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Profit margins expand for high cost producer Resolute Mining RSG as price of gold jumps $100 in a week. I suspect the short positions here, which were climbing into last week could be suffering the squeeze.
RSG are forecasting a minimum 75,000 ounces in Q421 with good reason for further upside given the decision to defer remedial works on the processing circuit to early next year.
Link to the latest presentation - Denver Gold Forums America
https://clients3.weblink.com.au/pdf/RSG/02420950.pdf
Fewer pages listed and mostly the same as last one except page 8 now lists all the forward hedging in place, which includes new hedges for the December quarter at a higher price bringing the average up to $1740/oz. Next quarter is much better!
March 2022 Q: 55,000 ounces hedged at $1807/oz
June 2022 Q: 20,000 ounces hedged at $1730/oz
Also as confirmed by recent updates the presentation now includes the balance sheet improvements
? $59.7m in debt repayments including $50m voluntary debt repayment on Revolving Credit Facility
? $50m capacity on $150m Revolving Facility
The market is losing interest in precious metal stocks so even these recent director buys appear to have had little impact on sentiment. Pan African gold released their strongest set of results on record, balance sheet also strongest it's been for many years and yet it now trades at 15 month lows.
Director buys in detail - almost 250,000 bought on the market
Mr Adrian Reynolds bought his first 50,000 shares on the 3rd
Mr Martin Botha bought 150,000 shares on the 6th and now holds 195,455 total
Mr Mark Potts bought 44,444 shares on the 8th and now holds 123,541 total
Another early voluntary debt repayment of $30 million announced today following receipt of the first instalment of the Bibiani mine disposal. That means Resolute have paid $50 million in early debt repayments in the last three months, and will benefit from lower borrowing costs going forward. Expectations of net cash by 2023 likely brought forward.
On top of that the first scheduled loan repayment of $25m will be collected later this month, funded from cash flows.
Link to latest update can be downloaded from https://www.rml.com.au/ with the direct link below:
https://clients3.weblink.com.au/pdf/RSG/02419922.pdf
And the most recent presentation from Africa Down Under is already out of date following todays news but still worth a read. Long term outlook looks very positive with Tabakoroni underground coming online in 2024 around the time Ravenwood proceeds (up to A$250m) are available. Cash positive by then. Mako exploration will extend current 6 year mine life further out. General 10 year mine production schedule indicates falling costs in the coming years too.
https://clients3.weblink.com.au/pdf/RSG/02416484.pdf
Always nice to see and it seems to have helped the sentiment.
The coup in neighbouring Guinea does not appear to be of concern to buyers, RSG only have a small exploration presence there and the leaders of the coup have said they want the mining companies to keep running.
RSG is heavily shorted on the asx, so if they start to think that the tide is turning and close then this could tick up quite quickly.
Operational and Financial Overview
Revenue: $261m
EBITDA: $78m
Operating cash flow: $69m
Gold production: 163,118oz
Average price received: $1,723/oz
All-in sustaining costs: $1,277/oz
2021 guidance updated to reflect first half performance and expectations for the remainder of the year.
- Gold Production Forecast: 315,000 - 340,000 ounces at AISC of $1,290 - $1,365/oz
- Capital expenditure (non-sustaining) for operating assets $29m (inclusive of Mako cut back of $13m)
- Sustaining capital expenditure (included in AISC) $49m
Balance sheet upside
? $30m initial cash proceeds from sale of Bibiani to be applied to voluntary debt repayment. Remaining proceeds from sale of $60m to be received in the next 12 months.
? Ravenswood sale proceeds up to A$250m available from March 2024
Syama Gold Mine
Long life asset with significant gold resource endowment and exploration potential
Mineral Resources: 7.6Moz
Ore Reserves: 3.3Moz
LOM AISC: US$1,000/oz
Current Mine Life: 11 years
Target Site Production: 250-300koz pa
Mako Gold Mine
High margin open pit with near mine exploration optionality
Mineral Resources: 965koz
Ore Reserves: 780koz
LOM AISC: US$900/oz
Mine Life: 6 years
Target Site Production: 120-140koz pa
There does seem to be more clarity about the finances with the new(ish) CEO and other senior management changes. There also seems to be a desire to put all of the buried issues behind them with the announced impairments and tax charges, this is usually a good sign.
