Gold Stocks Information and Comparison

[Sean K]

I have updated the spreadsheet with additional information on many of the companies and updated with their recent significant results.

Sorry, I've ramped AZM in there as having 1m oz au, when they only have 500K JORC. Adjust the spreadsheet.

Wonder how goldies will go today with US implosion and gold doing a stiffy. When will we get the decoupling of gold stocks to the overall market?

 

[Sean K]

I have updated the spreadsheet with additional information on many of the companies and updated with their recent significant results. Doc is too big to paste up in the thread, so you will need to open it up as a file.

Any additions, please advise if you like, but include as much information as possible:

Shares on issue
Current SP
Resource base
Grades

etc etc.

Cheers,
kennas

Couple of anomalies in the speedsheet for discussion.

CTO at $18.5 for a developer/producer is really low. Really low....?

RSG at $38 for a producer is very low.

SBS at $9.3 looks cheap.

MML at $269 looks very expensive.


Of course , my 2 explorer picks are KMN and AZM which still looks cheap on this comparison.

 

[Sean K]

I've updated the spreadsheet with current prices and a general comment on their charts.

The explorer end of town has been well and truly SMASHED recently with many at 1/3 their value from a few months ago, and many at multi year lows. It's carnage out there in the spec gold sector.

Can only wonder about their turn around fortunes with a POG break up, but at the moment, the sin bin for most.

Perhaps all the spec money is in IO, CSM and Poo?

 

[JTLP]

Hi Kennas,

Would you mind updating AVO to the producers list (as of last week )

G/T is around 4.0 and operating costs is around $369 per ounce.

Thanks,

JTLP

 

[michael_selway]

I've updated the spreadsheet with current prices and a general comment on their charts.

The explorer end of town has been well and truly SMASHED recently with many at 1/3 their value from a few months ago, and many at multi year lows. It's carnage out there in the spec gold sector.

Can only wonder about their turn around fortunes with a POG break up, but at the moment, the sin bin for most.

Perhaps all the spec money is in IO, CSM and Poo?

I think ASX:GOLD might be a good one to look at also

thx

ms

 

[Sean K]

Hi Kennas,

Would you mind updating AVO to the producers list (as of last week )

G/T is around 4.0 and operating costs is around $369 per ounce.

Thanks,

JTLP

Done.



Nice to be a producer right now.

Except for POO and wages and blah blah....

Are they hedged or not?

 

[grace]

I think the small caps have been getting murdered due to View Resources and Monarch Gold....both small gold producers who have gone broke! Not a good example for anyone hoping to start production, and shareholders have left the small caps in droves!

I hold NAV and am feeling pain all round! However, gold will find new highs soon I hope.

 

[bvbfan]

A couple for your sheet

MDL 520mill shares, price 70c, cap 364mill, 2.7mill oz, costs450, annual production 165000 oz
CNT 900mill shares, price 1.10, cap 990mill, 12.5mill oz, costs?

MDL also has a zircon project to go in 2009/10

 

[kbxk508]

The following chart I put together compares a number of AUS Gold Producers and shows, (i) EV per Ounce (Resource), (ii) Total Cost per Ounce (TCO), (iii) % Reserves as a Percentage of the Resource (% Reserves) and (iv) Net Financial Assets (NFA). Datasource GoldNerds (14/7/08).

These 4 factors are compared on a line graph and sorted in order of highest % Reserves to lowest.

In addition, there are horizontal averages for each of the categories (i) to (iv) to give you an indicative benchmark to what is normal.

While the graph may look intimidating at first glance, it is actually quite easy to follow once you understand how to use it. Use the following link http://www.globalspeculator.com.au/articles-newsletter.html to open the article "Australian Gold Company Comparison 08/05/08" for more information.

The higher the % Reserves the higher the value that is attributed to the companies overall ounces and is evident by a black line of best fit for EV per Ounce.

As noted in the article, the above indicators become very useful when scanning across potential investment opportunities. Starting with EV per Ounce you look for companies that sit significantly below the black line, i.e. the company is trading at an EV per Ounce that appears to be below what it should be, given the compilation of its reserves and resources.

Next, look at the TCO and NFA for the relevant companies to ensure they are within or better than the averages (horizontal lines). If they appear to be at satisfactory levels, you may have found an appropriate investment candidate worthy of further research. If on the other hand, they fail miserably in any of the other components, you may have your explanation as to why the ounces are comparatively cheap.

