New investor here, recently started accumulating a position in CYL. I feel it only fair to now return some effort after sitting behind the scenes reading yours.
First of all I wanted to thank all regular posters for providing all their perspectives. Opposing views are only a good thing. A couple of personal keyboard battles are evident but I think that they can be treated as value-added entertainment as opposed to anything significant on the investment logic front.....!
Disclosures: I am not a gold/mining expert. I have seasoned financial markets experience by trade. I do not have any affiliation to CYL (apart from now being a shareholder!).
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Given the way that recent posts have turned, I wanted to start an intellectually honest discussion which is tied to facts where possible, not anything too subjective or personal (be that positive or negative views). Please see below for my cents worth - which is absolutely welcome to be backed or shot-down as long as the retort is based on facts. I have thick-skin don't worry.....
Value Proposition Seesaw:
Positives:
Given the recent consolidation in WA, I think it is well documented that the infrastructure alone now owned by CYL is conservatively worth at least 2.5x current MC. Tied with the mines themselves, the relatively low AISC and the potential upside that exists in the ground, there is justification for there to also be a reasonable amount of premium priced in addition to the asset base.
And let's not forget the VIC tenements which alone are assets which have significant and tangible value to them.
FX/Gold Price: Despite Australian costs being high, the FX is massively in CYL's favour (AUD costs, USD receipts) and I do not see this changing any time soon. Gold price is stable and IMO with geopolitics as they are and interest rates likely having reached the high-end of the range, I can see gold trending upwards from current levels in the medium-term.
Neutral:
Henty: I get why CYL purchased Henty a few years ago - to take them from an explorer to a tangible producer. Whilst Henty may be treading water at the moment, I read it as the last published and relatively high AISC was due to recent investment at the mine and I would expect this number to trend lower as the cost average blends in. Given the direction that the company has taken since purchasing Henty I also accept that this asset now looks slightly out of focus but it is not a bleeder, I do think it can and will contribute positively over the next few years (albeit not a breakout amount). But the company focus should certainly be in WA over the short/medium term, so yes, sell if a bid comes in close to value but no need to have a fire-sale event here.
Cash: CYL is a going concern but not overly cash rich. There could be risk of a cap raise but given the WA operations are now under the CYL umbrella, I hope this risk is minimal as fresh output flows should start to fill the coffers from now on.
Negatives:
Legacy issues from acquisitions: These are noted and most importantly are not a surprise. The acquisitions were struck with full knowledge of such and are either priced-in, relatively insignificant $ wise or I am sure (leap of faith here!) have suitable indemnity clauses tied into the deal T's & C's.
Key-man risk exists (Bruce Kay).
Market Cap and Volume: (see below)
Board/Management/Employees:
I see a mixed skill-set here and this is not a bad thing. Some more finance driven, some more 'deal-maker' driven but there is proper mining skillset as well (Bruce Kay appears highly well-regarded). It is good for a company to have all these perspectives around the decision-making table.
On the ground there has clearly been a recent deadwood purge and replacement hires are now onboard.
Conclusion: I appreciate this is all high-level opinion but I have tried to remain factual and objective and thus overall I see CYL as significantly under-valued with large upside potential. But no need to flame me - I would reach this conclusion as I am now a shareholder....!
Finally, why the Share Price Malaise?:
I simply put this down to 'normal' crappy stock factors:
(i) being a tightly held stock by long-term holders. Most people only have so much ammo, so in the event of any lengthy lull in pertinent news, stocks do tend do trend lower. $500 ticket, short-term chart monkeys (apologies to any that I have just insulted) do not help either.
(ii) Being too low MC and ADV to attract institutional attention. Quite simply, professional institutional traders do not have the mandate to trade stocks below certain MC and ADV. Regardless if a stock screams value, they just won't touch it.
(iii) There has probably been some legacy selling from VAN and SGI interests and in the absence of value driven demand (see points (i) and (ii) above) it will trend down.
For long-term fundamentally driven holders we will have to be patient. For short-term holders then I can understand your frustration but it is what it is. File the statements and mark-to-markets in the bottom drawer, lock it, do not open for 12 months and then we can all enjoy together.....!
Best of luck to all
LR
(20min delay)