Benj GallanderGolden Star ResourcesGSC.TOCOMMENTJun 28, 2016
This company has some knocks against it. They had a lot of difficulties with the gold price being down. They always have trouble making money. Royal Gold made a royalty agreement and are giving them $130 million, but of course there is a whole payback with that, which will depress their earnings. He can see this going up $1.25.
Gold in Ghana. Several operational problems over the last few years so has been in the doghouse. High cost producer at about $650 so are currently generating about $500 in cash flow with minimal capital spending. Ploughing this free cash flow into the ground for the first time to develop more resources.
Producing about 400,000 ounces of gold in Ghana and have about $.9 billion. Trades at about 5.5X cash flow. Cheap at 16.8X PE for 2010. 46% earnings growth forecast for 2011.
(Top pick, March 12, 2007. Down 15%) They’ve had nothing but problems coming from their mines. Very, very cheap, new CEO, good production, great take over target. Would rather buy a stock that doesn’t disappoint.
(A Top Pick March 7/07. Down 33.3%.) Issued a convertible debenture, which kneecapped the stock. He sold his holdings before this happened when it was clear they were running out of money.
Chang in management caused the last dip. Projects are located in Ghana, which doesn't have a developed infrastructure creating a lot of power interruptions. Also a lot of metallurgical problems. Would look elsewhere.
Finally seems to be making a turnaround on the corporate side. Had a nice pop and has come off. Stock is starting to show some relative strength. Need to go a couple of more quarters to get the analytical community to see that they have their act together.
Had some production issues a few years ago and the stock disappointed. Have solved their power problems, but the stock is still very cheap. You can get about 400,000 oz. of production for about a 1 billion market cap, so can see it being a takeout.
Has not participated in a big way in the last 12-24 months because management has not done that well. A merger candidate but there won't be much premium.
During the past year, there were a lot of tops that kept getting lower and lower. This is not been a favourite of his. It needs to bust out on the upside with good volume.
This company has some knocks against it. They had a lot of difficulties with the gold price being down. They always have trouble making money. Royal Gold made a royalty agreement and are giving them $130 million, but of course there is a whole payback with that, which will depress their earnings. He can see this going up $1.25.