 

[kbxk508]

Another comparison is to look at the EV per Ounce of Production per Annum for AUS Gold Producers. The attachment has two charts, (i) EV per Ounce of Production less than $10,000 A$ and (ii) EV per Ounce of Production greater than $10,000 A$.



To put these results into some perspective, here's a quote from The Speculative Investor - Weekly Market Update for the Week Commencing 28th July 2008

DOM's enterprise value is about A$230M, which means that it is being valued by the stock market at around A$2300 per ounce of production. This is low for a profitable gold mine in a politically secure jurisdiction. In a more buoyant stock market the company would probably command a valuation of A$3500-$4000 per ounce of production assuming a gold price of around US$900/oz.

kbxk508

 

[jman2007]

While the graph may look intimidating at first glance, it is actually quite easy to follow once you understand how to use it. Use the following link http://www.globalspeculator.com.au/articles-newsletter.html to open the article "Australian Gold Company Comparison 08/05/08" for more information.

Looks like an interesting approach,

And one that I'll have to spend a bit more time looking at to fully understand and appreciate.

I find that one of the more difficult aspects to capture whilst researching any company would be the actual quality of the resource, in terms of size and grade.

Consider a hypothetical case of "Company A" under two different scenarios. In the first scenario, Company A has two JORC equivalent open pittable resources 35km apart, each containing 100,000oz Au @ 2 g/t, and in the second case, one single open pittable resource containing 200,000oz @ 2 g/t in an identical JORC category. Obviously the 200K oz pit would have a clear advantage over the two satellite deposits in terms of logisitics, mining costs etc. But potentially, the EV per oz wouldn't be able to distinguish between these cases.

Arguably a premium would already be incorporated into a company's sp for a "larger, higher quality" deposit, but I think a lot of people are confused when faced with distinguishing between "good ounces" vs "bad ounces", and how much they should be paying for each. Obviously % of resources converted to reserves goes a long way to establishing demonstrated economic viability for a proportion of the ounces, but imo this only goes so far in clarifying the waters.

Comments welcome
jman

 

[So_Cynical]

Another comparison is to look at the EV per Ounce of Production per Annum for AUS Gold Producers.

Couldn't help but notice that MON is on 1 of those charts...interesting considering
they went ass up more than 3 weeks ago.

As jman said there's good ounces and bad....i prefer to say, hard and easy, and
ive yet to see a chart that successfully categorizes that.

 

[jman2007]

Couldn't help but notice that MON is on 1 of those charts...interesting considering they went ass up more than 3 weeks ago.

As jman said there's good ounces and bad....i prefer to say, hard and easy, and ive yet to see a chart that successfully categorizes that.

Yep, too true,

If in doubt stay out. MON and VRE were also both producers, which fundamentally speaking are ususally considered less riskier plays than a pure greenfields exploration play.

I guess it just goes to show that vigliance is required at all times, like it says in the attached article. Unfortunately things like production schedules and pit optimizations etc are incredibly sensitive to small changes in commodity prices and operating costs, which is why it is so important to get it right from the word go.

jman

 

[jman2007]

I've updated the spreadsheet with current prices and a general comment on their charts.

The explorer end of town has been well and truly SMASHED recently with many at 1/3 their value from a few months ago, and many at multi year lows. It's carnage out there in the spec gold sector.

Perhaps all the spec money is in IO, CSM and Poo?

Hhmm yeah,

Explorers/developers definitely up against a hostile market atm, probably the smart money has been pulled out to prop up other resurgent/recovering sectors. I think most of us are hanging tough atm and licking some pretty substansial wounds.

 

[kbxk508]

Looks like an interesting approach,

And one that I'll have to spend a bit more time looking at to fully understand and appreciate. ...

Obviously % of resources converted to reserves goes a long way to establishing demonstrated economic viability for a proportion of the ounces, but imo this only goes so far in clarifying the waters.

Comments welcome
jman

Hi jman,

Just to clarify some of the key data in the chart,

Net Financial Position, NFP = Market Cap - EV, NFP% = NFP/Market Cap

If NFP is positive that's a good sign. If it's negative, it means they owe more money than they have in liquid assets at the moment. What's critical is how large this Net Financial Position (NFP) is compared to the Market Cap.

