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VAU - Vault Minerals

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Its a waiting game at present, with the insto's obviously holding out to see who weakens! Whilst they may believe they have got time on their hands at present, once news comes out about the ongoing developments at Siana, and Mapawa drilling, then they won't be able to wait much longer if they want to try force the weaker hands!

AND from my point of view the clock is ticking with regards to us allowing them have second tranche of cheap shares - IF they don't prove they are worthy of having those shares by supporting the share price then why would any shareholder want to give them anymore cheap shares - in my view we must remain completely objective to the benefits of having insto's on the register. They can play their trading games, but if they don't add value for us, then I know what I will do with my vote regarding them getting second tranche shares.

By the way McCoy Pauley I guess that means you don't hold RED shares (and my comment is not "probably rhetorical", its "actually" rhetorical, lol!). Each to our own I admit.

Come on RED, some action please - even if the gold price drops US100 and the exchange rate with it, and even on the most diluted case, RED is still worth 35 odd cents per share once in production (and we know its going into production for sure now!). The markets waiting RED . . .
 
beatle said:
Its a waiting game at present, with the insto's obviously holding out to see who weakens! Whilst they may believe they have got time on their hands at present, once news comes out about the ongoing developments at Siana, and Mapawa drilling, then they won't be able to wait much longer if they want to try force the weaker hands!

AND from my point of view the clock is ticking with regards to us allowing them have second tranche of cheap shares - IF they don't prove they are worthy of having those shares by supporting the share price then why would any shareholder want to give them anymore cheap shares - in my view we must remain completely objective to the benefits of having insto's on the register. They can play their trading games, but if they don't add value for us, then I know what I will do with my vote regarding them getting second tranche shares.

By the way McCoy Pauley I guess that means you don't hold RED shares (and my comment is not "probably rhetorical", its "actually" rhetorical, lol!). Each to our own I admit.

Come on RED, some action please - even if the gold price drops US100 and the exchange rate with it, and even on the most diluted case, RED is still worth 35 odd cents per share once in production (and we know its going into production for sure now!). The markets waiting RED . . .
Click to expand...

Only action is on the downside at present.
Question is would you be better off selling now & buying them back at a cheaper price as this downtrend looks like continuing.
What % do the insto's hold in RED Beatle?
 
To be honest Jancha I have no idea, as the insto's have been slowly pulling shares off smaller holders since the previous placement, and these 2 current placements (the first being likely and the second not yet approved) will confuse the situation further. All I know is that its been the retail holder that has been the main seller in recent months according to the Chairman.

I agree with there "appears" to be a logical reason to sell now knowing RED is on a downswing at present, but the issue you face if you go ahead with that strategy is that at some point the insto's will reappear viciously taking any shares at these lower prices before pushing it higher, particularly in view of:
1. Its about time for Mapawa drilling to be announced;
2. Quarterly report out in the next 2 weeks at the latest, thus confirmation of Siana development likely to be on track;
3. Insto's have every reason to keep the share price bubbling along slightly above the 17 cents placement price to argue why they should get the approval of all shareholders for that second placement, but my argument is that they should be able to demonstrate through the goodwill of RED having given them the first cheap shares at 17 cents (not just goodwill, as RED is also paying a fee for the pleasure (?) of having them on the register) that they can influence the share price up!;
4. The fundamental value of RED at current gold price/exchange rate remains in the mid-30's cents range, regardless of whether the second tranche placement happens or not;
5. Last week we did see some big Bids in amounts of 1 and 2 million shares at 20.5 cents and 21 cents, those have been pulled for now but they can reoccur so easily.

Therefore if you decide to temporarily make a quick buck then aim to re-enter RED at a lower price, you risk your chance, especially if the share price rises for a few cents very quickly!
 
Hi Beatle
Thanks for the feedback before re valuation. I was just wondering, forgetting all the calculations and as you have said previously gold producers often trade at a premium to valuations, do you have a figure that you believe would be achievable for this company if all went as planned and production goes ahead. I know it's only guesswork but I would love to know what you think this could realistically get to before you consider it overpriced.
Hope it's not too daft a question?
Cheers
Andrewk65
 
Hi Andrewk65, sorry for the delay in my reply, and of course its not a daft question, and I'm possibly not the best person to pronounce that premium with my biased view, lol!

