Compared to the overheating printing presses of Ben "Just Say When" Bernanke and Hank "Make the Market Tank" Paulson, the precious-metal miners provide a very different definition of "making money."
While gold and silver miners fashion large sums of tangible money from earthbound ores, it takes a heap of greenbacks to get these projects running and keep them in shape. Surprisingly low metal prices are plaguing miners' near-term results, particularly as base metal byproducts plunge in value. Now, even the strongest miners, with unimaginable riches in the ground, are clearly strapped for capital.
In just six months, Agnico had added $300 million in long-term debt (as of Sept. 30). The cash position dwindled by 62% to $112 million over the same period. Based upon Agnico's sensitivity to zinc and other byproduct prices, I expect a lean fourth quarter, even as the company's Kittila mine in Finland moves into production.
As frustrating as the dilutive offering must be for Canadian shareholders, the problem appears manageable in scale compared to the $1 billion loan AngloGold Ashanti
After digging into Agnico's balance sheet, I decided to take a closer look at its rivals as well. One favorite among CAPS members, Yamana Gold
Further shiny Foolishness:
Four-star Motley Fool CAPS pick Agnico-Eagle Mines boasts nearly 900 faithful fans. Whether you agree or disagree, as a seasoned investor or an eager novice, this friendly community of investors would like to know your thoughts.
Fool contributor Christopher Barker wonders whether Hank Paulson is aware that money doesn't actually grow on trees. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns shares of Agnico-Eagle Mines, Kinross Gold, Silver Wheaton, Teck Cominco, and Yamana Gold. The Motley Fool has a disclosure policy.