Mkt cap is now about US$10/oz. Including the debt it’s about US$15/oz. (That’s on the current resource).
This is cheap:
- On a global basis (look at assets in Canada, the Americas, etc)
- Given the (substantial) size of the resource
- Given they are in production (annualizing around 80,000 oz this quarter)
- Given the (triple A) jurisdiction of Australia
(What other companies are there with resources more than say 3m oz gold, in a decent jurisdiction, in production and trading at US$10/oz?)
Technically, and to me, really very obviously, it is massively oversold.
(That's what happens when a big seller hammers an illiquid stock).
It is easy to second guess yourself when a stock gets beaten up this badly. What have I missed? What do others know that I do not? I remind myself of the fundamentals:
Production is going up
From the RUI presentation, throughput was ~125kt in April, and is expected to be 142kt in May. Assuming June is the same as May, June quarter throughout would be 409kt, and a good estimate of production for the quarter might be 409kt x 1.6 g/t x 94% recovery => ~19,800 oz. That’s up from 14,900 oz in the March quarter.
Costs are coming down
Expect lower strip ratios this quarter; this will drive down costs. I’m expecting around A$1,300/oz all-in for the quarter.
Profitability is improving
See above.
Resources will increase.
49,000m of drilling not included in the current resource. Incredible drilling update earlier this week. My view has long been that this will be a 10m oz resources at some stage.
Expect an update with the June quarter release.
Obviously, management needs to calm the market.
They know it. Hopefully we’ll get an operations update in early June reaffirming what they said at RUI – production is back on track.
25c. Wow. Just wow! What a chance.
I have doubled my position this week, with some dry powder still to go...
Cheers
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