I believe that a premium to the fundamental value will be achieved around the time of gold production, but the extent of that premium depends so much on the state of the market as well as RED's ability to translate that first production into marketable spin! (We have already observed that RED is not the same as MML in that regard unfortunately!).

I guess the other point to make is that whilst we are now assured that RED will develop Siana with the funds in hand, whether the second tranche of that funding occurs or not (I hope not!), the wildcard always will be Mapawa in terms of achieving even better pricing for RED. Who knows how that will pan out.

What is of interest today, is that with the US$ gold price in retreat (the aussie gold price not much changed but the market seems to forget that!), what will happen with those North American insto's seeking cheap placements in RED, and even the other insto's, with the first tranche being issued tomorrow - will some smaller insto's take a quick profit and drop some existing shares to replace them with more cheap shares. Thats my issue with the second tranche of funds too, it could mean we are delayed in getting to that fundamental value for a while if in the meantime the insto's start to change their overall weighting in gold shares due to a slight change in gold price outlook.

Interesting times for RED and the entire gold sector of the market.
 
Here is a copy of an old article that appeared in Diggers and Drillers that might be useful (I couldn't find a link to it so I've copied and pasted it)

Gold Stock Valuation Using Enterprise Value Per oz
By Troy Schwensen

[Editor's note: This article appeared in the July 2009 edition of Diggers and Drillers. Troy Schwensen is the editor of The Global Speculator and a research analyst at www.goldnerds.com.au.]

When investing in anything, it pays to have a sense of value. Let's say, for instance, you were looking to buy a house in a suburb you like. For starters, you could just charge in like a wounded bull and purchase the first house that takes your fancy. I think many of you would agree that this approach is fraught with danger.

If you were somewhat smarter, you would probably do what most people do and look at as many houses that are for sale in that suburb first and try and establish a sense of value before making a purchase (giving you peace of mind).

The savvy investor may even take this process one step further and establish a value on what all these properties have in common, the answer of course being land. They may work out a value that they are paying per square meter of land for each property inspected. Next, they would compare this with an average for the suburb compiled from recent historical sales data.

Now valuing a property by looking at the valuation of the land is of course only half the battle in establishing whether you are getting reasonable value for money. Why?

Because every house built on that land obviously differs in various ways. The house could be bigger in size and better equipped. The land itself could be located in a more desirable part of the suburb, such as on a hill or by a lake or river where there may be a view and breezes. The list could obviously go on but I think you get the general idea.

All these other factors are variables that you would take into account in order to establish what you think that particular property is worth. But your starting point would be the value of the land and you would build on your analysis from there, based on a comparison of these other variables.

How to find precious metals stocks are reasonable prices

When buying shares in a precious metals company, do you go through a similar process in order to determine whether the company you are buying shares in is reasonably priced? For most, the thought of going through this process is much too daunting. It is much easier to get your stock broker to perhaps recommend a company.

In my experience there is no substitute for being able to personally assess value, even if it is at just a basic level. There is also nothing wrong with receiving stock recommendations from newsletter writers or stock brokers on the proviso you have the ability to check these companies out yourself.

This is what will give you the conviction to buy and hold which brings me to a concept I want to introduce to you today. It is a relatively simple but practical method of comparing similar precious metals companies and establishing a sense of value.

Enterprise Value per Ounce

Let me start by defining what an Enterprise Value (EV) is. An EV is simply the Market Capitalization of a company (number of outstanding shares multiplied by the current share price) adjusted to eliminate the effect of a company's financial assets and its financial obligations (liabilities). You subtract the financial assets which would include items such as (not an exhaustive list):
1. Cash and Cash Equivalents
2. Accounts Receivable
3. Inventories (If a producer)
4. Listed and Unlisted Investments where you can readily establish a fair value
5. Derivatives (Bought Options and favorable Forward Sales Agreements)
And add the company's financial obligations including (not an exhaustive list):
1. Accounts Payable
2. Interest Bearing Liabilities
3. Derivative Obligations (Unfavorable Forward Sales Agreements and written option contracts)
4. Retirement Obligations
What remains is essentially the value the market is attributing to the company's non-financial assets or its projects. If you were to look at this diagrammatically it would appear as follows:


To calculate an EV per ounce, you simply add up the total number of ounces attributable to the company via its projects and divide this number into the Enterprise Value.

