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<p>[QUOTE=&quot;GoldFinger1969, post: 2087451, member: 73489&quot;]Easy....the capital structures were not laden with debt.&nbsp; Plus, the CAPX that went into these lower-hanging fruit were much less (see my comment above on debt ratios).</p><p><br /></p><p>Finally, the cost of extraction were much lower....think about it...labor supply for mining/oil &amp; gas/geological stuff was much less competitive...and energy costs were more or less configured on oil @ $25/bbl. !!! <img src="styles/default/xenforo/clear.png" class="mceSmilieSprite mceSmilie100" alt=":wideyed:" unselectable="on" unselectable="on" /></p><p><br /></p><p><br /></p><p>Actually....not. <img src="styles/default/xenforo/clear.png" class="mceSmilieSprite mceSmilie8" alt=":D" unselectable="on" unselectable="on" /> I work in the financial sector so this is 2nd nature to me, but the truth is you can look at the sector and the individual companies and see that what I am talking about is true.</p><p><br /></p><p><b><span style="color: #0000ff">The companies made a few major mistakes:</span></b></p><ol> <li>First, they <b><span style="color: #ff0000">hedged their gold price rise from 2002 onward</span></b>. So they didn&#039;t realize much of the 6-fold boost to $1,800/oz.</li> <li>Second, instead of &#039;digesting&#039; previous CAPX, <b><span style="color: #ff0000">they kept building and buying (&quot;Empire Building&quot;)</span></b> and got burned by overpaying big time.&nbsp; And I am not talking about overpaying by 30-50% but more like 100-300%.</li> <li>They failed to see the <b><span style="color: #ff0000">huge rise in extraction costs</span></b>, based on labor, materials, machines, and energy (oil).</li> <li><b><span style="color: #ff0000">Unfriendly governments</span></b> imposing red tape, additional costs, mandates, and sometimes (threats of) expropriation.</li> <li><b><span style="color: #ff0000">Way too high debt levels.&nbsp; Not enough free cash flow.</span></b></li> </ol><p><span style="color: #000000">In retrospect, these mistakes look easy enough to have spotted.&nbsp; But not really.&nbsp; If in 2002 you had told most gold mining CEOs that gold was going to go up 6-fold in the next 10 years they probably would have spent even MORE.&nbsp; Most would have figured they&#039;d have stock prices that went up closer to 10-fold if not more.</span></p><p><span style="color: #000000"><br /></span></p><p><span style="color: #000000">As Don Adams (&quot;Maxwell Smart&quot;) used to say.....<b><i>missed it by thatmuch</i></b>.&nbsp; <img src="styles/default/xenforo/clear.png" class="mceSmilieSprite mceSmilie8" alt=":D" unselectable="on" unselectable="on" /></span>[/QUOTE]</p><p><br /></p>

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