Australian (ASX) Stock Market Forum

GDO - Gold One International

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Hurricane said:
Hi Sion, have a look at the investor section on their website for some broker research on these guys. In my mind the SP won't start to move until these guys start start regularly hitting quarterly quarterly production targets. While the upgrade in resources at megamine has been positive, I don't think this has been fully realised in the SP.
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Hi Hurricane, agree that the quarterly prod'n will help any SP charge, but in the immediate term I think that the 12th November is an important date. This is the date by which GDO bondholders need to advise the Co. if they intend to exercise their once-off put option which will occur on 12 Dec 2010. If all were to do so, then there would be a sizable dilution in these shares. So the preferred option is that bondholders cash out (which is why GDO recently secured a $65million loan facility). I think that once this is out of the way a re-rating is likely.

Wrt what a re-rated share price would look like here are 3 wild guesses (that should not be relied upon) based on different metrics:

Mkt Cap / Prod'n oz ($5000/oz). GDO is about $3,500 so 53cps
Mkt Cap / Reserve oz ($350/oz). GDO is about $205 so 63 cps
Mkt Cap / Resource oz ($154/oz). GDO is about $14 so 407cps??

I think the first 2 are probably a bit more realistic over the next couple of quarters assuming (like you say) they become proven producers

boronia
 
Boronia, having gotten around 50 cents per share as my personal valuation of GDO, it's good to see that it's also held in a more mathematical basis (on $ value per ounce production).

I'd agree in that the bondholders conversion (if they will do it or not), along with their lack of production history is causing some hesitation among investors. Imo in the next quarterly these two issues will be sorted out, with bondholders being able to convert at a price of around 38 cents if I recall correctly or they can cash out at par (GDO has secured the funding for this, as per previous announcements), and last quarters production highlighting what GDO can do (didn't hit the target, but got 85% of the way there).

:2twocents
 
407c sounds good to me how about you PVF? If only it were that simple!!!

"(didn't hit the target, but got 85% of the way there)." Not really something I like to hear from a company I've invested my hard earned moola into!! Come on GDO - under-promise over-deliver!
 
Big jump in SP today what gives? Surely not a delayed reaction from the Modder East update??? Anyone know of any Broker/Analyst reports out today???
 
Hurricane said:
Big jump in SP today what gives? Surely not a delayed reaction from the Modder East update??? Anyone know of any Broker/Analyst reports out today???
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yesterday was the last day for GDO bondholders to exercise their put options. It appears that the previous selling pressure that has been around for the last few months has now disappeared and given GDO SP an opportunity to approach fair value
 
The positive news today and the SP drop have encouraged me to get out of GDO for the time being. Perhaps when everyone wakes up and it rallies through 60c I will hope back on board :)
 
Yeah what gives?? Anyone with any insight into why the SP dropped?? Gold seems to be on the leg back up, is there some regional news out there having an effect?
 
I'm pretty sure that it's the nature of the announcement itself. The drilling program didn't really extend the resources beyond the production that has been made (about 2-3% increase in overall resources). The reason Modder East now has a longer life is the addition of the more marginal ores, as opposed to a finding of more high grade quality ore. The high gold price allows GDO to process the lower quality ore later on, increasing the NPV of GDO, but obviously not changing the game much today. It's more of a several years from now ME will still be open making some cash announcement, rather than a discovery of masses of new reserves.

PVF.
 
ParleVouFrancois said:
The drilling program didn't really extend the resources beyond the production that has been made (about 2-3% increase in overall resources). The reason Modder East now has a longer life is the addition of the more marginal ores.
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I think you might be right there PVF. Not a good look for if/when there's a decent correction in POG. Anyone hanging their hat on lower grade and more expensive ore to mine will naturally get hammered. POG is continuing to find very good support and will probably keep running until the printing presses stop. But if the printing presses stop and the USD survives then these new developers of marginal projects which are low grade and relatively high Opex will turn to dust. Many will go bankrupt and people will lose mega bucks. On the other hand of course... :2twocents
 
Wow so informative this forum, keep it up guys!


I've been reading into GDO for quiet some time now and can honestly see myself investing within once 1 more positive company announcement is listed

the user with the Alien/piccasso? avatar you've quoted a potential roller coaster towards a huge 7 cent?

where do you source all your information from as i'm yet to come across this?
 
Hi guys, drop in SP today on good news. Technically GDO is not in a good place and fundamentally it is not either. It cannot at the moment generate enough cash to pay off its debt (80% of assets) and I cant see that situation improving.

Just a heads up to holders as to the reason why the SP is not doing anything.
 
Hi, as assumingly the guy with the 'piccasso painting', (it's called 'the scream' LOL and it's by Edvard Munch, I thought it'd be applicable to the sharemarket sometimes :D), it's in the company announcements. Assuming they hit their target of 120,000 ounces this year they expect to generate cashflow of 7 cps.

Here we go, found the exact announcement regarding the 7 cents per share:

http://imagesignal.comsec.com.au/asxdata/20101129/pdf/01126200.pdf

It's on page two first paragraph, obviously all the assumptions that have been made in calculating that have to be hit, and you'd have to weight your decisions based on the likelihood of them all occuring.