The concept of EV per ounce is by no means a new valuation methodology and it certainly has its critics. Like land is the common denominator in our real estate investment example, gold in the ground is obviously the commonality when looking to compare gold related companies.

Now critics of the EV method will tell you that when using this method you are incorrectly assuming that all metal in the ground is created equally. This is of course a valid criticism if and only if your analysis was to simply stop there. It would be like saying property A is better value than property B because I can pick up the land for a cheaper rate per square meter without taking anything else into account.

Obviously this technique would be completely flawed. For instance, you can't conceivably take a producing gold mining company and compare its EV per ounce with an exploration company and come to the conclusion that the exploration company offers better value. You would be excluding the costs associated with the development of the mine, not to mention the premium a company receives in the market for successfully developing the project.

My question to the critics of EV per ounce would be why on earth would you stop at just this first step? This limitation can be quite simply overcome by having a large enough number of companies to compare, so that you can isolate the ones that have the most in common (similar development stages) and generate the additional information required to consider the applicable variables. These might include:
• The size of the deposit. Bigger deposits tend to attract a premium due to the higher probability of being developed based on better economies of scale.
• Different resource classifications dependent on drill spacing and economic viability. Reserves both Proven and Probable (supported by economic studies) versus just a resource (no supporting feasibility study work).
• The depth of the deposit. Is it shallow enough for cheaper open cut mining methods? (Generally 150m-200m or ideally shallower) Are there large amounts of overburden that need to be stripped away adding to the cost of mining (stripping ratios).
• The average grade of the deposit. Generally speaking, higher grades are cheaper to produce and attract a premium. If you are mining underground, higher grades become essential due to the additional capital cost associated with underground mining.
• Different economics (cash costs, construction costs, ongoing capital expenditure etc) Useful by-product credits can in turn lower the net cash costs of production. The availability of infrastructure lowers construction costs. For example, access to grid power versus the requirement for diesel generators in remote regions (more expensive). Access to ready built roads and ports versus having to build this infrastructure. Underground mines have higher ongoing capital costs associated with the continuation of underground development.
• The metallurgy (recoverability of the metals). Sulfide deposits generally have lower recovery rates than oxide and require a more complicated extraction process.
• The political risks. A deposit in Zimbabwe would obviously trade at a substantial discount to say the same type of deposit in Australia or Canada.
• The exploration potential on the properties and the probability of future expansion of the deposits.
The precious metals sector is emotionally charged. When you study EV per ounce information on a large scale it becomes very apparent just how much influence market sentiment can have on a company's valuation.

A simple way to avoid this risk is to have a basic sense of value. Perform a quick EV per ounce calculation and see what you are paying. Compare this to some of the company's peers and establish whether what you are paying is reasonable. Don't be the chump that is buying shares off the people that were fortunate enough to get in at the ground level and are cashing out.

One of the single largest limitations with the EV per ounce method is having enough comparable companies and all the associated information you need available to make the process of comparison easy and effective. For the average investor, you may be able to undertake this process for a handful of companies but it is not realistic to compile all the necessary information yourself.

If something like EV per ounce sounds like it appeals to you, my advice would be to find a reliable information service that does the grunt work for you at a reasonable price. Most importantly, you need to find a group that actually use their own information and can properly articulate the optimal way of using it.
 
Thanks Ubtheboss, its an interesting article, which provides a good coverage of the broader elements that require consideration relevant to resource development etc, not just pertaining for RED but for the entire resources sector.
The key points though that must be recognised is that:
1. Each metal deposit is unique in terms of the specifics of type of deposit, grade, quantity, recovery, etc, and its capacity to support a profitable mining operation
2. Resouce estimation is an inexact science (albeit camouflaged with the use of geostatistic etc), and thus the estimate of gold in the ground is a highly questionable issue but becomes THE key parameter in any comparative analysis of EV/oz, thus there are many pitfalls in that analysis although it might provide a good starting point for more definitive assessment.

