another sbm, page-10

Watso, it's 2.00 in the morning and I'm veged out nursing a bottle of Cleanskin red. However, let me attempt to run this by you and other readers anyway:

1) RSG is now fully funded.
2) It has 281m shares on issue with another 93m coming. At 55c, this equates to a market cap of $205m.
3) Reserves are 2.5m oz (2.2 g/t) and additional resources are 8.0m oz (2.0 g/t) of which only 2.7m oz is in the weakest inferred category.
4) Current reserves and resources (measured and indicated) are sufficient to support 10-yr production at 500k oz pa. Exciting exploration upside will significantly expand these numbers.
5) Assuming conservative production of 400k oz pa attributable to RSG (Mali government owns 20% of Syama) we can calculate EBITDA based on cash cost of $A 700 per oz.
6) We know 80k oz pa is hedged at $A 667 per oz until mid 2012 (IDIOTS!) meaning they lose $A 2.6m pa. The remaining $320k oz at $A 1200 gold price generates EBITDA of $160m pa.

So I think buying this company at 55c per share (which is being offered to me today) makes a lot of sense, on the presumption Syama will be OK. RSG’s actions suggest they now eschew hedging and the quality of their assets means they will be producing for many more years. They have the funding secured and this is a very big deal as I am learning with bitter tears in our current market…

Rowingboat.