RRL's share price currently values it at a MC of A$1.47b.I note...

RRL's share price currently values it at a MC of A$1.47b.

I note RRL paid IGO A$903m for the 30% share of Tropicana. The 70% JV partner being Anglogold (MC over A$10b).

Morgans at the time determined a NPV of the 30% interest at A$1.1b. I wonder what POG they used in that determination? Anglogold had ROFR to ensure an appropriate price was paid.

The Tropicana 30% interest attributes ~120,000 ozpa of Gold, with AISCs of A$1,179. The Sept21 Quarterly Report affirmed this.

Yet RRL has total production guidance of ~480,000 ozpa of Gold for FY22. The Sept21 Quarterly Report maintained this.

Theoretically, if Tropicana contributes A$1.1b to RRL's notional MC, then shouldn't the balance of production add something more. That balance being 3 times Tropicana's contribution, albeit at AISCs 50% higher.

Then there's another A$200m in cash sitting on the Balance Sheet.

Interesting to read that the BOD'S plan, is that the Tropicana cash flow will contribute to a total cashflow, that will be used to self fund the development of the McPhillamy's resource, Government approval pending. This will then make RRL a producer of 750,000 ozpa of Gold in 2 years time.

That's triple SLR (MC A$1.5b) production and half of NST (MC A$11b) current production. McPhillamy's approval will cause a substantial share price re-rate. I doubt a negative result will affect the RRL share price much at all.

From the Company's website: "Regis expects a decision on the Development Application would be made during 2021"

https://www.morgans.com.au/Blog/2021/April/Regis-Resources-Acquires-Long-Life-Tropicana


Funnily enough, IGO went on to use that AZ$903m to buy an interest in Greenbushes Spodumene mine and have seen that investment triple since.


GDX (VanEck Gold Miners ETF) was up 3.15% last night. Its been all downhill for five months now. It lost 31% in value from its 52wk high during that period but has now bounced back 14%. RRL lost 29% and has bounced only 4.5%.

Barrick Gold up 4.53%.

Newmont underperforming but still up 2.75%. Newmont last week announced a FY22 production reduction of 500,000 oz due to COVID. That's (very) roughly about 1/2 a % of world annual production. What other miners have had similar production issues? What will this supply disruption do to the POG?

All WA miners were reporting instances of increased costs during the past quarter. Further exacerbated by COVID issues which even affected Gold giants like Newmont.


If the Fed is going to suppress interest rates, then the negative yields on 10Yr T Bonds will support the POG. No QT means the supply of fiat money is maintained.

The POG is already low compared to other asset prices, such as Equities and Real Estate. Perhaps some have considered Bitcoin another haven for real value but that will get competition early next year when China go mainstream with their digital yuan, the e-RMB. Also Russia with the Cryptoruble and other Central Banks considering their CBDC options.









I was expecting to make this a short term play but I'm reconsidering my term. RRL looks to have considerable upside from here, with indications of a resurgent interest in Oz Gold equities from the BEOT.