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Nice jump today. Glad I topped up on Wednesday. Still incredibly undervalued though.
I read some interesting comments elsewhere that it could be beneficial for both Resolute and Teranga Gold to merge, thus unlocking lots of value since their assets are in close proximity in West Africa. In turn that should boost the share price. I like the sound of that. A less appealing but likely alternative is that a bigger fish just comes and takes us over. I mean this thing is as cheap as chips.
We've already seen a similar deal this year with Endeavour Mining spending C$1b on Semafo . $1b Canadian is about 1.07 Australian. Our market cap is A$1.17. Okay, that probably puts Endeavour out of the picture. But someone else might come along. Perhaps Centamin? They are a single mine company and diversifying would make sense. B2Gold is another potential buyer. However, so far in this bull market premiums have been small. So I'd prefer something like a merger with Teranga to unlock value rather than a takeover.
Opened at over 60P on the ask. There have been more buys (volume) than sells and the price of SP has dropped to 58p. Inexplicable.
Thanks for the useful view, I regard you as my guide through a very strange situation. Seemingly an under-rated share whose SP goes down against logic.
A decent price increase today.
Total shorts now holding around 3.5%, however if you are wondering about the price drop yesterday , 36% (4.2m out of 11.5m ) trades (on asx) were short positions, this is compared to what has been typically been around 1.2 M p.d as net shorts have been creeping down.
What I don’t know, is if this is because there is something specific, or has, as I believe, rsg become a useful proxy for gold/economic factors when traders want a ‘go to’ stock to short in this sector.
Metro bank was similar – probably good reasons to short it initially - then once they have established a short position it becomes a proxy to use for banking/Brexit/other economic factors in general (overlaid with company specific issues).
We know that the amount of gold hedged in A$ this quarter will take some shine off the results, but I am hoping that production is on track setting things up for a very good third quarter when the shorts should retreat further. I do think that it is going to take quite a time for rsg to build enough trust to completely shake off its following of shorters though.
Regarding exploration projects we also own I think 26% of Manas Resources and have a person on their board. They have 3 exploration projects in Cote d’Ivoire. That one has a $13m market cap.
We also own 15% of Mako Gold also in Cote d’Ivoire, which is even smaller in terms of market cap - about $8m. Not to be confused with the Mako mine in Senegal.
There's also Oklo Resources where we own 8%. This one is much bigger - $127m market cap but also explorer in Mali.
Finally Loncor Resources, $68m market cap. They have some JVs with Barrick in the DRC.
None of these are in Resolute's corporate presentation at all which I find a bit surprising, especially Orca gold which is progressing nicely, I like that one. I can't say much about the 4 explorers, as I don't know much about geology. But it's good to have a pipeline of projects like these. If they turn out to be promising we already have a foothold in the companies and could try to take them over.
I almost topped up today and instead bought something else. Hopefully, this doesn't go much higher tomorrow on the news and I can pick up some more shares. I have some dry powder at the ready. My timing here has been far from perfect so I might as well follow the lead of the CEO haha
Yes JW has purchased more shares - JW purchased 50,000 shares! Must have something up his sleeve, as no one would put their own money into RSG unless they thought it is worthwhile!
In addition to his performance shares (really?), JW purchased 50,000 shares - quite bullish for the future price as he has a reputation for buying and selling at optimal times. His last purchase was at the bottom of the dip, so I assume this quarter is going well, possibly with some other good news as well?
Dimi, thanks for your observations about Bibiani. I had seen a similar sentiment expressed elsewhere. The fact that it has been passed about and then just sat there implies it may not be the hottest prospect, although from their last report on it in 2018 - 'the potential for Bibiani to produce ~100,000oz annually at a LOM AISC of US$764/oz for ten years' -sounds like there could be potential. They were waiting for approval for the tailing facility and mine operating permit towards the end of last year, so not sure how this is progressing.
