Gold company warns prices to fall

The company brought in just over $51 million in the last quarter up from almost $44 million in Q1 2007. Production costs dropped by a third which brought net income in at $9.3 million compared to a loss of $10.7 million last year.

GRS has barely enough cash to buy a bus ticket with $5.5 million in the bank. The company says its mining interests and property are worth $575 million. Gammon has a market cap of $1.2 billion, which does not say much for its enterprise value.

Both gold ounces and silver ounces sold in Q1 fell. That may not be bad, but investors would not want to see it as a trend. While Gammon says its total ounces of gold sold should rise from 155,000 this year to 213,000 ounces in 2010, and it forecasts the price of gold falling in each of the next two years. Its forecast for silver prices also steps down in 2009 and 2010.

It is probably not a good sign when a firm says its major products are going to lose a lot of their value.

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