1) The dividend is a “policy” and part of the value proposition of RRL. Unless the price of gold has a major correction the 8c per half year dividend will be maintained. There is plenty of free cashflow to pay for the dividend. RRL could also easily access finance for future Capex.
2) The talk of the McPhillamys project not being approved is realistically not a likely outcome. RRL are a well respected corporate citizen that pays a lot of tax and I suspect that the NSW Govt is acutely aware of the economic benefits of the mine. RRL announcements also indicate that the process is going to plan and they expect an approval in H1 2021.
3) Execution risk for a new mine is not unique to RRL. However, they can justifiably say “been there, done that”. RRL is not lacking mining expertise.
4) RRL has acquired resources, has increased its exploration spend and has plenty of cash to acquire further assets. I do not see RRL running out of mill feed any time soon.
At the moment I cannot see better value income + capital appreciation options than RRL and EVN. If you expect the price of gold to move up in the medium term, volume will trump margin so companies selling material ounces are going to take off in a big way and share prices will move up to mouth watering levels. RRL and EVN breaking $10 will not surprise me at all and those buying at current prices could be earning 10% fully franked dividends.
RRL Price at posting:
$3.70 Sentiment: Buy Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)