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M#4 Keeps the Tape Rolling

Daily Rap 11-27-2019

It was a mixed bag for the game of beat-the-number last night, but as we all know, any bad news is quarantined and thus irrelevant, so I won't discuss the details. The indices were sort of mixed at midday, with the Nasdaq up 0.5%, the Dow flat, and the S&P modestly higher. In the afternoon, the S&P and Nasdaq added to their early gains while the Dow didn't do much.

Away from stocks, green paper was a little stronger, fixed income was lower, and the metals lost 0.5% apiece.

Housekeeping There will be no Rap or Ask Fleck on Friday because the shortened holiday session certainly won't have any information in it, so there's no point commenting on it.

I hope everyone has a wonderful Thanksgiving and sometime soon I'll be discussing my plans for matching...more

Last year's posts for Ask Fleck

Q: Assuming you were on the board of KL (as you were at PAAS). What would you have advocated? You obviously wouldn’t have supported this acquisition (I’m more sanguine than you). Is there a type of deposit you would have preferred? No acquisition at all? Use cash instead of stock and/or buy a smaller asset with more development potential? Just curious.

Detour had lots of posterior issues, but from what I understand from John Hathaway and others, they printed their best quarter ever last quarter and are on track to do much better prospectively, old (inept) management had been removed, the pro forma company generates about $1.5bln in annualized cash flow (based on last quarter), and Tony thinks he can bring down AISC to about $800 on the new asset, lower than most miners - and he has proven to be a capable executive.

By the way, I didn’t love this deal, but the action of the stock has now brought it to a lower valuation than AEM, NEM, and GOLD with a far superior margin and growth profile (other than maybe AEM, which I like better). Thanks!

Fleck: I can't answer that because I don't know what I don't know about their drill program at and around Fosterville. I don't disagree with your last comment. It may turn out to be a good deal over time (see the other post on this topic). I'm just not sure what I think yet.
(posted: 11/27/2019)

Q: Hi Fleck,

Can you elaborate on why the KL story is now totally changed since the acquisition?

Fleck: They were a high-grade underground miner with only medium-length reserves (at least at Fosterville). Detour is a long-lived, very-low-grade open-pit miner. The two couldn't be more different, though in a roaring gold bull market it could possibly be a great combination. For right now, it has just sowed confusion and disappointment. I may come back to it again once I sort it all out.
(posted: 11/27/2019)

Q: For your info. The history of the China trade deal.
A history of the "close" China trade deal

Fleck: It is so absurd.
(posted: 11/27/2019)

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