Q: hi, one assumes there is methodology that you look at to value this company as it relates to the price of Gold vis a vis all other mining costs etc. Where do you see the price of AEM with a Gold price at $5000? do you know how often the price of Gold meaningfully corrects in these bull markets? what price would you buy or add to AEM?
cheers, Chris
cheers, Chris
5i Research Answer:
Gold can certainly correct but it is difficult to forecast and the reasons will vary. Gold has had five annual losses since 2005, including -51% in 2011 and -46% in 2013. The US dollar and interest rates are the biggest drivers (good and bad). Companies with good cost control such as AEM have very good leverage to price moves. At $5000 gold, we would be fairly sure AEM would trade above $300. It is 23x earnings today. We would be fine buying in the $235 range.