POG / inflation / cash flow/ production Not a lot to say about Victoria and unfortunately, I can not say "no news, good news" with this Company as we learned to be suspicious with past lack of real time information about ops issues.
But as per today my focus is on :
1) the 2Q 2022 produciton : we should have the info in the first 10 says of July.
2) If they provide the OZ sold and average price obtains as wel as AISC, it would give a a good estiamted of Q2 earnings... Note that they sold forward a small portion of the production at 2000+ USD... Not a bad idea.. easy to say today that they should have crystallized more around 2000$/oz
3) POG/Rates/Inflation
POG did not enjoy a huge rally when inflation began to hurt us. The Ukraine war set up a premium still in the price but not as big as I thought it would be.
Central banks, with the FED leading the race, will tighten agressively int. rates. FED clearly set up its objective with no interest about market direction : they want to fight the inflation even if it means a short term recession in the US.
US real interest rate are or are close to be positive now.. This is a real bad news for POG.
BCE and other Central banks will follow with interest increase, and decrease liquidity at the same time.
So what is already priced in POG is difficult to determine.. but I had a few conference the past days and all had the same macro view : USD currency up short term, then decreasing as other central banks will raise interest rate, S&P still with a long way down before fair valuaitons, end of the easy money, slow down of the economy in 4q 2022/ 1H 2023 with technical recession or worse...
0.75 interest hike at next FED meeting.. then 0.5 then 0.25/0.5 depending of the inflation numbers.
POG : more pressure down than up.
So for a Gold producer ?
Negative for the next 12M :
POG could go down if real interest rate materialize more.
AISC up as energy price are up, wages will follow
Debt interests up if variabl component.
Positive:
if the agressive intrerest rate poliicies brings down inflation, AISC will go down.. Margin could be preserved.
Hedge : 2500 oz/months sold at 2000 (total 15000 oz = 7-9% of 2022 est. production.
share price is quite low imo for a 170'000/oz producer making money. All gold producers were beaten down.. so maybe a sector already cheap in terms of valuaiton...