Vancouver July, 2015 7//20/2015 Gold Stocks Underperform Gold - - PowerPoint PPT Presentation

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Vancouver July, 2015 7//20/2015 Gold Stocks Underperform Gold - - PowerPoint PPT Presentation

Jul 25, 2023 638 likes •1.09k views

Vancouver July, 2015 7//20/2015 Gold Stocks Underperform Gold Source: Bloomberg Round Trip for Gold Stocks 200 150 100 54.20 50 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

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SLIDE 1

7//20/2015

July, 2015

Vancouver

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SLIDE 2

Gold Stocks Underperform Gold

Source: Bloomberg

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SLIDE 3

Round Trip for Gold Stocks

Source: Bloomberg 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

54.20

200 150 100 50

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SLIDE 4

Major Gold Producers

Source: Company reports 2014 est. production

  • 1. Barrick Gold

7.16 million oz.

  • 2. Newmont Mining

5.1 million oz.

  • 3. AngloGold Ashanti

4.1 million oz.

  • 4. Goldcorp

2.67 million oz.

  • 5. Kinross Gold

2.63 million oz.

  • 6. Newcrest Mining

2.1 million oz.

  • 7. Gold Fields

2.0 million oz.

  • 8. Polyus Gold

1.65 million oz.

  • 9. China National

1.4 million oz.

  • 10. Yamana Gold

1.2 million oz.

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SLIDE 5

Source: Thomson Reuters GFMS, LBMA, DCM Economics

World Mine Production

1800 1600 1400 1200 1000 800 600 400 200 3600 3200 2800 2400 2000 1600 1200 800 400

Gold, US$

Mine production, tonnes

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SLIDE 6

Net Mine Supply

Source: World Gold Council tabulated by Thomson Reuters GFMS

900 800 700

.

600 500 400 300 200

09-Q1 10-Q1 11-Q1 12-Q1 13-Q1 14-Q1

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SLIDE 7

Source:

Nevada Output Down

1978 - 2014

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SLIDE 8

Source: Scotiabank GBM and Thompson Reuters

Gold Cash Costs

1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2013

$800 $700 $600 $500 $400 $300 $200 $100 $0

(US$/oz) $919*

*estimate

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SLIDE 9

Costs Up, Gold Down

Source: Canaccord Genuity estimates

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SLIDE 10

Cash Costs Still High

Source: Bloomberg

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SLIDE 11

Costs Decline, But…

Source:

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SLIDE 12

High Cost Still High

Source: GMP estimates, company news releases

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SLIDE 13

Help From Oil

Source: Bloomberg

90

50.89

80 70 60 50

Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul 2014 2015
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SLIDE 14

Help From The Dollar

Source: Bloomberg

97.862
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SLIDE 15

Help From Gold?

Source: Bloomberg

1334.47
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SLIDE 16

No Profits

Source: Bloomberg

Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec31 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

20 30 10

  • 10
  • 20
  • 30
  • 40
  • 50
‐26.8735
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SLIDE 17

