I have mixed feelings at bestWe should be able to do better than this. I cannot confirm romarco's assertion that Oceanagold/Romarco will be THE lowest cost global gold producer, and consider that statement highly suspect. Show me.
Oceanagold's 2014 all-in sustaining costs were similar to those projected for Haile. However, OG's production costs have been kept low owing to copper from their Philippines mine more than offsetting gold production cost there. Very unlikely that will be the case going forward with the collapse in copper price. A negative all-in cost in the Philippines (approx -$173US) offset a far higher production cost (approx $923US) in New Zealand, home to 70% of
OG's production.
And although I realize the announcement of a C$0.68 per share takeover is a standard way of reporting such a proposed stock-swap transaction, the dilution of Oceanagold shares necessary to complete the deal makes the C$0.68 figure moot upon announcement and, in fact, misleading IMO.
Then again, we are a year away from production at Haile, and many are predicting gold below $1,000US by then if not before. The measured and indicated at Haile is based on $1,200US gold as I recall. The mineable tonnage could drop considerably if gold keeps sliding.
The proposed takeover leaves me with a 30% or so loss on currently held shares, if it happens at today's share price, and that blows big time for seven years of dealing with this rocky ride.
Haile remains a low cost producer, if we could only get some support in gold price perhaps there will be competing offers. I hope so. We are being killed not only by the price of gold, but also by the strong US dollar. Romarco raises money in Canada, and spends it here. Not good. Plus they did the hugely dilutive private placement on the very day the Canadian dollar hit an historic low against the US dollar. Tempting to say management is to blame. Fact is, they seem to have been backed into one corner after another.
At the current share price, I estimate investors are predicting $750US gold a year from now. Inflation adjusted, that's where gold was in the 1980's, when economic conditions were far more stable. Still, hedge funds are net short gold for first time ever, if reports are to be believed, and considering they absolutely control the stock market, they can drive gold down whether fundamentals support that move or not. We in the US, as a society, have ceded control of capital markets to a relative handful of hedge-fund managers who work for the ultrawealthy who own over 50% of the market. The rest of us are pawns and 'dumb money' to be used as they manipulate the big picture and grease the correct palms. But enough of that.
In the end, little has gone well for Romarco investors. "Robust economics" be damned it seems. Personally, I hope I never hear that phrase again.