Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Sorting debt is always good for shareholders should be back past 50p in no time happy with guidance production for the year and gold will be much higher after April
When the price of gold hits 2I this will fly brought and holding
Quarterly Activities Report for the period ended 31 December 2020
· Quarterly production of 89,888 ounces (oz), a 3% increase compared to the September quarter, bringing CY20 production to 395,136oz (CY19 production of 384,731oz)
· Realised gold price for the quarter averaged US$1,719/oz compared to the average spot price of US$1,877/oz
· All-In Sustaining Cost (AISC) of US$1,002/oz for the quarter bringing year to date AISC to US$1,074/oz (CY19 AISC of US$1,095/oz)
· Cash and bullion of US$106.5 million reducing net debt to US$230.4 million at 31 December 2020
· Agreement reached for sale of Bibiani Gold Mine for US$105 million (proceeds will be used to repay debt).
· Tabakoroni Mineral Resource increased to 1.3Moz at 4.9g/t Au
Outlook
· Guidance for 2021 of 350,000oz to 375,000oz at a forecast AISC between US$1,200/oz and US$1,275/oz inclusive of corporate overheads. The focus for 2021 will be operational consistency and cash generation.
That is the million dollar question.
The US Elections came and went, the USD fell as markets rallied but it's had little impact on gold prices. In the same week the Bank of England pumped another £150 billion into the economy, although really it was just spent buying government debt as per usual and that too did little for safe haven demand.
The vaccine news from Pfizer and Moderna this past week or two has had a cooling affect on precious metal prices and companies that produce them. A lot of investors are piling back into the depressed airline and hospitality sectors despite the worsening infection rates and Covid deaths across Europe, the US and much of the world.
I'm also trying to weigh up if the gold sector will weaken further in the immediate future and whether it would be prudent to reduce my position. Gold stocks like RSG have taken sizeable hits despite establishing strong support in the $1850/oz range, much higher than a year ago (Nov 19: $1450/oz). This quarter many gold stocks I am invested in or watch have lost 15-20% of their market value despite most delivering encouraging Q3 reports. RSG was one of the few that underdelivered and was clobbered as a result. The outlook for Q4 and further out to 2021 is much improved.
So what will get this sector moving? I believe the rollout of the vaccine will and here is why. While a lot of investors have increased their exposure to gold, many more have parked their cash into the USD. As the vaccine is delivered and markets begin to take on more risk the USD will fall and what is bad for the dollar is generally good for gold. Reuters are reporting the 'vaccine rollout could cause U.S. dollar to fall 20% in 2021' as it is coupled with increased monetary easing.
https://uk.reuters.com/article/instant-article/idUKKBN27W25E
If gold remains around this level I'd expect investor demand to stay fairly subdued up until Christmas time when we may see some interest in the lead up to January results. I don't think many are expecting RSG to meet their quarterly target of around 100koz and AISC of $1,100/oz. Until we know either way 50p is going to be a tough nut to crack.
Any ideas as when this share will be on the rise, considering what's happening? Any help greatly appreciated.
Further to the point on hedging
"Resolute maintains a policy of undertaking discretionary hedging in compliance with funding obligations, which require a minimum of 30% of the next 18 months of forecast production to be hedged."
The Forward Price agreed for this quarter is $1,647 for 60,000 ounces. Assuming they don't carry any over into next quarters hedged production that will likely result in two thirds of this quarters production being hedged so we are looking at 100,000 at an average realised price of $1740/oz this quarter.
· Total gold production of 87,303 ounces
· Realised gold price for the quarter averaged US$1,694/oz
· All-In Sustaining Cost (AISC) of US$1,284/oz
· Syama Sulphide recovery rate of 79.5%
· Tabakoroni Pre-Feasibility Study released (22% increase)
· Syama Union confirms cancellation of further planned strike action
· Mali interim government established and ECOWAS sanctions lifted
· Cash and bullion of US$106 million with net debt of US$234 million at 30 September 2020
· CY20 production is expected at the lower end of the guidance of 400,000oz to 430,000oz
There were quite a few negatives namely reduced production, lost value owing to prices hedging and costs rising but this was skewed by the strike action and compounded with Covid restrictions. Gold production at Syama during the quarter was 46,622oz at an eye watering $1,628/oz AISC! Production this quarter should be back to around 60koz at AISC of $1200/oz as the company are expecting to process higher grade ore at the sulphide operations and at the Cashew prospect which is already providing higher grade oxide material for processing in the December quarter.
Despite the operational difficulties there are positives to be drawn from the update. Namely the company sold 91,000 ounces at an average price of $1694/oz which compares to 111,000 ounces at 1446/oz in the previous quarter. Hedged sales should reduce this quarter which should lead to higher realised prices with gold trading steady around $1900.
Of importance for RSG, HUM, CAPD and CORA holders: An interim government has now been established in Mali following the Coup on 18 August 2020. This government has the support of ECOWAS which has lifted all previously imposed sanctions on Mali. As a result, supply links into Mali have re-opened and transportation of key consumables to Syama has been re-established.
Tabakoroni exploration success continues with intercepts like 5m @ 116.3g/t following the Mineral Resource update which put the total resource above 1Moz at 4.4 g/t. Mining during 2020 at the "Porphyry Splay" pit extracted over 40,000oz from a small shallow open pit, exceeding expectations. The company expect a remodelling of the area will lead to a restart to open pit mining activities.