VAU - Vault Minerals
- Thread starter Uncle Festivus
- Start date
PRODUCTION GUIDANCE REPORT OUT TODAY!
I refer to my previous forecasts (posted 19th Feb) for the period Feb 2012 --> June 2013. I'm HAPPY to admit that I was WRONG!!! Both for gold produced as well as cost of production.
In fact according to RED management Siana should produce about 2,500 ozs MORE than my estimate for current year, at an operating cost $100/oz LESS than my expectation. That suggests to me RED profits in current year will be appreciably ABOVE my estimate of $18 million!!!
And in the following year RED believe Siana will produce 75,000 ozs, 20,500 ozs IN EXCESS of my forecast. At a considerably reduced operating cost, of $325/oz the profit margin is considerably above my expectations and should result in a considerably HIGHER profit to my previous estimate of $62 million.
MY ERRORS indicate that once the gold price stabilises then RED should be on considerably higher CPS and lower PE than I could ever have imagined, thus its current share price will not last for long IMO.
Of course with the gold price dropping appreciably last night it will have a negative impact on RED along with all other gold producers, however, RED has confirmed that Siana will be a highly profitable mining operation, with considerable reserves of gold that are obtainable at comparatively low operating costs! This will improve RED's share price performance compared to many other middle tier gold producers and should entice gold investors to switch from other less profitable gold companies. Just remember that Siana is a TEN year, low cost gold producer!
This is likely to sway North American fund managers into RED if they haven't already got in. AND I understand that RED management are on their way to North America now!!!
Yes its unfortunate that the gold price has fallen, but that is also offset somewhat by the exchange rate, so although there could be a very short term negative impact, the medium term outlook for RED is very very positive IMO. You can call that positive spin if you want, but its not spin in my view at all!
I refer to my previous forecasts (posted 19th Feb) for the period Feb 2012 --> June 2013. I'm HAPPY to admit that I was WRONG!!! Both for gold produced as well as cost of production.
In fact according to RED management Siana should produce about 2,500 ozs MORE than my estimate for current year, at an operating cost $100/oz LESS than my expectation. That suggests to me RED profits in current year will be appreciably ABOVE my estimate of $18 million!!!
And in the following year RED believe Siana will produce 75,000 ozs, 20,500 ozs IN EXCESS of my forecast. At a considerably reduced operating cost, of $325/oz the profit margin is considerably above my expectations and should result in a considerably HIGHER profit to my previous estimate of $62 million.
MY ERRORS indicate that once the gold price stabilises then RED should be on considerably higher CPS and lower PE than I could ever have imagined, thus its current share price will not last for long IMO.
Of course with the gold price dropping appreciably last night it will have a negative impact on RED along with all other gold producers, however, RED has confirmed that Siana will be a highly profitable mining operation, with considerable reserves of gold that are obtainable at comparatively low operating costs! This will improve RED's share price performance compared to many other middle tier gold producers and should entice gold investors to switch from other less profitable gold companies. Just remember that Siana is a TEN year, low cost gold producer!
This is likely to sway North American fund managers into RED if they haven't already got in. AND I understand that RED management are on their way to North America now!!!
Yes its unfortunate that the gold price has fallen, but that is also offset somewhat by the exchange rate, so although there could be a very short term negative impact, the medium term outlook for RED is very very positive IMO. You can call that positive spin if you want, but its not spin in my view at all!
Depends if you want to buy in at a cheap price. RED is one of the few gold stocks in positive territory today so gold just has to rebound some what and RED should get over that hurdle of $2.30. The glass is half full.
Hi Jancha, I'm not sure if the glass is half full, I think its been on empty for a long while, and RED is just about starting to fill it up, lol!
ITs looking very good for RED now, not just because its share price has moved into positive territory, but the fact that the long term outlook for RED is very positive. Your point about getting cheap stock is absolutely spot on IMO, I have no doubt that RED will break that resistance around current levels of $2.30 - $2.35.
Subject to the outlook of gold price going forward we are looking at a profit of $20 million for current 2011/2112 year and in EXCESS of $90 million for next financial year! RED simply can't stay at this low price IMO.
Beatle with the numbers now out what is the true value of red with a 90 mil profit for the next fin year, chears
Hi Fastbuck, its great to see you keeping in touch.
