Just wondering what people are thinking about this stock. Any reason that it is trading at such a discount? Is it simply the production downgrade? Or because markets are bearish on the gold price? Do people have a problem with management?
I’m convinced that they are going to be a great long-term bet. Soon they will lock in financing for KOTH. Gold miners typically trade 5-8x EV/EBITDA, RED5 are currently at 6.7x EV/EBITDA, even with their growth story. The development of their mine is highly likely at post-tax IRR of 64% and as such stock is not priced appropriately. They have a backable feasibility study and are already developing mine expansions. Net debt is ($70m).
If they are at year 1 production, 3x current production, in mid-CY22. This will move their EBITDA from ~$44m LTM, to ~$190 run-rate conservatively as the new mine will have a much lower AISC to mine and some scale effects. If you build some scenarios around the gold price for this and I’m still pretty confident. In a world where they don’t pull off mine expansion it tanks but in the world where they achieve the mine build-out I see a EBITDA multiple at say todays 7x and you can do the math on TSR (5-6x in this scenario). So look I think there’s a lot of room to move here for the gold price downward, but I kind of believe I will do at least ok. Seems like a good story right?
Figure1: AUD gold prices could come off 15% and project still has a pre-tax IRR of38%
Figure2: Today St Barbara has a 3x market cap on RED, and Westgold a 2.3x
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Last
29.0¢ |
Change
-0.015(4.92%) |
Mkt cap ! $1.972B |
Open | High | Low | Value | Volume |
30.0¢ | 30.5¢ | 28.5¢ | $11.74M | 40.23M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
19 | 2499164 | 29.0¢ |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
29.5¢ | 1608201 | 23 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
18 | 1693518 | 0.290 |
19 | 1401753 | 0.285 |
29 | 1630799 | 0.280 |
15 | 662909 | 0.275 |
10 | 925300 | 0.270 |
Price($) | Vol. | No. |
---|---|---|
0.295 | 1608201 | 23 |
0.300 | 992106 | 10 |
0.305 | 378790 | 5 |
0.310 | 627143 | 11 |
0.315 | 338468 | 6 |
Last trade - 16.10pm 04/09/2024 (20 minute delay) ? |
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