Hi Fangk SLR is profitable now. The company should produce...

Hi Fangk

SLR is profitable now. The company should produce 130,000 oz of gold this year at a cost of A$1200/oz or thereabouts. It should sell those ounces for about A$1580. Importantly a lot of production is hedged so even if the A$ gold price tanked it wouldn't affect margins a lot.

So $380 x 130,000 oz = A$49.4M gross profit before non-sustaining exploration. Small debt of $6.7M will be paid off by end of the FY. A$29M in cash at end of last quarter and I'm hoping to see this increase to $37-40M at end of September.

Article I posted last week suggested possible sales of Great Southern and Murchison projects could net A$20M. A few other investments in listed companies that might be sold off as well (not sure) worth another A$6M.

To give you an idea of how beaten up the stock is companies like NST, RRL, SAR all trade on EV/free cash multiple of around 5. SLR is about 1.7 at today's close. Admittedly those companies are all much higher quality but the gap should close if confidence comes back to SLR and investors start to look at stocks further down the quality rungs.

SLR also trade on EV/reserve ounce of A$104. NST ~$1000, RRL ~440, SAR ~$600. PRU is by far the most undervalued stock on this basis at $35/oz!!

The market has doubts about the SLR reserves. UBS suggests that the type of deposit at Mt Monger has a very high conversion of resources though. The exploration budget is clearly targeting this. There is huge leverage in the share price to exploration success. Every year of reserves added should put ~5c on the share price in theory.

Having said all that, this company has been a turkey for a long time so I don't rule them out stuffing something up!