I think that it will still take another half year to get things really moving, it has been a wet summer making them a bit behind for July/August, they also have the roaster shutdown later this year which will reduce their ability to catch up any shortfall.
They have taken measures to overcome some of the staffing problems with operating from Australia, which have clearly been an issue with restricted movement in and out of the country. Hopefully this means that the roaster shutdown will not be more protracted than the minimum required.
The dip in quality of feed at Syama looks to be temporary and reassuringly their recoveries are gradually improving.
The power plant is now running and there is no immediate need for any capital (provided they remember to heat the roaster up slowly this time after they service it...) .
Generally they are moving in the right direction and the further they can stretch the need to go underground at Tabakoroni closer to 2024 when the monies from Ravenswood accrue to the company the better.
They have now got to a position that if they could offer some clarity over the Mali tax situation the share price could really start to rerate.
Resolute provided an updated Life of Mine for Syama in April 2021 with an improved production and cost profile over the 11-year mine life (7 years underground).
Exploration and mine design work last year culminated in increases to resources at both Tabakoroni and Syama. Near mine exploration (open pit) "remains a key focus at Syama and is expected to extend LOM production" and today's update adds further weight behind the decision to return to open pit mining of Syama North in late 2021
Excellent set of results today! Extending the oxide production at Syama and Tabakoroni to beyond 2023 and 2024 respectively will be massively beneficial, especially if near surface grades are higher than current resource modelling would suggest.
rns out now - not sure why it was not released at 7.00am as it was released on the asx last night (our time).
I have bought back in today.
They have sold Bibiani which will help reduce debt. Todays update about new drilling (not showing here?) looks promising for providing potential for further oxide deposits, both this and the reduced debt will both push back the need for a placing to get the Tabakoroni up and running. The drilling results indicate that the total reserves at Tabakoroni could also be increased at a future date.
Opposition to the French cutbacks in Mali also seem to be growing, I would think that the collapse of opposition to the Taliban in Afghanistan will also add focus to this.
From The Times -
Xavier Bertrand, frontrunner in the field of conservative contenders for next April’s presidential election, said Macron had made a “major error” in announcing the imminent end of France’s Operation Barkhane in Mali and surrounding countries.
It's not showing yet but i took 16,024 @ 24.9
I'm new to RSG but have been following the technical's here for a few months and finally decided to take a bite this morning. as the chart looks pretty good for a retace atm
Apologies, fourth paragraph should read:
With the sale of the Bibiani project for $90m and two thirds of that expected this quarter or next, net debt should reduce to around $150m by year end or possibly a little more depending on fees. The final instalment will likely fall due in the first half of the next financial year.
At the year end 2020 (31 December) net debt stood at $230.3m with cash and bullion of $106.6m and this had reduced to $219.8 million with cash and bullion of $88.8 million by 30 June.
Net debt has fallen slowly in the first half due to lower than expected production volumes, mainly down to power disruptions, extended periods of mill maintenance and lower grades and that has had a negative impact on AISC, in Q2 they averaged $1,319/oz.
We should be looking at 80-85koz production in each of the second half quarters at similar AISC (incl corporate overheads) and our hedges for approx 30% are at $1715/oz a good 9% higher than this time last year ($1576/oz).
With the sale of the Bibiani project for $90m and two thirds of that expected this quarter, net debt should reduce to around $180m or possibly a little more depending on fees. The other two instalments will likely fall due in the fourth quarter this year and then half way into the next financial year.
By the middle of 2022, when all payments have been made to Resolute, further early loan repayments made when appropriate, lower interest to pay and having benefitted from a further 12 months of production at these revised 340koz levels and at current gold prices, assuming AISC fall back to the $1275/oz range, net debt will have reduced to around $80-90m. Of course we are capable of producing 400koz and this year should have been producing closer to 350k-375koz but for the issues mentioned above.
The board need to demonstrate they can achieve revised guidance over the next six months. If operations are running smoothly as we enter the new financial year I don't see why margins won't improve and net debt come down faster.
Resolute's issues have been one long, ongoing headache for some time but there is a clear route to success here with earning boosts from their deleveraging of secondary assets.