With regards to the valuation of RED now there are the obvious questions:
1. What is the forecast now for the gold price. Seems that overnight the market has been shaken somewhat so most won't want to make any immediate judgements which way gold is headed.
2. What is RED going to do in the short term with respect to its already increased resource of +27% to contained gold as announced last year. AND further GE's veiled comments of the other day that suggest the RESOURCE may well be increased again from the recent deeper drilling around Siana - as has been detailed for a couple of holes with good intersections of high grade gold.
And how to value RED, via P/E or NPV, based on those levels.
I would prefer to hold off changing my model until RED comes out with some more definitive statements re Revised Ore Reserves. But suffice to say its likely that RED could get valuations from various brokers in the range of:
$3.50 - $5.00 quite easily if they accept RED's indicated medium term forecast operating cost of $325/oz. That is way below the feasibility study estimate of US$351/oz. I am really impressed with RED being prepared to quote that as guidance! (They are a conservative group as you will know yourself).
On current price we are talking next years PE around 3 that simply won't happen if it pans out that way. It points to a RED share price actually higher than $4.00 easily.
Hi Reeftip and All RED observers.
Good to see that the gold price has now stablised (at least for the time being!). RED has no forward sales at all at this time, and the subject has been discussed by the directors on various occasions, with the concensus being that they are not going to put in place forward selling in the foreseeable future. But my understanding (and I am not intimately aware of the position) is that when they make a decision to go to the lower cutoff grade ore reserve which could increase total economic gold inventory by around 25% (ie the US$900/oz ore outlines) they may consider a smallish program of puts that would provide safety in the event that the gold price slid beyond about US$1,200 and of course only if they can get the puts at a cheap price (ie when volatility in gold price is low thus the beta is low for the put). But this is not agreed, its just a point of discussion for the board's consideration. And I understand that the board is very conscious to keep the company as an investment for gold investors wanting an exposure to the gold price - as a shareholder I would prefer they did have a forward selling program in place but seems instos want the exposure to the gold price movement.
Mgm1a, this is where my alzheimers steps in, but I do recall asking CJ about that ADR facility, and from my recollections I think he said that it was put in place thinking it would facilitate trading but since that time they have not followed it up. Perhaps that might have not been pursued due to the concentration on more pressing matters in recent months (I asked him about this at the time of the AGM).
There is no doubt in my mind that RED suffered like all gold shares yesterday due to the gold price, and thus whilst we are close to historic highs, the positive news put out by RED can only mean that there is one way for RED to go in the short term (unless gold drops further appreciably!) and that is up! Yesterday, whilst the share price performed ok under the circumstances, it certainly hasn't moved anywhere near where it can according to the production guidelines.
AND I would imagine that the RED roadshow presentations in North America are due to commence in earnest soon, thus there is likely to be much more buying from those instos once they realise the out-performance and low cost that is now expected! Thus my view is that this could be the last chance to get RED at a cheap price - of course I have been saying that for maybe a year now, but now its different, RED has confirmed its producing gold, at low cost, and will be doing so for around 10 or more years! And production started only 1 month ago so the transformation is only beginning, so why wait now for what is likely to be a capital growth story from here on.
AND whilst traders seem to bank on RED range trading, thus are lining up to get out around $2.35, once that resistance level is broken then I suggest traders will not have that opportunity any more. That resistance level then becomes a support level (according to the TA's I have read, lol!).
Go RED UP UP and AWAY into the Blue Yonder...
It seems to me RED is about to lift off, and now we have this interesting tussle between various traders too:
Those that range trade, and those that have been waiting on the side for a break through that $2.35 level. Those trend following traders surely will now start to get on board!
But fundamentally I can't see why RED won't move towards $3.00 from here on! IMO of course (yes its positive spin, but its based on cash flow analysis and PEs that could take it beyond $5.00 in the next few months!).
Those that range trade, and those that have been waiting on the side for a break through that $2.35 level. Those trend following traders surely will now start to get on board!
But fundamentally I can't see why RED won't move towards $3.00 from here on! IMO of course (yes its positive spin, but its based on cash flow analysis and PEs that could take it beyond $5.00 in the next few months!).
Many thanks for your insightful comments Beatle.