In the case of RED we are talking about a considerable number of Indicated Resource ozs that have gone through the entire optimisation, mining schedule, metallurgy process etc to finally end up with a positive outcome for the Feasibility Study. Many other projects will never end up as mineable projects notwithstanding appearing to be attractive on a EV/oz basis on first glance. I agree that Schwensen suggests comparing like with like as the next stage after the first comparison is made but again it so much depends upon the resource ounces which are unique from project to project.
 
Hi Beatle and all other RED club members. I'm hoping our family hasn't disintegrated too much. It sure has been quiet on ASF...

Beatle what a day today was, a low of 18.5 and a finish right at the end of 20 cents. It was fairly volatile trading, and great volume to go with it. I know I'm only stating the obvious, but its good to talk about our little gold mine... I also noticed at 4.12 an L3 cross trade of 2,099,845. I'm not sure what the L3 code is, but is it possible it maybe one of those infamous instos that we've all been waiting for. If it was, he could have been batting for us a few days ago, lol.

Still nothing on Mapawa, I'm looking forward to hearing some positive news in regards to drilling. Beatle were you reading the bottom of AB's glass of RED, or your own tea leaves when you thought a report of Mapawa was due out, lol. My XXXX bottle is suggesting, its coming, just not sure when...

Anyway, RED is holding up quite well considering its Share price has pretty much been at 7 year highs. I think the sellers are starting to settle down a bit and the buyers and sellers are starting to get on a level playing field, which is great to see.

Just my thoughts, regards Moit, GO RED !!!
 
I am still hanging in there. Waiting for results from mapawa.Thats what the inst are positioning themselves for and so am I.
 
Hi Moit, good to see your enthusiasm remains, and also great to see the rebound after the drop yesterday. In fact if the truth were known, the valuation of RED during yesterday's mad trading was slightly more than today, due completely due to the exchange rate variation. But who's nitpicking that when we remain at such a discount anyway.

I do want to confirm that I have not been reading Anderbonds wine sediment with regard to Mapawa. I have no idea when they will put out that announcement, but I would assume it will come before the quarterly which is due out soon.

On other matters, just beware that if we have 1 loose insto cannon, there might be a bit of stock coming out today or the next couple of days once the 3B is released to the market. If one of the insto's has changed his gold outlook slightly they might want to lighten off with some of the placement shares. (Especially if they think they will also be getting some more cheap shares in about 6 weeks time - it really irritates me, I'm even more convinced as time goes by that we should all be voting no at the agm re the second part of this placement).
 
Well annual report out and first thing to check is top20...
can't see too many of the 31 instos that went into cap rasing.
Notably Anglo Ashanti fully out, David Teoh increased 28m, Lujeta 28m, Equity Trustees (ASX:EQT) with 4% 42m, and good to see Allen Govey hasn't sold any since leaving Red5 to work at Triton.
Top 20 last year totaled 61% this year 67%. I thought it might be more still free float is decreasing..
....
.....Now...which one is beatle?
 
Mapawa picture now looking more like a dental root canal going very deep with gold/copper ....can a geo give opinion please
 
Hi all
Maybe another daft question but am I right in thinking that if we produce 100,000 oz gold in first year we should be earning approx $1000 per oz giving 100,000,000? Is that a realistic target for first year. I assume 800,000 odd oz is supposed to be the estimated life of mine. Still can't understand why we are giving away money with the share issue.at least the market has not punished red this time, I seem to remember it was a bit ugly when the first finance arrangement with db was announced.
 
the capp raising could have and should have been at .20, and we would have a few less shares kicking around, think i will vote no for the extra funds, car'nt see why its needed.....and only means more shares .......they will just have to wait till and get this mine producing if they want some money....
 
I'm out today at 20 cents, not because I've changed my views of RED (30 cents discounted intrinsic value) but I see a much higher upside in TRF. I've had a good run with RED, and it could easily go up from here, but alas, capital shortages mean something has to give, I wish the best of luck to current and future RED holders, she'll definitely have a mine, and Mapawa will be explored, hopefully I'll have a few gains and be able to buy back in before the big run up to 30 cents.