Last point should be to watch the huge short position which was 10%+ at one point mid June 2021 now down to 6% and expected to unwind further once the price of gold catches a new wind.
https://www.shortman.com.au/stock?q=RSG
Sale of Bibiani Gold Mine for $90 million in cash
· Resolute has entered into an agreement to sell the Bibiani Gold Mine in Ghana to Asante Gold Corporation.
· Cash consideration paid in $30 million deposit (already received by Resolute to be applied upon completion) and further
$30 million on or before 6 months from completion; and $30 million on or before 12 months from completion.
Importantly "The agreement has received Ministerial Consent, having been approved by the Ghanaian Honourable Minister of Lands and Natural Resources"
Completion expected 10 days from now, mark the 19th August in your books (assuming it's working days)
Asante are already well established in Ghana and have a strong track record of community involvement schemes as well as being a popular company among Ghanaian nationals, soon to be listed on the Ghana Stock Exchange. So this is a good outcome for the Ghanaian authorities and people.
The impression I got back in April was that Ghanaian assets were going to stay with tried and trusted partners but in fact it looks like it the licence restoration was perhaps engineered to bring Asanta on board as the only viable option.
Resolute and Asante are committed to ensuring an orderly transition of ownership at Bibiani. Asante is dedicated to injecting the necessary capital to achieve the rapid restart of Bibiani, which is not expected to result in any immediate changes to employment or contract relationships.
The Ghanaian Honourable Minister for Lands and Natural Resources, Hon. Samuel A. Jinapor, MP (the Minister), commented: "I commend the recent approach of Resolute and Asante in their dealings with the Ministry for Lands and Natural Resources and am pleased to support the transition of ownership of Bibiani to Asante."
Note Stuart Gale's comment: "Resolute is .. particularly proud to have the opportunity to transfer ownership in Bibiani to a highly regarded team with strong ties to Ghana."
But this is an optimum outcome for Resolute, soon to benefit from a $90 million gross injection over the coming year which reduces the risk of loan covenant breach to nil and firms up the balance sheet.
Asset sold for 90m should increase the mkt cap as it fell on news originally
Sylvania Platinum (AIM: SLP) is pleased to announce the appointment of Mr. Adrian Reynolds as Independent Non-executive Director, with effect from 1 August 2021.
One of our directors joining the board of Cash rich SLP eh?and here we are with a little old Gold mine to sell or develop?
Average price $1,800 oz
Revenue x 315,000 market cap is lower than total revenue this is a simple buy at these prices
Wed, 9th Jun 2021 09:17
RNS Number : 3081B
Resolute Mining Limited
US$20 million early debt repayment
Resolute Mining Limited (Resolute or the Company) (ASX/LSE:RSG) is pleased to advise that it has repaid US$20 million in advance of its first scheduled debt repayment.
The voluntary early repayment reduces the Company's Revolving Credit Facility (the RCF) balance to US$130 million and lowers borrowing costs. The RCF also provides Resolute with the flexibility to redraw funds to the US$150 million facility threshold, at the Company's discretion, up until the maturity date which is currently March 2023.
A summary of the debt maturity balances following the US$20 million repayment is set out in the graph provided in the full version of the announcement at www.rml.com.au.
Resolute's first scheduled debt repayment under the Company's Term Loan facility is in September 2021. The Company's intent is to repay all Term Loan obligations through the generation of operating cashflows. Additional free cashflow may also be applied to further reduce the RCF as options to extend the maturity of this facility are assessed in accordance with the lending agreement.
Resolute's Chief Executive Officer, Mr Stuart Gale, commented on the accelerated debt repayment: "This early repayment strengthens Resolute's balance sheet and reduces ongoing borrowing costs. Our teams remain focussed on improving operational performance and with that cash generation. The flexibility of the RCF then provides us with the option to continue repaying debt ahead of maturities with operating cashflow and proceeds from potential non-core asset sales."
Cash and bullion balances were US$106.0 million at the last quarterly update (31 March 2021)
https://clients3.weblink.com.au/pdf/RSG/02383046.pdf
Will this ever pop to the 40s
Gold $1900 all the way to $3000
12 months time this will be over £
Late late tick up to 36p near the end!
This one is highly geared and has been incredibly volatile in times of wild commodity swings. There's also a large shorting syndicate on the Aussie exchange or at least there was up until recently. They may have closed positions now.
Doesn't take a lot to move this. 13% up today and that is on top of last weeks rise. Certainly seems that someone is loading up big time. News soon?