They also picked up other rights from Toro - 'a highly prospective and expansive exploration portfolio including Toro Gold's substantial African exploration tenement package covering over 2,800km2 across Senegal, Cote d'Ivoire and Guinea'
JW's recent purchase makes me wonder if we may soon be hearing something about future developments ….
Nice, looking forward to this. Gold has pulled back a bit today and most gold stocks have sold off. Perhaps a chance to top up tomorrow.
Going back to my mini essay on our projects, the news just came out that we have participated with $1.2m in Orca Gold's recent private placement. The same amount as the Lundins with Zebra Holdings and Investments S.à.r.l.. Ross Beaty added about half a milion. So Resolute is maintaining its percentage of the ownership, or perhaps increasing it slightly. I haven't done the math.
Whitegate, You are not the first :o)
I have found JW is unbelievably good at responding to any questions I have asked. Far better than any other company I have put questions to. Sometimes I have just asked that a certain point could be clarified at the next quarterly presentation and then received a long explanatory reply from him the next day.
The impression I get is that their belief is that if they can hit their production targets and get 85% recovery at Syama then the shorts will close shares will rerate. I think that we are already seing signs of this.
Well I emailed John CEO. And he said they were working on increasing the share price. So watch this space!
I agree, the pipeline has been shrinking and they should try and fix that. Apparently Orca Gold are also open to a JV so it doesn't have to be a full takeover, perhaps increasing our stake and giving them some money to develop the mine. I'm sure someone with deep pockets like Ross Beaty could also add a couple of dollars to the kitty!
On another note, I've done some more digging (excuse the pun) on Bibiani and I haven't been too impressed. It seems to be one of those old projects that has been recycled and has changed hands multiple times. Apparently Resolute didn't acquire it per se but got it as collateral from the Noble Mining bankruptcy in 2013. If I'm not mistaken the FS was done in 2016 and environmental permit was received in 2018 with plans for "operational readiness to commence in FY2019":
https://www.asx.com.au/asxpdf/20180713/pdf/43whc1fw56x61c.pdf
Obviously the difficulties at Syama last year didn't help but I wonder if this project is so great and has AISC of $700-800 why has it changed hands so many times and it's not producing yet after 7 years of ownership? Why does Resolute need to place it "under strategic review" to use their own words? It should be a no brainer with capex of $75m and AISC of 1000 bucks below the price of gold. I feel something is not quite right there with this project and they might indeed be looking to get rid of it. The fact that it's barely mentioned in the corporate presentation is also in support of that.
I've only been a shareholder in the last 1 year or so and don't know the full history. It'd be interesting to hear other thoughts on this.
Dimi, Thanks for your thoughts on possible future directions, some interesting points there that I had not come across before.
One of the reasons buying into rsg in the first place was the multiple jurisdiction's and a potential future pipeline, to what then was a theoretical 750k pa. This has already changed with the sale of Ravenswood and if they sell Bibiani then we are down to just the two remaining sites. I can see why they have had to do this but it does leave one wandering about what happens next.
For ratings see link below :
https://www.lse.co.uk/ShareBrokerTips.asp?shareprice=RSG&share=Resolute-Mining
https://ir.q4europe.com/Solutionsstaging/ResoluteMining/4030/newsArticle.aspx?storyid=14704094
Resolute is a successful gold miner with more than 30 years of experience as an explorer, developer and operator of gold mines in Australia and Africa which have produaced more than 8 million ounces of gold. The Company trades on the Australian Securities Exchange (ASX) and the London Stock Exchange (LSE) under the ticker RSG.
Resolute currently operates the Syama Gold Mine in Mali and the Mako Gold Mine in Senegal. The Company is the owner of the Bibiani Gold Mine in Ghana. Resolute's guidance for 2020 has been set at production of 430,000 ounces of gold at an All-In Sustaining Cost of US$980 per ounce.
Syama Gold Mine in Mali and the Mako Gold Mine in Senegal. The Company is the owner of the Bibiani Gold Mine in Ghana.
