Hi Joe, I am happy to give my opinion but its only based on a...

Hi Joe, I am happy to give my opinion but its only based on a few hours research. I don't have a long history with the company. So its only my initial independent opinion.

Valuation - this is definitely low. A cursory look gives a market capitalisation of $3.1B with cash and bullion of circa $800M at the end of the March quarter (cash and bullion was $576M at the end of the December quarter). This gives an enterprise value in the range of $2.3B. Using simple benchmarks the enterprise value for a 400,000ktpa producer with an ASIC of about $2300 ought to be more like $4B. So the company value is definitely low. That is what sparked my interest.
The cash and bullion seems to be increasing looking at previous company reports and information so the company is going forwards financially. When I saw Vault at Diggers n Dealers last August they're enterprise value was $1.9B so the enterprise value hasn't really moved much despite the run up in the gold price. At Diggers I bought CYL for $2.20 and those shares are now $5.50 whereas Vault has hardly moved so my question I ask myself is why?

Management - I don't have a long history with the company. But I the presentation at Diggers n Dealers last August and bought CYL instead of Red5/Vault because of the hedge book. Management has allowed the hedge book to be a real mess. I note other comments on the forum that at the time of the merger they forecast about 450 ktpa ounces and are now running at about 400ktpa ounces so there could be a credibility issue also. However that doesnt scare me too much. Gold mining is really complicated. Producing 400ktpa is a good effort.

Hedging - I think this is the kicker. Its not a small problem like others on this site have suggested. My maths says that as of 1 January they had 209,000 ounces hedged at roughly $2750 per ounce. Thats not a small problem. Hedging out of the money is more like a debt than anything else. And at the current gold price its out of the money by $460M.

So at at 1 January, by my maths, the "pristine" balance sheet with no debt and $576M of gold and bullion actually only had $100M of headroom using the gold price of today. This hedging is a big deal and it means the enterprise value reflected in the share price is closer to $3B. So while the company market capitalisation looks low it isnt nearly as low as it looks at first pass.

Reading the comments on HC my perception is that this hedging problem is being understated.

My takeaways
Compared to the other peers I have shares in such as PNR and CYL, Vault hasnt run as hard and does look cheap. I will buy a few shares. But I will stay more exposed to PNR and CYL because they don't have the hedge problems of Vault. Also the concern at Vault meeting its production forecasts makes me a bit cautious.
That said, two thirds of the Vault gold production is unhedged. And Vault makes a lot of gold. And the gold price is really high. So Vault is definitely attractive and I will buy some shares. Just cautiously.