via Financial Post - Show Us The Money

Blackrock has come out in favour of investors by pointing out the excesses and pitfalls of the gold mining industry.

I would say that if a company earning ~$100m/year by producing roughly 63k oz. and having an operating cost of ~$670/oz. and a development cost of $500/oz., you could pay out an 8¢ dividend per year after taxes, 2¢ quarterly.

Should the gold price average ~$2000/oz. and your production increases 50% to 100k oz. per year, and your operating costs remain the same, then your development budget can increase to $670/oz. and your dividend can be as much as 12¢ after taxes.

Gold prices have not appreciated 15% over the previous yearly close, but we are still early in December. Next year's average aught to be higher, but I think politics will intervene and attempt to fix the gold price in the foreign exchange, and then devalue afterwards.

Shareholders will have a say should gold miners begin to fight over GBN.V. Calculate fair value based on P/E ratios for the gold sector, and EBITDA.

http://business.financialpost.com/2012/12/04/show-us-the-money-blackrock-tells-gold-miners/