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
- Forums
- ASX - By Stock
- Fundamental Valuation
Just wondering what people are thinking about this stock. Any...
-
- There are more pages in this discussion • 6 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
Featured News
Add RED (ASX) to my watchlist
(20min delay)
|
|||||
Last
37.5¢ |
Change
0.005(1.35%) |
Mkt cap ! $2.550B |
Open | High | Low | Value | Volume |
37.0¢ | 38.0¢ | 37.0¢ | $5.609M | 14.97M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
5 | 311637 | 37.5¢ |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
38.0¢ | 1805403 | 9 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
1 | 13322 | 0.375 |
9 | 348492 | 0.370 |
33 | 860113 | 0.365 |
23 | 824605 | 0.360 |
25 | 375766 | 0.355 |
Price($) | Vol. | No. |
---|---|---|
0.380 | 750000 | 2 |
0.385 | 590715 | 11 |
0.390 | 2815312 | 11 |
0.395 | 982544 | 13 |
0.400 | 1369333 | 19 |
Last trade - 16.10pm 05/07/2024 (20 minute delay) ? |
Featured News
RED (ASX) Chart |