CASH IS KING RIGHT NOW AND MTO HAS $0
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Cash does give independence and flexibility to miners, but the new normal for gold miners seems to be that with cash or no cash, the SP is treated like a Mike Tyson sparring partner.
For instance, Aurizon which is endowed with $199m cash and no debt and also is generating $18.9m cash flow on 137k ounces of production, is quoted at the same SP today as it was in 2008, when the gold price was circa $800.
Also, half the market cap of Richmont is cash, but its SP has been hit due to closure of Francoeur. The board can afford to make many more Francoeur misjudgement and still have no debt.
It seems therefore, that the key driver to SP is future earnings prospects and the jury is still out as to whether Metanor can convert gold assets to profits.
Aurizon - Third Quarter 2012 Highlights and Significant Items
§ Net profit of $5.5 million, or $0.03 per share
§ EBITDA of $18.9 million
§ Operating profit margin of US$894 per ounce
§ Cash balance of $199 million and no debt
§ Gold production of 29,913 ounces, resulting in revised annual gold production guidance of approximately
137,000 ounces for 2012
§ Casa Berardi enters transition phase to accommodate shaft sinking and access to new zones
§ Successful transition from contractor to owner-operated mining at Casa Berardi
§ Encouraging exploration results on the Heva and Hosco West Extension areas
§ Receipt of Marban and Fayolle resource updates