Pierre Lassonde And New Gold Inc.
June 25th 2008 18:38
I've written twice about Pierre Lassonde, former President of Newmont Mining. The first time I wrote about Lassonde was in September of 2005 with Who is Pierre Lassonde. In that post Lassonde, when oil was at $37 a barrel, said he was looking for $80 to $100 oil based on the research in Matthew Simmons’ book Twilight in the Desert.
Lassonde wrote in the 1999 Newmont annual report that
…investment performance cycles between paper and hard assets. He believed the world was near the end of the paper cycle and near the beginning of the hard asset cycle. There had been two cycles before, each lasting 12 to 14 years. In 2001 the price of Gold hit bottom at about $250 per ounce.
He believes (in 2005), we are four years into the cycle and Gold is up 80%. (Since the low of $250, we have reached $1,035!) I quoted Lassonde as saying
I do not believe we are going to see outright deflation in the United States, I think it is going to be more like a muddle through, so I still think the Dow is going to be 6000 to 8000 /- something. When you look at the amount of money that has been created, what I see is a gold price that will have three zeros after the first number. But I don't know what that first number is going to be. Yes, over $1,000. Is it going to be in the next year or two, I don't think so, I think it is going to be a 5-8 bull market that we have in front of us. So the place to be over the next 5-8 years is hard assets. That's what it is, gold, oil.
During a conference call to discuss Newmont's third-quarter financial results, Lassonde described Bernanke as a "reflationist" with a Chicago School-economist orientation (The Chicago School is renown for its belief in the power of markets).
Lassonde predicted that there will be a slowdown in the U.S. economy, which will motivate the Fed to become "commodative," which will be good for gold. Meanwhile, he noted, "China continues to defy expectation" in terms of demand.
Gold "supply continues to be challenged," Lassonde forecast as the production of Newmont and other international gold mining companies is down. As a result, he predicted the gold price will reach $525 an ounce before the beginning of next year.
Lassonde predicted that there will be a slowdown in the U.S. economy, which will motivate the Fed to become "commodative," which will be good for gold. Meanwhile, he noted, "China continues to defy expectation" in terms of demand.
Gold "supply continues to be challenged," Lassonde forecast as the production of Newmont and other international gold mining companies is down. As a result, he predicted the gold price will reach $525 an ounce before the beginning of next year.
What’s up with Lassonde now? He seems to be a private investor. Stockhouse reports Lassonde and Seymour Schulich left Newmont and have invested in Vancouver's Peak Gold Ltd and their goal is to form a mid-tier gold mining company.
Gold miners worth more than $1.5 billion are in "the sweet spot" where large institutions get on board, added Lassonde, industry veteran and chair of Franco-Nevada Corp., who will own a 5 per cent stake in the new company.
"Only when you put the three companies together do you get it, and you get it all in spades," he told analysts on a conference call.
Vancouver's Peak Gold Ltd., along with Metallica Resources Inc. and New Gold Inc. of Toronto, announced yesterday that they have struck an all-stock deal to form the combined New Gold Inc. to boost production with a solid pipeline of projects coming on stream in the current cycle.
New Gold is expected to produce 297,000 ounces of gold this year and 335,000 ounces in 2009 from operations in Australia, Brazil and Mexico.
And with more than $500 million in cash on the books, the merged company will be well positioned to develop the Afton mine in B.C. and the El Morro mine in Chile. It may also expand Peak's Amapari mine in Brazil while "aggressively" seeking acquisitions to complement its stable of projects, the companies said.
"Only when you put the three companies together do you get it, and you get it all in spades," he told analysts on a conference call.
Vancouver's Peak Gold Ltd., along with Metallica Resources Inc. and New Gold Inc. of Toronto, announced yesterday that they have struck an all-stock deal to form the combined New Gold Inc. to boost production with a solid pipeline of projects coming on stream in the current cycle.
New Gold is expected to produce 297,000 ounces of gold this year and 335,000 ounces in 2009 from operations in Australia, Brazil and Mexico.
And with more than $500 million in cash on the books, the merged company will be well positioned to develop the Afton mine in B.C. and the El Morro mine in Chile. It may also expand Peak's Amapari mine in Brazil while "aggressively" seeking acquisitions to complement its stable of projects, the companies said.
Stay tuned! Lassonde has an enviable track record and he thinks this bull market may have five to seven years to go.
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