VRE announced on Dec 31 2007 that it was "Unhedged, Debt Free and moving to steady state production". The catch was, it planned to pay of its debts with proceeds from the sale of the nickel interest for $22m, for which it had signed a "Heads of Agreement". But when the nickel property sale fell through on Feb 11, the debts could not be paid. Combined with an unexpectedly lower production from one property, the company went into voluntary administration merely 5 weeks after this quaterly announcement. One of the few clues to their risk level was their NFP%. Their cash and assets were around $11m. Debts, were $37m, and Market Cap was $50m. So their EV was a lot higher than their Market Cap. Their NFP% was around -50%. In other words, VRE owed about $25m above and beyond their liquid assets, which was equivalent to their Market Cap.

To illustrate this,

I put together the same chart (re: attachment) using the same Aus gold producers - only this time I've added VRE and MON into the mix and taken AQP out. The date is 24/3/08 (a time when MON was trading, VRE was in administration and the data reflects its position just prior to that occurrence).

In both cases NFP% was woeful.

2. Total Cost per Ounce (TCO) = (EV + Development Cost)/Mineable Oz + Cash Cost per Ounce of Production

Mineable Oz = 100% Reserve + 60% (Resource - Reserve)

It takes into account, the current share price, cash, debt, investments, hedging, liabilities, as well as the development capital needed to build the mines and acquire mining equipment, and the operational costs to mine the gold. It's all expressed per ounce of mineable gold.

Just a word of caution,

TCO depends on every bit of input data. Each bit of input data has some uncertainty, and the uncertainties CAN mount up.

Treat TCO comparisons between companies at different stages of the gold company life-cycle (explorer, developer, or producer) with much caution - they are only approximate. Even TCO comparisons between producers are only indicative, because cash costs are only indicative.

kbxk508

 

[kbxk508]

Couldn't help but notice that MON is on 1 of those charts...interesting considering
they went ass up more than 3 weeks ago.

As jman said there's good ounces and bad....i prefer to say, hard and easy, and
ive yet to see a chart that successfully categorizes that.

Hi So_Cynical,

Well picked up, and I guess when they went ass up their EV per Ounce of Production went to infinity.

Refer to my previous post regarding their Net Financial Position, i.e. NFP%. On 24/3/08 and still trading, it was -90%, [Cash 11.5 A$m, Investments 1.5 A$m, Liabilities 93.8 A$m, Market Cap 80 A$m and EV 152 A$m].

kbxk508

 

[So_Cynical]

Nice Charts kbxk508...makes TRY look darn good anyway and helps explain
the SP weakness in NFG-Norton and AGG-Anglo.

Can u put MDL in that chart using there projected figures.?

 

[kbxk508]

Nice Charts kbxk508...makes TRY look darn good anyway and helps explain
the SP weakness in NFG-Norton and AGG-Anglo.

Can u put MDL in that chart using there projected figures.?

Hi So_Cynical,

Mineral Deposits MDL, current stats

[Reserve: 1.25 mOz, Resource: 2.47 mOz]

Market Cap = 331.1 A$m, EV per Ounce (Resource) = 132.8 A$, Total Cost per Ounce = 600.3 A$ and NFA = 0.95%

Looking to produce >150 kOz pa (min) by Dec Qtr.

 

[Sean K]

Hi So_Cynical,

Mineral Deposits MDL, current stats

[Reserve: 1.25 mOz, Resource: 2.47 mOz]

Market Cap = 331.1 A$m, EV per Ounce (Resource) = 132.8 A$, Total Cost per Ounce = 600.3 A$ and NFA = 0.95%

Looking to produce >150 kOz pa (min) by Dec Qtr.

kbxk508, just curious, are you putting these charts together, or just cut and pasting them from somewhere else?

The following chart I put together compares a number of AUS Gold Producers and shows, (i) EV per Ounce (Resource), (ii) Total Cost per Ounce (TCO), (iii) % Reserves as a Percentage of the Resource (% Reserves) and (iv) Net Financial Assets (NFA). Datasource GoldNerds (14/7/08).

Or, are you telling us that you are the author?

 

[Uncle Festivus]

kbxk508, just curious, are you putting these charts together, or just cut and pasting them from somewhere else?

Or, are you telling us that you are the author?

Datasource GoldNerds????