.27 is a market capp of only 320 000 000 , for a debt free gold miner pumping out aprox 6- 7000 oz per month= $9 800 000 the market capp should be $750 000 000 , check out mml just up the road from siana market capp is over a billion$ ....oh its share price used to be only .30 prior to production now its $7+, mml production cost is only $250 oz against red's $400 ....its food for thought....i believe those that are running red are ex normanby.... cheers
VAU - Vault Minerals
- Thread starter Uncle Festivus
- Start date
Fair enough. I wil take this into consideration - it does make sense.
Does anyone believe this up trend will continue? My entry point is at 17.4c and am thinking of increasing my holdings before production starts.
NewTrade, I suggest Mgm1a, Fastbuck, Jancha have provided you with a number of facts that support a share price substantially higher than what it currently is. How high it actually rises depends chiefly on 3 factors:
1. The price of gold in coming months,
2. General market conditions;
3. How successful the commissioning is at Siana.
If it produces gold at a rate & cost along the lines forecast in base case modeling then it will move appreciably higher than present. And typically gold equities trade ABOVE NPV estimates (refer to MML witha market cap approaching $1.5 billion).
I suggest your argument that it hasn't been at 27 cents before so therefore how can it rise above 27 cents is fallacious-did MET or MML move anywhere near those high points before production was imminent?
1. The price of gold in coming months,
2. General market conditions;
3. How successful the commissioning is at Siana.
If it produces gold at a rate & cost along the lines forecast in base case modeling then it will move appreciably higher than present. And typically gold equities trade ABOVE NPV estimates (refer to MML witha market cap approaching $1.5 billion).
I suggest your argument that it hasn't been at 27 cents before so therefore how can it rise above 27 cents is fallacious-did MET or MML move anywhere near those high points before production was imminent?
No they did not move towards those high's, they were on a steady rise but then a sharp rise to the peak of the up-trend - check out the charts. I bought in 09 when it was 0.03.
Now I do respect your counter argument however I don't believe I have surcumb to any fallacy. It is merely making light of historical data which when analysing a stock is extremely important. But the arguments put forward are strong and I have taken them into consideration. I do have holdings in RED and am waiting to top up while the price remains at this level - however it may be viable to wait until the next trough to signal the ongoing trend before topping up.
I tried to post a graph of my entry but couldn't make a go of it.
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New Trade with all due respect you do seem a little out of your depth (I mean this in the best possible way). We are talking about a speculative resource stock so previous prices are largely irrelevant as it is all about future prospects. I am sure if you posted some analysis and questions regarding your thoughts and reasons behind the SP other posters would be happy to discuss what you have found.
I don't follow or invest in RED myself but just because a share has never met a certain level doesnt mean anything. There are countless shares that have hung around for years doing nothing and then management changes or they find an asset and develop it. (again see NST for example).
Also in the resource sector it takes years to move from exploration to production.
Resource companys normally re-rate in a number of steps.
If the company starts out as an explorer they will normally jump in price if they discover something good.
The SP then typically falls as traders move out of the stock as it has had its run for the time being.
The SP could then jump again when a JORC estimate is finally put together.
The SP then drops back as traders leave it again and people realise it takes money to develop a mine.
A pre-lim feaso is then conducted to run some basic numbers. If the company reports that it looks ok the SP will prob jump again.
Then it will dropback down as traders leave it and investors wait for a "bankable feasability study".
When this is released if it confirms that a mine can be profitably developed the SP may run again.
Then it will drop back because developing a mine costs a shed load of money and approvals need to be granted.
The SP may then run and re-trace every now and then based on the issuing of mining licences or achievement of construction/production targets.
Finally once the mine is in production there will be a re-rate in the SP as they have finally achieved what they wanted (i.e a mine that is operating).
The real re-rating will normally come 3, 6, 9 months odd down the track when they prove that not only can they run a mine but that they can meet their production targets, revenue and profitabilty forecasts.
Now that is a basic breakdown but you will see that in the early days traders move in and out based on certain announcements. As the stock moves closer to production more traders jump on board.
The reason why it can run and re-trace so much is because the day traders get ahold of it to make short term gains and as an explorer the company will prob be worth $20-$50m. To develop a mine will cost many times their market cap and as a result new shares will be issued diluting existing holders. Obviously some holders will sell in anticipation of this.
If you are looking at fundamentals you need to run some numbers on:
Cap-ex
Op-ex
Production costs
Rate of production
Gold Price
Mine life
and arrive at a net cash flow position. Then discount it back to a present value and you will have your answer
Gold is quoted in USD so if the AUD goes down the price of gold in AUD would actually go up.
