Barrington Research Associates observes that even without the benefit of the Hemlo mine’s output, the major gold producer appears to be under-valued based on its gold reserve and plans for boosting output.
“Expansion has traditionally come from exploration and not acquisition,” wro te the U.S. firm about LAC. “This tends to take longer but is more profitable, particularly at today’s high purchase prices for gold properties.”
LAC has been generating substantial “other income” of late, Prudential-Bache Securities notes, adding that investment income is an important element of earnings. The brokerage firm expects LAC will continue to benefit from this income source and it speculates the “other income” contained in the earnings “influences the kind of acquisition and capital expenditures the company can make.”
Selling its one-third interest in the Stillwater platinum-palladium mine in Montana netted LAC $48 million. Analysts are quick to point out that this amount plus the $154 million (awarded at the original 1986 trial, this figure has grown to about $200 million today) the company would receive should the Page-Williams court decision go against LAC, would serve to place the company in an even stronger cash position and in an excellent position to make acquisitions.
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