RE: To: vraimantPerhaps, but my understand was that costs given were net of cash credits of other metals, and my impression is that Penasquito is included in the forecasts of the increasing production from 2007 to 2011 of 2.8 to 3.5 million ounces of gold.
Certainly when I looked at the production on the current mines I only found 2-2.4 million ounces between the two companies, and I saw roughly 400,000 new ounces coming onstream from a new mine. I believe gold production of Penasquito is definitely included in the 2.8 million ounces given in the recent guidance, but I welcome you to list the mines and the production expected and add it up to show me differently. Check out https://www.stockhouse.ca/blogs.asp?page=viewpost&blogID=459&postID=6813 where I've listed the mines and let me know where I'm short. It adds to 2.4 million ounces and with Penasquito, that's 2.8 million ounces. And, because I've listed the mines, and you have familiarity with the company, you might see something I've missed quickly.
But, if my analysis flawed, Goldcorp's guidance is flawed, because my analysis of cash flow is based on their guidance. I am completely willing to accept that I've erred in my look at, but I would like to see it demonstrated to me in the financials, and you haven't done that. I've added up production of the individual mines on my blog here, and I've stated I know nothing of the properties that they haven't reported in reserves.
It is my belief that Goldcorp reports product costs of gold net of cash credits of other metals. They most certainly have done so with copper and silver in every report and I find it highly unlikely that they would switch gears in their reporting now, but I accept that they may have done this, I simply haven't found proof of that assessment, nor have I bothered to go back and look and the guidance and re-read it to ensure my understand is correct.
I am under the impression that their guidance is 2.8 million ounces for 2007 with costs net of cash credits of $150/oz. If my understand is correct, their guidance includes credits for copper and the silver, the zinc, and the lead that you mention. I can't fathom why they wouldn't include one of their mines in their guidance. $625 minus 150 gives $475/oz for potential income, which is a nice $1.3 billion. But, they've got $750 million in captial costs and 55 million in exploration, so now it is down to a half billion for taxes and profits.
There is no analysis in what I've said of the value of what's in the ground of silver, zinc or lead in terms of their reserves, but the gold is definitely included. Reserves increased from 25 million ounces to 41 million ounces with the merger -- 25 million for goldcrop, 16 million for glamis.
And I do go back and adjust when something I've missed has been pointed out to me.
So, silver at $13 gives $300 million. Zinc at $2 gives $600 million. Lead at $0.75 gives another $100 million, so there is a billion in other metals contributing to cash flow, but because of how they report costs net of cash credits, I think this money is already eaten up in production costs given for their guidance.
I think Penasquito is well reported in Goldcorp's guidance, but from my look at Goldcorp, what isn't well reported is the potential of their other properties, and that's where you'd find that I've undervalued Goldcorp assets in terms of what's in the ground.
I honestly believe the numbers you are giving are included in their guidance for 2007 for cash flow, but I don't know what they used for $ values for cash credits for the other metals.
There are two types of analysis happening here, cash flow and earnings, of which you've given some information for production, which I believe is included in Goldcorp's guidance. And there is the value of what's in the ground, some of which is included in what I've stated, and most certainly I made no mention of the value of silver, zinc or lead reserves.
Personally, I think the value of what's in the ground should be at least 6 times the market cap for a market perform stock, never mine one with a potential of growth. I actually overstated the reserves by 9 million ounces. Copper and Gold's value is $30 billion, only 1.5 times market cap. Are those unreported properties and other metals you mention going to make up $90 billion in reserves in the ground? I don't think so. If you give 20 properties 2.5 million ounces each, you get an additional 50 million ounces and at best, double my estimate.
And I read it here that "big" finds of more than 2.5 million ounces are becoming rare in properties.