:2twocents
 
Hi Guys, sorry to hear you're out completely ParlevousFrancais, but at least you have got a great return (I'm interested to read up on TRF if you consider them being a better alternative!).

I've not had much of a chance to read the Annual Report for RED yet, except to gloss over some of the points made by others here - and Mgm1a, I have got a few different accounts in different names so no chance to be in the 20 (but aggregated ...).
I will make one observation with regard to your comment about Lance which is very relevant - in fact you are not only correct that he hasn't sold a share since leaving RED, but he has actually INCREASED his holding (ever so slightly, by 100,000 shares!!!). But that ever so slight increase says a lot more to me than the slightness of the increase - it proves he believes that he likes what he has seen since leaving RED!!! THAT IS A BIG VOTE OF CONFIDENCE in my opinion!
(Mgm1a I don't like the analogy of Mapawa to a dental root canal! Yuk, lol (I hate going to the dentist - is that a good enough comment from a geologist, haha?). I haven't read that part of the report yet, but I do like the Chairmans comment about the eclipsing of Siana gold inventory by Mapawa based on 3 drilling rigs - but what I like was the comment that its potential to RAPIDLY eclipse Siana. And of course that is a very fair comment, in my mind it won't take long for that to happen if we build up towards 100 million tonnes of porphyry grading around 0.8 - 1.2 g/t!

Fastbuck, the more I have thought about it, the more i believe its important that we smaller shareholders band together to vote NO to the second tranche - in fact, who knows, maybe RED management have gone along with the request by the insto's without really wanting it, so maybe we are doing the management a favour - i believe we are certainly doing ourselves, as shareholders, a favour in voting against it. Once RED has hit 35 cents based on Siana alone, if they need more cash then we might reconsider another smaller placement at around that level, just reducing total shares on issue by around 100 million! (Absolute crazy this second tranche placement at 17 cents!!!).

Tomorrow we might see how many opportunists drop shares from the latest placement, lets hope they all hold! If they drop shares it only proves to me that they should not be getting the second placement!

Also, Andrew RED ramp up to 100,000 ozs progressively, over a couple of years, so they don't achieve it in the first 12 months, but certainly do have a significant cash profit from as soon as they get into production.
 
beatle said:
Hi Guys, sorry to hear you're out completely ParlevousFrancais, but at least you have got a great return (I'm interested to read up on TRF if you consider them being a better alternative!).

I've not had much of a chance to read the Annual Report for RED yet, except to gloss over some of the points made by others here - and Mgm1a, I have got a few different accounts in different names so no chance to be in the 20 (but aggregated ...).
I will make one observation with regard to your comment about Lance which is very relevant - in fact you are not only correct that he hasn't sold a share since leaving RED, but he has actually INCREASED his holding (ever so slightly, by 100,000 shares!!!). But that ever so slight increase says a lot more to me than the slightness of the increase - it proves he believes that he likes what he has seen since leaving RED!!! THAT IS A BIG VOTE OF CONFIDENCE in my opinion!
(Mgm1a I don't like the analogy of Mapawa to a dental root canal! Yuk, lol (I hate going to the dentist - is that a good enough comment from a geologist, haha?). I haven't read that part of the report yet, but I do like the Chairmans comment about the eclipsing of Siana gold inventory by Mapawa based on 3 drilling rigs - but what I like was the comment that its potential to RAPIDLY eclipse Siana. And of course that is a very fair comment, in my mind it won't take long for that to happen if we build up towards 100 million tonnes of porphyry grading around 0.8 - 1.2 g/t!

Fastbuck, the more I have thought about it, the more i believe its important that we smaller shareholders band together to vote NO to the second tranche - in fact, who knows, maybe RED management have gone along with the request by the insto's without really wanting it, so maybe we are doing the management a favour - i believe we are certainly doing ourselves, as shareholders, a favour in voting against it. Once RED has hit 35 cents based on Siana alone, if they need more cash then we might reconsider another smaller placement at around that level, just reducing total shares on issue by around 100 million! (Absolute crazy this second tranche placement at 17 cents!!!).

Tomorrow we might see how many opportunists drop shares from the latest placement, lets hope they all hold! If they drop shares it only proves to me that they should not be getting the second placement!

