IKN

Thy sin’s not accidental

The CEO of Gammon Gold (GRS) (GAM.to) needs a dictionary……..

…..because he should check the definition of the word “strong”.

Today Gammon Gold (GRS) (GAM.to) released its 1q10 earnings, which it described as strong.

Let’s see why our friend the owl seems to disagree with the use of that adjective. First there’s gold and silver production. Despite previous production forecasts from GAM that said the company would produce between 200,000 oz and 220,000 oz gold in 2010, the first quarter number of 28,431 oz (which annualizes at 113,724 oz) leaves mucho mucho to be desired:

Then there’s silver production that came in pisspoor too. (Previous GAM forecasts of 8.5m oz to 9.275m oz Ag also look very silly nowadays).


Cash costs continue on up (previous GAM guidance on costs was $315/oz to $350/oz for 2010)….
…with $490/oz a new recent high on costs. So when it comes down to the nitty-gritty, the $1.828m net profit reported by GAM…..

….does not justify the U$7.50 share price currently commanded by GAM (the US ticker being GRS)…not even close. That’s because with 138.4m shares out, this company makes a $1.8m quarterly profit and thinks it’s worth over a billion dollars. Craziness abounds.

Anyway, GAM has its ConfCall at 10am EST today, which you can tune into via this link. I’ll be there listening and noting just how many softball questions get tossed by the lapdog brokerage analysts that cover this stock. They’re unlikely to be too hard on GAM, cos clients are up to their eyeballs in paper generated by previous rounds of financing. Don’t wanna rock da boat too hard, eh boyz…

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