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drbubb

Reasons to buy Goldfields (GFI), a South Africa

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I have been watching Goldfields (GFI) for sometime, and think the buying point is approaching.

 

I think the Weekly Chart ... update : daily : monthly

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...shows a nice long base.

 

And I was interested to see that Adrian Day chose it as his "favorite South African stock" citing:

 

+ Best mines with the lowest cost, and longest life

+ Solid management and strong balance sheet

+ Vision for international growth

 

GFI's price has been held down by a recent acquisition, and the related financing. It acquired the long-lifed South Deep mine for $3 billion, which brought a jump in its SA production and reserves, but also in its debt and equity outstanding. the acquisition raised debt to $1.9 billion, which is managable. But to keep gearing to prudent levels, GFI also raised $1.2 billion of new equity, putting pressure on its stock price. hence the laggard stock performance.

 

But that issue is now done, and GFI's superior long term prospects should beginning to assert themselves. The large Cerro Corona gold-copper project in Peru should be in production a year from now, and two other investments are moving forward:

+ A strategic relationship with Sino Gold in china

+ the new Essakane JV in Africa

 

GFI expects its gold production to increase to over 5 milliion ounces pa within 18 months - giving it one of the best growth profiles amongst the majors

 

MORE from Adrian Day : http://www.AdrianDayGlobalAnalyst.com

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