Also, Andrew RED ramp up to 100,000 ozs progressively, over a couple of years, so they don't achieve it in the first 12 months, but certainly do have a significant cash profit from as soon as they get into production.
Click to expand...

Rapidly and RED are 2 words which don't gell...sorry Beatle, I laughed out loud when I read that! Also, you seriously have to be joking if you believe the 2nd tranche won't be approved....muster all the votes you like, but, it will happen. And goodbye to the teenage scribbler....it's the internet age I guess where the attention span of a gnat is the norm.
 
Hi Hugh_Jarz, and its good to have a laugh now and then! But actually if you do think about it a bit more than the timespan that your gnat may have, please reconsider:

1. Mapawa - RAPIDLY increase resources to beyond Siana. Whilst we may not be talking about finalising a reserve for Mapawa, to come up with a resource with more ounces than Siana is not hard to achieve at all, if you have 3 rigs drilling around the clock (which I understand they are doing). For a start, it appears that Mapawa mineralisation is associated with an altered diorite that once intersected has relatively homogeneous grades of gold (plus minor copper) over considerable widths for each of the holes drilled.

Whilst this might be a simplistic example to prove my point please don't fall asleep whilst I give you a few numbers: If we assume that the average grade of the deposit is 1.0 g/t (as an example), then to achieve 1 million ounces of gold, and lets say you need to drill on a final 50 metre x 25 metre drill grid to have sufficient drilling to get an Indicated Resource (which probably would not be required if it can be demonstrated earlier of such mineralisation homogeneity) = 50m x 25m x 2.3 (= SG which is likely to be more than 2.3) x Z metres drilled depth (ie the total drilled metres in mineralisation). Z = 11,000 metres. ie 3 rigs drilling in this sort of mineralisation, if we assume each rig drills 20 metres averages per shift (probably conservative) = 555 shifts, for 3 rigs = 183 days (6 months).

This achieves a Siana contained gold inventory!!! I acknowledge that drilling is most likely not intersecting "ore" grade intersections continuously, but if the alteration is as widespread as it appears, then the resource ozs will certainly be considerable with a concerted effort.

2. VOTE NO!!!
I understand that almost all insto's have been involved in this placement, consisting of both tranche 1 (already done) and tranche 2 (subject to shareholder approval). Thus NO institution involved in the placement (and since the ratification of tranche 1 and approval of tranche 2 have been mysteriously bundled into the same resolution indicates that any insto in either tranche 1 or the proposed tranche 2 placement!) can vote to this Resolution at the AGM!!! If you realise that most retail shareholders do not usually vote, any concerted effort to get shareholders to VOTE NO COULD have a significant bearing on the result.

I believe its in the best interests of us smaller retail shareholders to VOTE NO, and I do seek all shareholders that are allowed to vote, to VOTE NO on the proxy form prior to 48 hours from the meeting or at the meeting if you are attending (preferably on the proxy as well so there is no confusion at all!).

I hope you haven't fallen asleep Hugh_Jarz, but then maybe you represent an insto (lol!).
 
RE: Hugh, I've held since 12.5 cents, up 60% in less then 3 months, I'm still very interested in the RED story and will continue to follow the events of it, it's just that right now I'm not able to remain invested in RED, due to other investments IMO having a higher upside from here.

:2twocents
 
Hi RED clubhouse members, well another interesting week. Thought that the SP held up quite well given the CR. It looks like the insto's and some other larger shareholders are continuing to mop up the shares that are being dropped by the smaller holders. Like Beatle I find it difficult to understand that now is the time to drop off the company when it is all systems go! After all it is not as if they are still at exploration stage with Siana. But the big kicker will be Mapawa without any doubt. Notice that some of the larger holders have continued to increase their positions (see top 20). All looks v good to me. Only nagging issue is the size of the CR, especially the second tranche. I have heard on the grapevine that this was done to provide a "comfort" factor, but I am investigating further to see if there is something more definitive. I feel that drilling of Mapawa will now be much more focussed, as it is possible that it has been dragged out deliberately in order to not become a takeover target too early. Time will tell.
I need to read the report again as I believe there is much between the lines and the careful words being used. Remember, management is very conservative! AB:cool:
 
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