I tend to agree regarding RRL in a higher gold price environment (although to be honest, $2400-2500 POG is still amazing for RRL).
To me, whilst I have been quite critical of management, especially regarding them resting on their laurels for the past few years and not having gone big on internal growth exploration, that has changed quite dramatically. Though as RMS has shown, just ramping up the $$ in exploration does not mean an instant step change in production, it takes time to firstly prove up a deposit, then profitably mine it.
RRL is looking more and more like SAR did perhaps 3 years ago. Lots of internal growth plans, but a recognition that it will take time to get there.
The 400k p.a target is a nice 2-3 year target, but once they get McPhillamy's into production, well, 200k p.a is the plan, but I do wonder if that will be able to be improved up (I mean, they have had another 5 years to run the numbers!)
As for whether it is the best value, compared to its closest peers, sure, SBM, WGX (not many Aussie based producers to compare against).
RMS? SLR? SAR (but then, its basically a goner) I guess it partly depends on whether you want to be early, for the investment phase (RRL), or... perhaps enter after the investment phase (like RMS). I own ever stock I just mentioned, but... am heavily weighted in RMS, then SAR, then RRL and a bit in the last few.
As for the hedging. sigh.
There are many things I would like to see RRL, but I just don't think management have the sort of gumshoe required to close out the hedge heavily.
Imagine, if they went a step further, and took out debt, to wipe the entire hedge!
I think a far better way to mitigate the hedge, would be for RRL to undertake some sort of corporate action (i.e a small cap with a production profile of at least 100k p.a, with little hedging, not saying there are many to be had, but....), which would increase their production profile, whilst reducing the overall % of production currently hedged. Sure, RRLs script is hardly flying, but they went after CMM... it would have been a great fit for them. There is also the option, of say merging with SLR, or RMS, or even GOR.
RMS or SLR, would basically, enable the merged entity to have a mid term target of 1m ounces p.a. The size that entices global markets to take notice.
Do you think something like this might occur? I just get the feeling that RRL does not have a plan like this yet.
(20min delay)