Member Info for relephant

Thanks bigtimber. While lower quality sales will help boost turnover I suspect high quality sales will make a much bigger contribution the bottom line.

Skinny re being not sure what to do because of price movements. There is a difference between longer term investing where you are more interested in business fundamentals and prospect for EPS growth into the future ; and shorter term speculation which can focus more on price movements and what you gamble they are going to do. Personally not interested in the latter. With a declining price it can be justified and due to deteriorating business fundamentals; and if you believe this in selling may be advised. However a declining price could be due to misplaced pessimism by Mr Market. If you conclude that fundamentals are still good and a share is undervalued this creates a buying opportunity. Thus what to do hinges on you assessment of business prospects going forward and your estimate of intrinsic vale compared to share price. As Colin says if we can produce enough high quality stones and can sell them at a decent price operation should be nicely profitable. We haven't had any high quality sight sales yet and don't yet know what proportion is high quality but should get a good indication from first high quality sight when it happens. As Ben Graham taught key is to build in a margin of safety into your purchase and to buy when prices offered by Mr Market represent a decent discount on your estimate of intrinsic value. Problem right now is we don't yet have all the info we need to estimate intrinsic value with confidence but as Colin indicates could be promising. Buying now is therefore more speculative but if things go well could be nicely profitable in time. Alternative is to wait for more info but then price may have increased so ROI while safer may be less. However with latter less risk of losing capital.

When you mine you get poorer quality material and higher quality material. The poorer quality material is likely to make up the bulk of production and can also be expected to be sold for a low price. RLD will need to continue to sell this material which for example may have poor colour or clarity. Thus we can expect regular sales of poorer material at low prices going forward. As with Gemfield's rubies and emeralds and RLD's past tanzanites the rare high quality material is key to turnover and profitability. Once we know what proportion of cts mined are high quality and what proportion of these we can sell at what price we will be in a better position to assess viability and profitability. Good news is that we are already getting more/ct sold for low quality sapphire and corundum than average achieved for all material by Australis . How much of poorer quality we can sell at what price will also be a factor but probably not as important as the high quality.

Agree with you Lucky that key to profitability will be the high quality sight sales. Gemfields has only one high quality sight sale per year for each of rubies and emeralds.

Lucky I think previous estimates of cost included everything but I see the $1 odd/ct excludes corporate expenses, amort. & dep. Thus two figures may not be directly comparable but probably still represent a good cost saving. Still getting this down to $1/ct is good news and testament to the CEO's focus on keeping efficiency high and costs low

Yes also noticed reference to H1 rather than late Q1. IF there has been a change let's hope it is early April rather than late June.

Yes Colin - Let's hope so.

Hi Sniffer - you are not correct that Gemfields has made no effort to get into Sapphires. I recall reading ( I think in their last annual report) that they have aquired a 75% stake in a JV to source rough sapphires in Sri Lanka. Googled Gemfields and Sapphires and this came up confirming this.. http://www.ft.com/cms/s/0/ef727b02-3ce4-11e4-871d-00144feabdc0.html#ixzz3zCoPzdt2 . I think I recall they were also looking at a sapphire option somewhere else (Columbia?) I would hate RLD to be taken over too soon before it has had a chance to make some decent profits and for its share price to have rallied substantially. In due course it might make sense to have a single giant coloured gemstone company, but I would prefer this to be further down the line if at all, so that RLD shareholders could get the bulk of any price appreciation. For all their great success in mining, marketing and selling rubies and emeralds I am not sure I would want shares in Gemfields given their ownership structure and the way run of the mill retail investors got treated in the Faberge deal. Pallinghurst and associated companies controls a majority of Gemfields shares. A few years back they bought Faberge for a big sum but then more recently they sold it to Gemfields for what I recall was close to 3 times what they paid for it despite it being loss making. This transaction was paid for in shares with the result that Pallinghurst ended up with a greatly increased proportion of Gemfields shares while retail investors saw their holdings seriously diluted. Since Gemfields took over Faberge this arm has continued to rack up big losses. Executive compensation etc is also much more and whether Gemfields is as shareholder aligned is questionable, Thanks in part to Faberge losses (bad) and investing to grow existing mines for the future (good), the Gemfields EPS last year was tiny (despite all their emerald and ruby sales).