I am personally a disbeliever in the 'American recovery' which is based around inflating away the debt, historically any country who has started the process that America is on has had MASSIVE inflation, but we haven't seen that in the USA due to the currency's reserve status, history books will be written about these days, but the problem is noone really knows what will be written.

RE: Tab, obviously you would'nt find "high quality" companies with bullet proof balance sheets trading on a PE less than 5. Given that this time last year the company was plagued by the problems in the initial ramp up period, BEE (black economic empowerment) issues, a disgruntled and striking labor force, and uncertainty over the financing, all these issues have been sorted as of a few months ago. Now all that remains is the company keep hitting their production targets, they have a pretty aggressive production profile imo, and most of the current profits are being reinvested in more gear to mine more ounces hence the lack of cash flowing through to the balance sheet to pay off debt.

PVF.
 
Hmm the report I read must have used old information. It was dated jan 7th but maybe it used june10 financial statements.

The November anny is very positive and the assumptions dont sound too far fetched. Im not sure if that 59m figure is after debt, but even if it is GDO is still prices attractively with repayments easily covered several times.

Many gold small caps are in limbo at the moment, there is allot of uncertainty out there and quite a few things that could go wrong globally sending equities back into the doldrums.

I am keeping some cash handy, but if the GDO SP continues to fall it will make an excelling buying opportunity.
 
you fellas come across any other updates regarding GDO

i've read up on a few other forums and found nothing but good, but each time i read good i find a drop in the SP =/

hmmmm
 
BananaCake said:
you fellas come across any other updates regarding GDO

i've read up on a few other forums and found nothing but good, but each time i read good i find a drop in the SP =/

hmmmm
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Gold One are progressing quite well ATM and production is increasing every quarter.

IMHO the main problem holding back the SP is the large debt still around their necks.

Assets are $24,485,000
Liabilities are $92,230,000 which includes Total debt of $80,293,000.

One Gold produced 120,000 ozs in 2010 and have forcast an increase to 150,000ozs in 2011.Their production costs are around $400 per oz. So with gold selling around the $1300 mark, it may be a good 12 months before we see some movement.

I believe once this debt is reduced and they start to pay a dividend, then we should see some movement in the SP.

NB: I am not a financial adviser so DYOR.
 
NAV 100k production of gold with only 10M debt plus the entitlements for their REE Spin off is a much better looking investment IMHO at 22c MC 96M.

I have been watching GDO for a while now and I think its hard to see a big market re rating around the corner with gold prices flat (or worse).
 
Doesn't NAV have a much higher cost base than GDO? I can't seem to find the announcement but isn't it on the order of 800-900 an ounce? Would be happy to see it clarified. If we are talking producers who look undervalued I'm thinking DRA would be another one to have a poke at, producing in Finland and Sweden pretty nice position in cash and assets when compared to price atm.

Back on topic for GDO, I think the lackluster price has as much to do with not 'having' to buy in before a specific event, the mine is there and producing very profitably, but beyond that the debt, lack of dividends, and general unpopularity of South Afrian based companies listed on the ASX means that it probably will be a rather boring year for GDO. However I'm still a big fan of the cashflows and assets on the sheets, and to me this company is a very solid buy at these prices, still more upside with production and exploration due to come out in the next few years. Obviously if your timeline is shorter there are other stocks that most likely will outperform GDO.

PVF.
 
It was 800 inc. admin and according to the last announcement "progress has been made reducing cost per ounce" and 600-650 an ounce is a more likely long term average. Not exactly sure what they are running at over at NAV in the present though, but their q4 report should be out shortly.

Assuming novo's figures are correct, 80M in debt to 24M in assets is a riskier prospect, and you would expect to be compensated for that risk with capital growth which is not happening in the market. The debt also effects the earnings, a very rough EPS estimate for 2011 with GDO would be 6-10c (which would pay off its debt in about a year).

Nav will make 6-8c EPS in 2011 but does not have the risk profile GDO has. The kicker for me will be the rare earth entitlements that are basically a bonus of 1-2c per share that the market has not woken up to.

GDO has a very juicy cost base but there are probably better technical and fundamental options out there. The market is going a bit cold on gold stocks also, with Uranium and Zinc looking to be a better alternative prospect in the next few years according to some analyst reports.
 
ParleVouFrancois said:
Doesn't NAV have a much higher cost base than GDO? I can't seem to find the announcement but isn't it on the order of 800-900 an ounce? Would be happy to see it clarified. If we are talking producers who look undervalued I'm thinking DRA would be another one to have a poke at, producing in Finland and Sweden pretty nice position in cash and assets when compared to price atm.

Back on topic for GDO, I think the lackluster price has as much to do with not 'having' to buy in before a specific event, the mine is there and producing very profitably, but beyond that the debt, lack of dividends, and general unpopularity of South Afrian based companies listed on the ASX means that it probably will be a rather boring year for GDO. However I'm still a big fan of the cashflows and assets on the sheets, and to me this company is a very solid buy at these prices, still more upside with production and exploration due to come out in the next few years. Obviously if your timeline is shorter there are other stocks that most likely will outperform GDO.

PVF.
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Just a casual look at DRA, I would be interested to know what P/E you got for them and why you think they are a good buy? It looks like ~7
 
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