Monkshood, congrats on being in the blue. I didn't average down enough and I'll need us to go up a bit more before I break even. We're close to the LSE Listing price right now which is a nice achievement but I feel also that without the shorts Resolute has a lot of catching up to do compared to peers.
Regarding our own projects a quick look at the corporate presentation shows a lot of info about Tabakoroni and Syama and very little about Bibiani other than it's under strategic review. Considering that all the infrastructure is in place at Syama it probably makes sense to go for Tabakoroni. Hard to tell how that would shape up, as the PFS has just been initiated. We'd know more when that's complete. So I could definitely see them going forward with Tabakoroni first and keeping Bibiani for later. Not sure why they would sell it though, as they would need to replace it somehow in the future. Unless they get an amazing offer that would make little sense to me.
I've read some speculation that Resolute could go for Orca Gold in Sudan. Its share price has gone nowhere in the last 5 years so it's potentially cheap. I haven't done too much research on that but Ross Beaty is involved (10% ownership) so it should be a decent project. They have a FS on the project but the initial capes is much larger than the market cap so financing the project on their own might be tricky. I believe we already hold 15% of the shares so there is clearly some interest there from Resolute.
Going to Sudan will add some jurisdiction diversification but Sudan is obviously not a very stable place. All in all I don't think it'd make sense to get rid of Bibiani and go for Orca Gold. The projects have similar resource size and AISC but Bibiani has an initial capex of only $75m compared to US$328M for Orca plus costs of the acquisition.
Dimi, This has not been one of my better choices … but back in the blue now though, helped by topping up in the low 30s after JW's buy hinted that we were near te bottom.
The volume traded on the lse is small compared to the asx but it was sometimes running up on the lse then getting pushed back on the asx. When I checked this usually coincided with an increase in shorts on the asx. I am hoping that once they are out a run on here will be continued on the asx to generate a bit of upwards momentum.
Clearly if the next quarters results are not as expected then this will change things but so far the signals are good
The third quarter should be very good with all of the low value hedging behind us.
After this it is a much harder call, will they sell Bibiani? What are the cost of another underground mine in Mali ? They say it will be a low cost option but their track record on this is not great, on the other hand they may have learned to control the cost better now.
What are your thoughts?
Monkshood, thanks for sharing! This is good news indeed.
There has been a steady reduction in the shorts on the asx through this quarter, it held above 5% for quite a while but is now consistently moving down. I think that the shorts have had a large part in keeping the share price repressed by stifling in raises in the share price (any rise was always followed by a large increase in shorts to the extent of approx 25% of daily trades), so I view this as very positive and an indication that the share price should start to rerate nearer to that of its peers. To put it into context nearly all shorts were taken out from September at <80p .
Hi VV,
Well done on keeping the Barrick shares! I wish I had done the same. I didn't keep mine and split the money between Equinox gold which has done great and few others that haven't done so well like Gold Resource Corp.
I've been invested in Resolute since August 2019. At the time I thought I'm investing during a pullback in an undervalued company. My thinking was similar to what you described. Also they have had low dilution historically, low GA costs, all things I like to see.
Looking at the chart my timing was very poor and I'm still quite a bit underwater here. However, I'm still holding as I think this should re-price to at least the previous highs. I sold my Roxgold shares recently as it wasn't performing just to see it almost double! I think something similar might happen with this under-performer in my portfolio and I don't want to miss out again. The fundamentals are good and we just need a bit of patience. Even if the company doesn't execute as well as we have hoped the rising gold price should bring us some profits.
AU$ 1.14 = 61p overnight
Nice start to the week :)
They have not reduced their holding. They were just over the 5% limit and the recent Tranch 2 share issue must have pushed them back under it.
Yeah nothing there to contradict my view Monkshood. Very happy with the outlook.
Have a look at the recent Mcquarie presentation for RSG's take on this-
https://www.rml.com.au/investors/asx-announcements/