.

---