Discoveries Fewer

Source: SNL Metals & Mining

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SLIDE 18

“Peak Gold”: Production to Decline

Source: Goldcorp, SNL Metals & Mining

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SLIDE 19

Grade Declines at Mines

Source: 2013 Gold Mine Report and Deposit Rankings Report

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SLIDE 20

Losses for 2013

Source: Mineweb

  • 1. Barrick Gold

$10.3 billion

  • 2. Newmont Mining

$2.5 billion

  • 3. AngloGold Ashanti

$2.3 billion

  • 4. Goldcorp

$2.7 billion

  • 5. Kinross Gold

$3.0 billion

  • 6. Newcrest

$5.3 billion*

  • 7. Gold Fields

$214.4 million

  • 8. Polyus Gold

+$140 million

  • 9. Yamana Gold

$446.2 million

  • 10. Agnico Eagle

$406.5 million

* Newcrest has a June 30 year end

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SLIDE 21

Losses for 2014

Source: Mineweb

  • 1. Barrick Gold

$2.91 billion

  • 2. Newmont Mining

+548 million

  • 3. AngloGold Ashanti

+1.67 billion

  • 4. Goldcorp

$2.4 billion

  • 5. Kinross Gold

$1.4 million

  • 6. Newcrest

$2.4 billion*

  • 7. Gold Fields

+$1.2 million

  • 8. Polyus Gold

TBA +

  • 9. Yamana Gold

$300 million

  • 10. Agnico Eagle

+$83 million

* Newcrest has a June 30 year end

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SLIDE 22

Write Offs…

Since 2008

  • Coal

$19 billion

  • Nickel

$21 billion

  • Steel

$32 billion

  • Gold

$45 billion

Source: John Tumazos

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SLIDE 23

They Keep Coming…

Source: Company Reports

  • Barrick

Several $2.8 billion

  • Newcrest

Lihir $2.4 billion

  • Goldcorp

Cerro Negro $2.3 billion

  • Coeur

Several $1.0 billion

  • Yamana

Brazil $66.8 million

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SLIDE 24

2014 Reserves Down

Source: Brent Cook, Exploration Insights

  • Anglo Gold
  • 22%
  • IAMGOLD
  • 15%
  • Gold Fields
  • 15%
  • Barrick
  • 11%
  • Goldcorp
  • 8%
  • Eldorado
  • 6%
  • Coeur
  • 27%
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SLIDE 25

Less Activity in 2014

Source: EY Global Mining

$22 $22 billion

divestments

$44.6 $44.6 billion

deals

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SLIDE 26

Only 1 in 10,000

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SLIDE 27

Exploration Financing by Juniors

Source: SNL Metals & Mining 2008 2009 2010 2011 2012 2013

$1,500 $1,000 $500 $0 Amount Raised (US$ mil) 175 125 75 25 Indexed Metals Price (May 2008=1)

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SLIDE 28

Running Out Of Money

Source: Bloomberg

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SLIDE 29

Getting Desperate!

57% 57%

share offerings less than $1 million

Source: EY Global Mining

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SLIDE 30

Source: Hunting Securities

Junior G&A High

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SLIDE 31

Gold Moves in Long Cycles

Source: Global Financial Data, US Bureau of Labor Statistics

1800 1600 1400 1200 1000 800 600 400 200

1800 1812 1824 1836 1848 1860 1872 1884 1896 1908 1920 1932 1944 1956 1968 1980 1992 2004

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SLIDE 32

The 1970 Bull Market – Price Corrections

Source: Dundee Wealth

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SLIDE 33

Round Trip for Gold Stocks

Source: Bloomberg 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

54.20

200 150 100 50

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SLIDE 34

Source: Thomson Reuters Datastream, LBMA, DCM Economics

XAU/Gold Long Term

0.45 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

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SLIDE 35

Gold Stocks Undervalued

Source: Bloomberg

Price to Book Value

Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

10.00 8.00 6.00 4.00 2.00

0.8689

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SLIDE 36

Fourth Major Opportunity

Source: Bloomberg

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SLIDE 37

Royalty Business Model

* Revenue royalties & streams

Source: Franco-Nevada

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SLIDE 38

Project Generators Beat The Market

Source: Visual Capitalist

350 300 250 200 150 100 50 Price Performance (Re-Based)

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SLIDE 39

Change in Gold ETF’s

Source: Bloomberg, Dundee Economics

60 40 20

  • 20
  • 40
  • 60
  • 80
  • 100

2013 2014 2015

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SLIDE 40

Source: Shanghai Gold Exchange, Sharelynx Gold, DCM Economics

Chinese Gold Demand

Date: July 3, 2015

80 70 60 50 40 30 20 10 09 10 11 12 13 14 15

Shanghai Gold Deliveries (tonnes weekly totals) 12-week MA

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SLIDE 41

Source: Thomson Reuters Datastream, DCM Economics

India Gold Demand

175 150 125 100 75 50 25

Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

Last Month: November 2014

INDIA Gold Imports (monthly – tonnes)

12-month MA

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SLIDE 42
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SLIDE 43

Adrian Day is a well-known global newsletter writer and money manager. He is not registered in Canada and unable to accept business from Canadian residents, nor can he provide individual investment advice to such persons. If you wish to contact him, please write P.O. Box 6643, Annapolis, MD 21401, U.S.A., email AssetManagement@AdrianDay.com, phone 410-224-2037. This is not a solicitation for business. Adrian Day, his staff, clients, and subscribers may own securities mentioned herein. He may be buying or selling securities discussed herein concurrently, before or after this seminar and may be acting for clients in a manner contrary to implied recommendation at this seminar.