Forum Archive Index - September 2002
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Re: [sharechat] STUDY STOCK - LHG
>Rivkin has been in trouble over a number of insider trading charges etc.
>nastiest the I can recall was a few years back when he told subscribers to
>his newsletter to buy stocks that he has trying to dump....
>Me thinks that he is rich from playing the markets and playing the
>This is old, but you get the idea
I believe Rivkin gets around AU$20 million annually from his subscribers
It is a common argument that Rivkin often sells stocks he/has recommended to
His argument is basically "its what he does" and any of the recommendations
(so far) that he has sold while recommending them for subscribers have still
made good money for those subscribers
For instance while recommending Rebel Sports [REB] a buy up to 86 cents he
sold a large parcel of them at 80 cents. The REB shares (still a hold
recommendation) are currently trading at $2.38 (in less/around 12 months)
The fact is he day trades shares and often "juggles" shares around. The
views for his subscribers are not always what he himself does (his other
I myself always do a T/A on any shares I see recommended by anyone (They
should be the same! If not I give that one a miss or treat with caution.
Particularly if the T/A changes while holding)
The case of PSA is that Rivkin has *not* made this recommendation yet to his
subscribers. He may consider this too risky to be a subscriber one. He has
however made this a *semi-risky* suggestion on public radio to someone with
maybe $2000 to invest
There are *plenty* of Rivkin knockers? So do take his advice with care. He
does sometimes gets things wrong which he does not hide
Many online advisers simply have their dud recommendations vanish! (IMO)
Share Analysis is one of them and used by many a stock broker as a authority
of/on Australian shares
For *me* the three best on line source to *consider* paying for are
(2)Investor Web (IWEB)
in that order. This view can also change as they all seem to have "peak"
performance then get careless
Shareanalysis have LHG as a *SELL* presently! Below the fundamentals from
Kennecott (now owned by Rio) and Niugini Mining conducted the first serious
exploration on Lihir in the 1980’s, discovering high grade gold
mineralisation on the east coast of the island. Consequently Lihir listed on
the Australian Stock Exchange in 1995 and began producing gold in May 1997
after an 18 month development period. In 1999 Lihir facilitated a scrip
merger with Niugini Mining simplifying the ownership structure of the
company and giving Lihir access to Niugini Mining’s cash reserves.
Industries Of OperationLihir produces gold bullion, which is flown off the
island for sale into existing contracts and global markets. Long term the
outlook for gold is encouraging. Global production growth will slow with
higher cost South African operations reducing output. Central Bank selling
of reserves should continue to be moderated. Differentiating FactorThe
differentiating factor for Lihir is that it is a world class gold deposit
producing some 600,000 ounces of gold per annum from the one mine. This
amount is greater than many companies produce from a group of mines and
Lihir has the potential to increase output to some 800,000 ounces per annum
by 2006. The scale of the asset and its potential make the company
effectively an option on the gold price, making the stock very leveraged to
Lihir Gold Limited (LHG) is a Papua New Guinean gold miner and explorer. The
core operation is the massive Lihir gold mine located on Lihir Island (New
Ireland Province, PNG). Lihir`s only and principal operation is gold mining
on the Lihir island. The current mining plan consists of some 13m ounces of
gold reserves for a mine life of some 15 years with a similar number of
years production from subsequent treatment of stockpiles. Mining is
currently from the Minifie open cut.
The Lihir gold mine remains a world-class resource with significant mine
life and production potential. However, Lihir has both operational and PNG
sovereign risk, which gives the company a higher risk profile. Leverage to
gold prices in FY03 is limited with some 448,000 ounces or 70% of
anticipated production forward sold. In the short term, capacity will be
lifted to offset lower grades, prior to the shift to the Lenitz orebody in
While the company eased in recent times on the back of volatility in both
the gold price and global markets it continues to trade at a premium to our
12 month price target and expensive multiples relative to other gold stocks.
We view operational and sovereign risks as potential corporate barriers.
While the company has a huge reserve base, significant hedging has limited
short-term financial leverage to gold prices and we recommend a SELL.
Capital Structure Lihir has some 1,142 million ordinary shares on issue.
Following the merger some 162 million Niugini Mining shares have been
reclassified as B class - Treasury shares with no voting or participation
rights. Substantial shareholders of the company include Rio Tinto (16.26%)
and Mineral Resource Lihir (6.75% representing the Lihirian landowners).
Earnings Outlook The earnings outlook for the company is flat to weaker in
the medium term. In FY03 production will fall to some 600,000 ounces on
lower grades, with profits expected to also decline. Profits should improve
in 2005 with a large boost in production following the shift to the Lenitz
orebody. Leverage to gold prices in FY2002 is limited with some 480,000
ounces or 80% of anticipated production forward sold.
Historical Price Trends Over the last few years Lihir has traded from highs
of $2.66 to lows of $0.55. Through 1999 and 2000 the company was hit hard by
falling gold prices and operational difficulties. The stock has demonstrated
significant volatility during spikes in the gold price to which it has
reasonable correlation (just under 0.6 for the last 3 years). We would
continue to expect Lihir to track movements in the gold price.
Key Financial Issues The balance sheet is strong and ungeared, with the
company reviewing a number of options to lower costs and improve
productivity. As long as Lihir continues to produce sufficient gold to more
than cover forward sales the company is in a very sound financial state.
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