Yet if the USD goes up this normally means Investors are looking for "safe havens" which also includes Gold (esp at the moment).
As a result Australian mines are somewhat de-risked from currency fluctuations at this point in time (IMO)
I mean this in a nice way (so please dont take it wrong) but do your own detailed research. You will be much happier when you sleep at night and you will be able to manage your risk better.
Also don't forget everyone has different time frames and targets. One poster may then 47cents is achievable by the end of the year. Another may think some time next year is more realistic. Also if you understand the company announcements and potential drives in the SP you will be able to re-evaluate your position based on each announcement the company makes.
Thank you kindly for your input - it was enlightening. Perhaps I was looking at this stock from a flawed POV.
I have done my research on it as best I can and can see projection for the end of the year to be rather promising. The fact is this company has the cash on hand, debt free, to complete its mining setup, so that is one of the main attractions. also, it is de-risked for the reasons you posted earlier, as well as not being eligable for a carbon tax, if it gets pushed.
The information I was after was not research, but rather opinion based on fact. My research only took me so far but I wanted input from a long time holder and analyst.
Again, thanks for the input, I will take it into consideration.
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Definately a positive to see cash on hand and no debt. This is the kind of opportunity I look for so perhap I might take a closer look after all.
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Good to see some debate.
I agree to an extent that RED has been all over the shop in the past.
I have been watching for about 2 years before I even bought in.
I think the main facts are fair, but if they produce 7-9 kOz/month then in this market that equates to market cap of approx. $400M, but discounted by the air-travel gives $ 330 - 350M at this stage before there are further production development plans or further solid drill results. I base this on seeing the (in my view wrong) way the market is valuing other producers of similar size at this time.
Having exposure to a near term producer of gold is probably the most, best and only risk worth taking in this market unless you are shorting.
Top ups are a good idea so long as you are comfortable with the market and are not averaging down.
Cheers and good luck.
I agree to an extent that RED has been all over the shop in the past.
I have been watching for about 2 years before I even bought in.
I think the main facts are fair, but if they produce 7-9 kOz/month then in this market that equates to market cap of approx. $400M, but discounted by the air-travel gives $ 330 - 350M at this stage before there are further production development plans or further solid drill results. I base this on seeing the (in my view wrong) way the market is valuing other producers of similar size at this time.
Having exposure to a near term producer of gold is probably the most, best and only risk worth taking in this market unless you are shorting.
Top ups are a good idea so long as you are comfortable with the market and are not averaging down.
Cheers and good luck.
Paul,
Apparently - they had a surplus of 85m, debt free, with a cost of setup at around 35m. Though that number of 85m would be lower at this time as I believe that report was old.
I can see that this market condition has not swayed this stock a great deal. It actaully reached a peak on the 3-4th Aug, dropped on the 5th Aug crash but came back to form a trough and peak again on the 12th. Fridays point loss on the ASX saw the stock drop, but only very slightly into what I believe is yet another trough. Check out the daily chart from July 1st onwards, and you will see what I mean.
Jeff; I do enjoy debating. Whether it is to push a confident disposition I have or to probe for more information. The cost of production for this companys gold is slightly higher than most, which is a worry - but not in a great deal. The fact is the gold prices at the moment are on an uptrend. Still, a little less COG wouldn't go astray.
The cost of production is actually quite low compared to others $350-$400 compared with $650-$800 for most ozy minersnot to mention they have to pay tax and maybe carbon tax , remember red has a 5 year tax free hoilday, the profit red will make is huge, once in production the sp should go up every month with about 10 mil in cash going in the kitty....i dont have the house on red but i do have the block of land on it, red is getting more exciting by the day......and i continue to top up every fortnight.....good luck to all....
I see your confidence is at high considering the bet you have placed.
I am hoping to have allocated a fair amount into RED and hoping my other ventures turn a profit so I can reinvest them for growth. I am more a mid/long investor - and there is, in my view, a rather strong prospect of intermediate gains from the 16.5c mark onwards - plus trend and indicators signaling a decent entry.
I hope you all make an absolute fortune and retire on a sunny beach
hehehe...Also what needs to be concidered is the gold stock frenzy that happened in the early 80s when gold hit the $800's any thing that had the slite wiff of gold went up 10 fold+, i'm not saying its going to happen this time round but the early signs are there, when the average joe on the street whom dos'nt invest or own a single share starts to talk about the price of gold then it time to take a position, my own thinking is when gold hits $2000 the frenzy and hype will start ,no one will want to miss out , the perfect storm is developing for red, 3 months from production and a possible $2000 gold price , red's share price could reach dizzy hights that none of us could even imagine....
