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Ann: WGX Corporate Update, page-27

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Joelstar

3,908 Posts.

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26/09/22

12:25

Post #: 63877973
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Originally posted by jogo: ↑

I don't normally do this but in view of your comments re debt, I think my recent post under RED is relevant. WGX stands out as one of the better funded companies at present.

"I recognise that world conditions and market sentiment have changed considerably since the start of the year. Inflation is high and is now becoming built in to people's expectations and so is now persistent. Only a nasty economic retraction will change the psychology and I doubt if the central banks will have the stamina to do that, in which case inflation continues at a high rate.
Increasingly, commentators are referring to a nasty recession next year and if the monetary authorities continue their current tightening then that is likely.
So, I need to plan between high inflation (and probably stagflation) or an economic bust. Both scenarios should favour gold in the medium to long term, whereas in the short term, I would expect gold shares to get hit along with other stocks as interest rates head higher or as the economy stutters down.
However, I consider that stagflation vs nasty recession requires different investment approaches in relation to gold companies.
In a stagflation situation, gold should do well and gold companies will be able to invest provided they are not foolish with contracts and increasing costs.
In a recession situation, gold may not do so well, and managing costs becomes vital along with management of debt.

At present, I will continue with the general picture being painted in the media that interest rates will continue to be increased and that 2023 will go into recession and likely to be nasty.
Hence, a company's debt position becomes important.
Accordingly, I am paying increasing attention to gold companies' debt.

One of the ratios that I track is net cash to MC. Like any such ratio, it is not deterministic and so needs to be considered in relation to a company's overall situation and prospects. Still, a negative net cash to MC ratio, acts a a signal and the higher it is then the more concern that I have in today's climate.

I use figures from the most recent quarterly reports (ie for 30/6/22) or any subsequent update and for the following selection of companies (using Friday's SPs) obtain:
RSG-148.8%
CAI-39.8%
RED-23%
EVN-9.5%
SBM-6.4%
RRL-6.2%(excludes Phillamys)
NST +6.4% (excludes any forward capital expenditure)
DEG +6.4% (assigning capital cost of mine/processing plant from SS as debt in EV calculation)
CYL +13.6%
GOR +14.3% (subsequent takeover of DGO)
BGL +15.3%
TIE +17.8% (all construction fully funded)
RMS +30.6% (subsequent takeover of Apollo)
WGX +48.2%
X64 +58.3%
RND +89.4% (based on cost of producing gold on hand)
TBR +105% (based on assessed market value of gold on hand)"

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Thanks Jogo,
Hard to believe that WGX is now sitting over a 50% net cash to MC Ratio.
@mickeebee GRR mk2!

WGX Price at posting: 75.8¢ Sentiment: Buy Disclosure: Held
7 Upvote

0 Great analysis

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Last $2.76		Change 0.090(3.37%)		Mkt cap ! $1.308B

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