So just back from a great week of fishing and fun off the...

So just back from a great week of fishing and fun off the northern NSW coastline to see Resolute go for its stellar run on Monday. Have been an investor in this stock over the past 10 years and been very fortunate, with the right analysis, to buy in depressed times and sell at near heights in early 2012 and again on Monday and Tuesday. Kept about a fifth of my original holding.

Some recent thoughts on movements, results and where to next for this excellent company. Like GB, I think RSG is now very well priced (probably overpriced for an African producer) and would be looking to buy back in dips.

Just listened to Mr Welborn’s quarterly update on open briefing. He certainly is a good marketer, but having listened to him and reading the latest announcements I’d say it’s now time to be on the sidelines. Whilst the one high grade result from Monday was stellar the rest of the results for an underground operation were pretty average in width and grade and may suggest the orebody is not as strong at depth as originally purported by the company. Additionally, can’t believe the cash costs over last couple of quarters for the oxides; seem incredibly high, even if you take in an accelerated strip. Admin costs are excessive! Wonder if they’re not making the sulphide side look better than it truly is? There was a suggestion from Mr Welborn that the oxide processing would move in parallel with the sulphide over the next 12 years, but based on my calculations they must have only a few years of mineable resources left? In addition to GB’s comments, the NPAT result was also inflated by additional 25,000 ounces they treated from concentrate stocks that they hadn’t been able to process in the previous year. They obviously have a little more of this to treat but sulphide stockpiles are now only 1.7g/t not the 3.5g/t previously treated and they have to hold out for 12-18 months whilst they get the UG up and going.

Whilst their Sarsfield open pit should reopen and give them a much needed long life asset in Australia, we need to remember that this project will have high operating costs and likely only modest margins unless they can supplement with higher grade material than the 0.8g/t dirt they’re talking about.

Assets haven’t changed, other than Bibiani, since 2006 so it is what it is. Not sure about the cultural change, this one sounds like spin from the new kid on the block on lead up work of the past 6 years. Now the revaluation has been largely completed IMHO the share price going forward will largely be controlled by the movements in gold price and forex. NB. Resolute’s share price in Jan 2011 when gold was ~US$1400/oz was $1.40 and by early 2012 (POG US$1600/oz) reached a peak of $2.15 – largely same asset size and share registry.

Still like the long term story and will be a buyer again if gold consolidates around US$1400/oz and share price drops back to $1.50 level, which I believe it will in the coming 12 months once hype subsides. Only caveat, if gold shoots to $1600/oz again, they can discover another 500koz of oxides at Syama in short term , find some higher grades in Queensland, get Bibiani up and running or better still get gobbled by a bigger fish (had to use that analogy)

Good luck to all. Now to find the next one!