A good balanced post. I took a little money off the table at circa $3.20 and wish it was more as all existing shareholders do. The Rights Issue share price is nothing short of a disgrace but where we are now is where we are and I believe holding and adding shares at $2.70 is probably better than selling out in disgust. What are the positives?
1) The circa 33% dilution has been offset by the acquisition of a long-term, high margin producing asset of 150k ounces per annum. If you are a gold bull (as I am) this could easily be worth $300m free cash flow per annum at some stage very soon.
2) With a base case annual production level of 500k ounces at an AISC margin of $1k per ounce that is significant cash generation.
3) McPhillamys coming online would put RRL in the big league. Again for gold bulls, volume is more important than the current cost of production.
4) TheTropicana ounces will add to ounces being sold into the spot market and reduce the damage of the out of the money hedges.
I have bought some shares at just above the CR price to round up my holding with the view of taking up my CR allocation unless the share price falls dramatically . I see the chance of the share price heading back to the pre-CR level as being pretty good. Buying any share where a 10-20% gain in the short term is very possible is a good deal to me. I then always will have the option of jumping ship with a lower accumulated loss than if I jumped ship now and did not top up.
RRL Price at posting:
$2.73 Sentiment: Buy Disclosure: Held
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