I am now going to file RED away in the bottom draw and just sit back and enjoy the ride.
If the market returns to ‘normal’, I am calculating your $4 SP forecast to be very conservative after next year’s earnings are out.
I am now going to file RED away in the bottom draw and just sit back and enjoy the ride.
If the market returns to ‘normal’, I am calculating your $4 SP forecast to be very conservative after next year’s earnings are out.
Hmmm
Just noticed RED is be added to the ASX 300
Now that might stir a bit of interest
Hi Reeftip, its an interesting point, but not sure how many funds groups follow the ASX300 for balancing portfolios (have you or anyone else got any idea?), I guess we will see what effect it takes on Mar 16.
I think the more exciting time will be when RED is added to the ASX200 and that should follow within the next 2 quarters as RED increases its market cap (its at $300 million on todays share price) and trading liquidity surely won't be an issue as we are regularly getting plus/minus $1.0 million worth of shares traded per day.
Trading has slowed at the current resistance level now but once breached it could get another step up quickly. If its not gone today it might have to wait till Tues after the first North American groups start to consider putting in an investment. Whatever, IMO it WILL breached and its just a matter of which day it happens.
tech/a
No Ordinary Duck
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Lots of excited investors planning early retirement
SO HERE WE ARE----at resistance.
Click link above to expand
Time to show your stuff RED!
Ill get interested with a clear thrust above resistance---if not---its still a wannabe!
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Watching and waiting tech/a, this is going to be a 'hit and run' stock for a while yet judging by the current lack of interest.
Potential target/resistance areas below whenever it does break out, at the moment I am 50/50 as to whether it will break out or retrace back to just over $2.00.
(click to expand)
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Hi All RED followers and great to see you on ASF again Fastbuck!
Your comment re a takeover of RED is always an interesting topic for me, and yes at the current ridiculous price its an absolute steal. It surely is an ideal fit for a company like MML just on the basis of Siana, esp since IMO whilst not wanting to denigrate MML but on a share for share basis its price seems very much over-priced whereas RED is heavily discounted. And as it seems that MML will never consider such a deal due to past grievances between the two groups is crazy!
BUT as news finally filters out, month by month, or quartely by quarterly, then RED share price won't stay at this level forever! Thus that opportunity by others to steal RED simply will disappear. But the interesting thing is that the more recent news that Siana is now proving to be a far greater resource than previously thought (ie now potentially far greater potential than 1 million ounces) could have the bigger gold producers start to consider RED. And with Mapawa exploration a couple of months away then certainly this should open the door to many bigger groups who are more attracted to companies having the potential for 5 million+ ounces, and my view is that Mapawa and the other porphyry targets on the two MPSA's that RED holds should open that door.
And from a shareholders point of view I would love to see a takeover attempted, it could push RED up far sooner to achieve that much-awaited re-rating that I've been predictiing for a long while.
This week possibly will start slowly based on the close last week, but should hot up once a few more North American instos and funds become aware of RED and what is happening at Siana. I get the feeling that Matthews is currently in the process of dumping its final shares and this could provide the opportunity for some other funds groups getting set at a cheaper price than ever could be imagined!
Even though RED could open and move slightly lower at the start, I certainly wouldn't be considering selling a single share just to buy back cheaper. With the knowledge that RED is doing a roadshow in North America at the moment, its anyones guess at to which day it could take off and move upside of the resistance level. So do so at your own possible peril, yes you might make a few or so cents, but to sacrifice a huge jump up is certainly not something I would want to contemplate.
Your comment re a takeover of RED is always an interesting topic for me, and yes at the current ridiculous price its an absolute steal. It surely is an ideal fit for a company like MML just on the basis of Siana, esp since IMO whilst not wanting to denigrate MML but on a share for share basis its price seems very much over-priced whereas RED is heavily discounted. And as it seems that MML will never consider such a deal due to past grievances between the two groups is crazy!
BUT as news finally filters out, month by month, or quartely by quarterly, then RED share price won't stay at this level forever! Thus that opportunity by others to steal RED simply will disappear. But the interesting thing is that the more recent news that Siana is now proving to be a far greater resource than previously thought (ie now potentially far greater potential than 1 million ounces) could have the bigger gold producers start to consider RED. And with Mapawa exploration a couple of months away then certainly this should open the door to many bigger groups who are more attracted to companies having the potential for 5 million+ ounces, and my view is that Mapawa and the other porphyry targets on the two MPSA's that RED holds should open that door.
