saucy doubts and fears

Yamana (AUY) (YRI.to) and Brio-X Gold: Scotia got it

Here’s the call section of what Tanya Jakusconek wrote last night on the huevo-en-cara news from YRI last night. She’s right, of course:

Management had strongly telegraphed that it believed it could complete a monetization of Brio Gold in a timely manner in order to reduce its debt levels. Without the successful sale, we expect debt levels to remain high relative to the group (2016E net debt/EBITDA is 2.5x vs group avg ~1.6x at $1,100/oz gold price). We expect the shares to be weak tomorrow on the news of the suspension.

I like the understatement in that last sentence. It’s a bit like “We expect the next Pope to be a Catholic”.

UPDATE: Beggaring belief, YRI actually opened higher on this news! That’s either reefer madness or it’s a sad indictment of all mining management teams; the market is so used to mediocrity from people running these companies that when one of them (this time our pal Peter) makes a strategically dumb move, it just shrugs its shoulders, mutters “normal” under its breath and carries on regardless.

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