Gold bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich March 3, 2014. A return to the Bretton Woods system would require a gold price well in excess of $25,000 per ounce, Martin Murenbeeld says.Reuters
Globe editors have posted this research report with permission of Clarus Securities Inc. This should not be construed as an endorsement of the report's recommendations. For more on The Globe's disclaimers please read here. The following is excerpted from the report:
The goal of this research note is to consider gold producers that have the potential to reduce costs and undergo transformational change either through the completion of project ramp ups, development of new deposits, increase milled head grades or for the completion of major growth capital expenditures.
We revisit our scattergraph that compares the operating leverage and financial leverage of the senior and mid cap gold producers. We identify several companies which currently reside in the upper left of the survivability matrix that have the potential to move to the lower left quadrant in the next 12-18 months. We expect that reductions in AISC and increases in or transition to FCF, should translate to share price outperformance. With much of the low hanging fruit to reduce costs having been exploited, we believe the development of new deposits (RIC, SMF), increasing milled head grades (KGI) or the completion of major growth capital expenditures (DGC, AUQ) are key to driving cost reductions and increases in FCF.
Putting it all together, we highlight several names that are expected to see significant increases in FCF in 2015 and those that are going into/continuing with more capital intensive project builds.
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