Evening All,
I was actually getting worried about the last few sessions trading too... until I stepped back and re-thought it through.
Firstly, those that are medium term holders like me have probably had their metal tested pretty seriously when the share went from 10c to 3.7c in April. Initially, this thought alone put me in perspective and made me laugh at today's concerns - oh no, we hit 14.5c - I think I'll panic sell just before the auction - not. I'm sure I lost more at that time than anyone here has in the last week - but I held my belief and look where we are.
However, what caused me to hold from April this year was a very simple question and, as it still applies, I thought I'd share:
"is this company likely to be successful?"
The follow-up question, of "how successful will it be", is simply a logical extension from here but less relevant to the sell or hold question IMO (because if successful, it will be crazy successful). Maybe read
@wombat777's posts for guidance on this part.
The answer to the first question is IMO simple:
Yes.
If this is right, then the market will work itself out over time - irrationality will happen short term, but over time the truth will emerge. It might be next week... but it might be 6 months.
So far, IMO, management have now proven, time and time again, recently that they are doing everything they can to maximise the value.
Seriously, we were doubting 200k carats was achievable a few months back - I wasn't even sure there would be an auction. We weren't even sure they would have rubies or buyers.
Now, why do I think yes (still)-
1. We hold hundreds of hectares of land which has 20-50 years worth of ruby supply in it. Yes... this is actually what it is, I spoke to MUS's geologist personally and I truly believe this.
2. Want proof of 1 - We've already confirmed 3+ KM strike of mineable land and we haven't even been trying yet - from MULTIPLE PRIMARY SOURCES which are now weathered (ie these are secondary rubies but they also appear to have come from multiple primary sites originally according to MUS - ellivial only travel 5km or so from memory, so must be multiple; plus they have tested 30-odd holes dug across wider area - all of which bar 2 have had rubies - this is such a big strike that we can't even assess it easily)
3. The nearology of gemfields is pretty clear to evidence that our rubies are valuable and are there - it also generally shows that they are in demand, that they are quality and that their company had a val ~$400m even with multiple problems;
4. We now have rubies in abundance, this is not in doubt anymore
5. We will be improving the asset return over time with plant upgrades and more capital.
6. These are ellivial/alluvial rubies - they are good. Simple. My only caveat is this tender will be skewed lower due to the artisinal recoveries (maybe); but this does not undermine the overall feasibility of the plant.
So, the only remaining question is how much is this worth? I've done my numbers independently of others (and several times), but continue to come up with one big result and that is why I still hold a substantial portion of this company.
Whilst Tuesday's outcome is exciting and possible to be unbelievable - anything at or over US$30 a carat is enough to prove this company is worth an awful lot once we up-scale. I'm realistically expecting $50 per carat; hoping for $85; dreaming of $125+.
My final words of wisdom - Don't listen to the fear.
I would have hated to have sold at 3.7c six months ago; don't hate yourself for selling at 15c when in six months the share will have a bad day in the 30c range or higher.
Hold strong & believe in yourself (and please do some of your own research).
Cheers
Capt Amazing