And from a shareholders point of view I would love to see a takeover attempted, it could push RED up far sooner to achieve that much-awaited re-rating that I've been predictiing for a long while.
This week possibly will start slowly based on the close last week, but should hot up once a few more North American instos and funds become aware of RED and what is happening at Siana. I get the feeling that Matthews is currently in the process of dumping its final shares and this could provide the opportunity for some other funds groups getting set at a cheaper price than ever could be imagined!
Even though RED could open and move slightly lower at the start, I certainly wouldn't be considering selling a single share just to buy back cheaper. With the knowledge that RED is doing a roadshow in North America at the moment, its anyones guess at to which day it could take off and move upside of the resistance level. So do so at your own possible peril, yes you might make a few or so cents, but to sacrifice a huge jump up is certainly not something I would want to contemplate.
Whilst RED's profitability is now destined to be governed by the price of gold its worthwhile to consider whether the price of gold, in aussie dollars, has stabilised since the day it fell off a cliff last week, on the very same day that RED put out the most bullish of Guidance estimates that I could have possibly imagined.
http://www.xe.com/currencycharts/?from=XAU&to=AUD&view=1W
Clearly in Aussie dollar terms the gold price has stabilised, even if the US$gold price has shifted around a bit more. The A$ exchange rate does help to soften the impact of any drop if you look at that chart.
With the price of gold, now stabilised around A$1,600 and the fact that in this current financial year, RED will derive a net margin on operating costs of around A$1.120/oz. with RED estimating it will produce 18,000 ozs for this financial year. Furthermore, RED gets its first 5 years production tax-free in the Philippines - few gold producers will be enjoying that set of circumstances. This alone makes RED a standout investment IMO.
Then in the following 2012/2013 financial year, RED estimates to produce 75,000 ozs of gold, at a lower cost, of less than $325/oz. The profit on this is staggering and should definitely lead to a broader re-rating of its share price. My view is that RED's share price chart could easily replicate that of RRL's from now on, but based on a far lower market capitalisation, as news filters out of its increasing production performance. It would be good if RED could increase its effort in promotion as well ....
http://www.xe.com/currencycharts/?from=XAU&to=AUD&view=1W
Clearly in Aussie dollar terms the gold price has stabilised, even if the US$gold price has shifted around a bit more. The A$ exchange rate does help to soften the impact of any drop if you look at that chart.
With the price of gold, now stabilised around A$1,600 and the fact that in this current financial year, RED will derive a net margin on operating costs of around A$1.120/oz. with RED estimating it will produce 18,000 ozs for this financial year. Furthermore, RED gets its first 5 years production tax-free in the Philippines - few gold producers will be enjoying that set of circumstances. This alone makes RED a standout investment IMO.
Then in the following 2012/2013 financial year, RED estimates to produce 75,000 ozs of gold, at a lower cost, of less than $325/oz. The profit on this is staggering and should definitely lead to a broader re-rating of its share price. My view is that RED's share price chart could easily replicate that of RRL's from now on, but based on a far lower market capitalisation, as news filters out of its increasing production performance. It would be good if RED could increase its effort in promotion as well ....
tech/a
No Ordinary Duck
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Traders trading RED.
Resistance holding firm.
Critical point 1 at $2.17
Critical point 2 at $2.00
Fall below here and it wont be pretty.
But hey great opportunity for those who
average down or wish to add to a position.
So Will continue to watch the saga unfold.
Have you ever noticed that price will do whatever it wants to
do regardless of announcements or opinion!
In other words.
Supply and demand is affected by supply and demand!
Now isnt that easier?
Resistance holding firm.
Critical point 1 at $2.17
Critical point 2 at $2.00
Fall below here and it wont be pretty.
But hey great opportunity for those who
average down or wish to add to a position.
So Will continue to watch the saga unfold.
Have you ever noticed that price will do whatever it wants to
do regardless of announcements or opinion!
In other words.
Supply and demand is affected by supply and demand!
Now isnt that easier?