TSX:SGR.UN - Post by User
Post by
TedOwenson Nov 15, 2013 1:48am
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Post# 21908483
Sprott's PeterGrossKoff is calling for $2,500 POG
Sprott's PeterGrossKoff is calling for $2,500 POG
A 2,500 dollar gold price over the coming 12 months is highly unlikely and promotionally unrealistic given the markets clear preferance towards fiat currency value preservation.
Gold is going nowhere except sideways over the coming 12 to 24 months and as such, San Gold will not be in the position to use the depressed gold prices as a crutch towards explaining its stock price woes.
Clearly the companies issues rest with lower averge gold production figures over that which is being returned by the majority of junior gold outfits so unless production numbers start matching industry averages across the board, attempting to make up the slack by resorting to cost reduction solutions will only further destabalize the markets position that
The bottom line is that San Gold is in the postion where it needs to actually produce revenue by producing more gold. You can only scale back expenses so far without endangering the companies capacity to operate for the purposes of producing what it is that you are in business for.
The moral of the story is that while cost cutting is nice, its only a tuning mechanism to overcome raw business efficiencies which in this case, need to be supported by actual production and the ratio of its current production deficiencies when gagued against the possible expense reductions would mean that SGR would have to cut production costs well below what would be realistically possible in order to turn things around.