What sort of price you projecting? I realize it is an exaggerated approximate, but I am curious to know what you consider the stock’s value to be if gold reaches its 2K point - which I can see happening IMO...
who knows but here is a small example http://www.financialsensearchive.com/editorials/casey/2005/1214.html
Nice example - great article.
Wouldn't it be nice, eh? Anyway, let's see what happens with RED - htough I do think now, in light of new evidence, the payoff should be higher than 27c. I wonder what kind of deposit they have - considering it has been mined before, only now going back in with new tech.
I hope their strike is extremely profitable.
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Ive been watching RED for the last 12 months and I havent seen anything that really has made me think that I should buy in.
There reports are few and far between (Intrest needs regular posative reports), to be honest it is trading at about the same as 12 months ago with the odd bounce to 20 or so cents and looking like being interesting ,then to see it receed back to 17 or so cents.
To be honest RED needs to break 21 cents before most will even look at it.
In saying this I hope it does and I will jump on the train.
It does seem to be holding up through recent downtrends but the question is how long can it hold up for?
Early this coming week will be a test.
A break of 21 cents and I will consider RED but not before.
There reports are few and far between (Intrest needs regular posative reports), to be honest it is trading at about the same as 12 months ago with the odd bounce to 20 or so cents and looking like being interesting ,then to see it receed back to 17 or so cents.
To be honest RED needs to break 21 cents before most will even look at it.
In saying this I hope it does and I will jump on the train.
It does seem to be holding up through recent downtrends but the question is how long can it hold up for?
Early this coming week will be a test.
A break of 21 cents and I will consider RED but not before.
The stock took a hit on the fifth, which is no suprise - though mildly effected by Fridays loss.
Unfortunately, I think Monday is going to be a bloodbath. This may signal good buying oppertunities, but for those of us with current holdings - my sympathies. Still, I want to increase my holdings in RED before the price hikes back up.
I can see where your coming from Doug. Very similar to what they've been saying on Wall street in regards to buying Gold.
ont buy if you have'nt got it and dont sell if you've got it. Work that one out.Anyway im in at average of 12.5c so i'm quite content sitting on this one the way the market is.
Hi All RED Followers, great to see all the new contributors on the RED thread! And WOW you managed to stir stacks of posts with your first post NewTrade! (Great to see some interesting contributions from al)l.
I would like to confirm that the cash balance that RED is expected to have after completion of capital works is around $16 million and debt free although it does have a debt facility available, undrawn of $8 million (RED management are conservative and at the time of start up construction wanted to have it available in case of overruns - now its most likely not required with most big ticket capex items already covered till completion).
In terms of your question of valuations around a gold price of $2,000 NewTrade, my view is that with gold moving up steeply at the moment its probably entering bubble territory so best not to consider valuations that are unlikely to hold! Even if there is a pullback to US$1,500 RED remains considerably below the valuation price of high 30+ cents range on a DCF valuation!
And also I agree with Fastbuck that RED is in fact expected to be a lowish cash cost gold producer and therefore will be an attractive investment if the gold price comes off appreciably!
I would like to confirm that the cash balance that RED is expected to have after completion of capital works is around $16 million and debt free although it does have a debt facility available, undrawn of $8 million (RED management are conservative and at the time of start up construction wanted to have it available in case of overruns - now its most likely not required with most big ticket capex items already covered till completion).
In terms of your question of valuations around a gold price of $2,000 NewTrade, my view is that with gold moving up steeply at the moment its probably entering bubble territory so best not to consider valuations that are unlikely to hold! Even if there is a pullback to US$1,500 RED remains considerably below the valuation price of high 30+ cents range on a DCF valuation!
And also I agree with Fastbuck that RED is in fact expected to be a lowish cash cost gold producer and therefore will be an attractive investment if the gold price comes off appreciably!
I'm glad I got such quick responses to my arguments - I was hoping to top up this afternoon but Wpac/NAB glitches didn't alow my transfer
I have holdings in MQG at the moment which am waiting to exit - does not look good for an exit point today so I gues my top-up will have to wait a day.
Jancha - I wish I got in at 12.5c - I didn't really find out about the company until a short time ago. Still, I am sure 17c is still a good entry considering the forcast.
I have holdings in MQG at the moment which am waiting to exit - does not look good for an exit point today so I gues my top-up will have to wait a day.
Jancha - I wish I got in at 12.5c - I didn't really find out about the company until a short time ago. Still, I am sure 17c is still a good entry considering the forcast.