Agree that it makes sense and likely to have more impact for RLD to release quarterly update and hence "new news" a few days later at the time of the mining conference when other institutional investors and media will be present. As you surmise skenny89, this timing suggests bad news is not on the way. By delaying the update RLD may also be able to add a postcript on Jan production as well. Hopefully the update confirms that the ramp up has continued as planned. Await the next update with interest; although the most important update will be the one that announces the results of the first sight sale of higher quality material currently scheduled for late Q1. As with Gemfields' ruby and emerald sales and past tanzanite ones; one can expect the smaller proportion of high quality material to generate much of the turnover and be a key factor in overall profitability. Interesting times to be a RLD shareholder.

Encouraging . Another 100,000 top up from Nicholas Sibley bringing him up to 400,000 additions recently.

typo - should read all

Season's greetings to al from me too.

I agree that a director buy is encouraging and should other Directors top up too this will indicate their optimism for the future. For me the most important news will be the results of the first sight sale of higher quality material scheduled for late Q1 according to a recent RNS. This is because profitability is going to be strongly influenced by the proportion of cts mined that are saleable higher quality sapphires and the prices achieved for these stones.

Bunion, Great minds think alike. I suggested the same name change to RLD a few weeks back. You also would only need one website.

When I last looked there were only the 8 parti Coloured sapphires on the site. These were hidden away so most visitors won't find them, RLD hasn't really started to market and sell their sapphires online yet. Currently apart from the 8 parti sapphires, the bulk of stones being sold on the site are Tanzanite. The site features high up on Google searches for online Tanzanite sales which is good. No doubt when online Capricorn saphire sales start in earnest an effort will be made to come high up in Google searches. However I and a number of others on here, feel there is room for improvement in the website. Hopefully the website will be revamped once it starts really showcasing and marketing Capricorn sapphires. In addition to selling online, the website provides a great opportunity to show how the best Australian sapphires are top quality, and to create desire in our customers' minds.

Apart from the effective nationalization of half of the company for which the company has received nothing to date; the failure of Tanzanian authorities to enforce the law made it impossible to operate profitably. They failed to clear out and deal with neighbouring artisanal miners who had invaded and aggressively taken over most of the shafts, including all the ones with the most high quality stones (so important for profitability). They also failed to deal with rampant smuggling of uncut stones that depressed tanzanite prices. For years they also banned the company's scanners used to detect if staff were stealing stones despite them being independently assessed as safe. By changing the mining act they effectively reneged on the deal the company signed up to before investing where a 25 year extension of the mining license should have been a formality. Not only that but their tax authorities can suddenly levy spurious charges and penalties. Agree with Colin that to have got out of Tanzania debt free with a healthy balance sheet was a great achievement by BOD. Early years things were fine and nicely profitable but when Tanzanian authorities started their nonsense it became impossible to operate profitably. In the end the company and investors lost heavily. Fortunately Tanzania is history, and RLD has managed to start over with sapphires in a much more investor friendly country. Here's hoping the new venture proves to be nicely profitable.

As granto says early days of ramp up. First month of uninterrupted production was only Sept. Also mustn't confuse current share price with value as there can be marked discrepancies between both in the short term depending on market sentiment. While we await results that will indicate production and profitability of the new mine, RLD remains a speculative buy (and difficult to value). In the long run, we can expect the sp will track growth in earnings per share. As an investor (rather than speculative short term trader), I would prefer to see management concentrate on business fundamentals (ramping up production and getting marketing and sales going) rather than seeking to artificially boost sp in the short term through spin and PR. With every update from now on we should get more data on how many saleable cts the mine is producing, at what cost, and how many cts are being sold at what average price. This will allow us, and the market to more accurately value the company. If the new Capricorn sapphire venture proves to be nicely profitable, the sp will adjust to reflect this. A little patience will be required. Going to be an interesting next 12 months for RLD shareholders.

I would guess Tanzanite will be well enough known and stories of it running out and it's rarity would boost demand in the future. As for RLD in Australia, hopefully they can succeed in building the Capricorn brand, explaining and demonstrating that some of the world's best Sapphires come from Australia, and that historically these used to be passed off as coming from somewhere else.

If the Tanzanian authorities continue to stuff businesses around and continue not enforcing the law no larger scale tanzanite mining company will be viable. If so the deep mining that will be required to prolong the life of the deposit won't take place. Remains to be seen whether Sky will have any more success than RLD did. Thus the actual effective productive life of the deposit may not be as long as previously projected. Who in their right mind would invest in Tanzania given the way foreign investors including RLD have been treated? Just delighted RLD are out of there.

Although Tanzanites appear to be different to Sapphires in that the value per ct may be a little lower or similar for very big stones. With Sapphires generally the bigger the stone the higher the price per ct. However this may change when Tanzanite deposit is mined out.