Member Info for the_shareminator

At a time like this the quality companies will shine brighter. Encouraging measures adopted by this one, leading the field in terms of response. With the company operating in such a remote part of the country it has yet to experience any disruptions and I'd expect sentiment to reflect that when compared to say CEY.

Recommend watching Jim Rickard's recent interview. He mentions why US govt won't confiscate gold around 6 minute mark.

https://www.youtube.com/watch?v=zj3ttaiSgvs

1st gold pour at Kekura. Comparatively safer than HOC in light of their recent mine closure.

This is the first major I have heard of to shut mines due to government implemented shutdown. Do you know of any others?

This was nearly 90 years ago. So much has changed since then. The USD isn't pegged to gold. The reason the US took action to confiscated it back then was because they needed money supply. As we have seen just these past few days they can simply print it (through QE). If the US started confiscating gold today it would send shockwaves around the world and support in the US system, and therefore the dollar, would collapse overnight. Gold rising is simply a consequence and I don't think it really matters to the US as long as investors continue to buy US debt.

Note, gold prices recovered on Tuesday after the Federal Reserve moved to restore liquidity to U.S. short-term funding markets, reducing the need for forced selling by portfolio investors. The Fed said it would reintroduce a program for purchases of commercial paper, a $1.1 trillion market used by corporates for short-term funding, that had shown increasing signs of freezing up in recent days. This is how they will 'fix' the problem, kicking the can full of debt down the road.

https://www.investing.com/news/commodities-news/gold-prices-recover-as-fed-acts-to-unfreeze-funding-markets-2113170

Fed just announced they are supporting commercial paper market. This is what nearly collapsed the system in 2008 so by acting now they are placing guarantees on certain loans to big business. Confidence boost for sure!

Fed just announced they will support commercial paper market to help restore liquidity in the market and stem the outflow of capital. The Fed’s interventions could thus help avoid a repeat of 2008 when money market funds “broke the buck”

Suddenly up to $1537. Could be a reaction to the ongoing stimulus packages that are being announced. Can't see anything new on reuters

clarav - Russian reserves are heavily geared to commodity prices. They have a strong interest in seeing the USD weaken and gold rise. China fall into that category too although their currency is pegged to dollar movements.

jointhedots - I disagree with that prognosis. In the 1930s the dollar was pegged to the gold standard, every dollar was backed by gold basically so the US government had no real way to expand money supply. Today the Fed can just magic dollars out of thin air, add it to the ballooning debt pile and confidence is returned (in theory). So long as people believe the government will always honour their debt obligations the US will always be able to expand their money supply.

£36m market value for a £50m/year turnover gold producer soon to be in net cash and paying a dividend of 9% not including any specials. Probably the best buy among the small-cap gold stocks but have to consider AAZ at 75p, SHG at 6.5p and HUM at 19p

Absolute carnage today! Should have sold the entire lot last month. Everyone is taking on more debt so perhaps the answer is to take on debt and deploy it into gold stocks once gold confirms the next major uptrend.

Yes it definitely would do in normal times. I do not understand why the USD didn't fall much following QE 700bn yesterday though. The Pound is at particular risk from a steepening epidemic curve for reasons including its earlier fortune in dodging a severe outbreak, which is now unwinding and could see Sterling becoming the "pariah" of the market. The Dollar, on the other hand, is the world's reserve currency and its largest, most liquid unit. It will probably continue draw investors as it always does in times of risk-aversion.

Also I read Sterling underwrites activity in the City of London, where assets under management are more than three times national GDP in the good times, and so could be vulnerable to capital flight in the event the UK suffers a sudden surge in coronavirus infections and deaths that threatens the smooth operation of London. The UK also has a large current account deficit, which means Sterling relies for part of its value on continuous inflows of foreign capital that risk being interrupted.

Estimates suggest 1 million UK residents will be infected in less than 30 days time unless the government adopts the strategy Italy has.

$700,000,000,000 QE to begin with. Interesting times ahead. Stay safe all.

https://www.cnbc.com/2020/03/15/federal-reserve-cuts-rates-to-zero-and-launches-massive-700-billion-quantitative-easing-program.html

Agree, covering losses likely the major reason for the weakness this week. How much money is now being pumped into the system? This should send gold higher. It makes it more valuable as currencies devalue. The credit being created is simply cheap debt, enormous sums of it and on top of already historically high debts to GDP. This will be exacerbated with the coming slowdown, made worse by the inevitable recession. Gold has always been a safe haven in times of crisis and with inflation of perishable goods likely alongside deflationary pressures in the retail and tourism industry precious commodities should be in high demand. Nations that borrow too much at this time will struggle to come out of recession in 6-12 months time and I expect some will enter a liquidity crisis.

At the last set of Interims they had made sales of 26,588 ounces (H1 2018: 25,778 ounces) at an average price of $1,319/oz. Net cash was $15.2 million. By the end of December 2019 net cash had risen to $21.2 million from $6.1 million a year earlier. All debt repaid last month.

The company have said they will now distribute 25% of the Group's free cash flow to shareholders each year split between the Interims and Final results. Free cash flow is defined as net cash flow ($14.5m) from operating activities less capital expenditure ($3m mine development + $2m ongoing exploration).

In H1 2019 free cash flow was just $9.6m but the company still paid out $4m worth of dividends ($0.035).

We know they sold 26koz in H1 and approx 28koz in H2. We can estimate average prices in H2 were approx. $1490/oz based on the average FY price $1410/oz and taking into account the average price in the first half was $1319/oz.

They sold $8.1m worth of copper concentrate in H1 and based on the total $17.9m for the year, approx $9.8m in H2.

This should mean net cash flow in the second half was significantly higher than the $14.5m recorded in H1. It looks to me like $18-20m cash flow but it could well be higher and should support an increase to $0.04 twice yearly. In this climate and with the company in such a strong financial position I hope they adopt a more aggressive dividend policy and reward investors who hold through the good times and the bad.

$22/bbl costs in the last set of Interims, due to fall as production increases. Obviously not all inclusive but I think $30 is manageable. Recent price action suggests the oil price will fall further so I wouldn't be surprised if RRE begins to recover in a couple of weeks assuming the oil price holds at this level and doesn't breakdown. Compared to debt laden oil producers it doesn't make sense RRE has fallen as far as it has. Even Shell hasn't fallen this far!

Well said, these gold producers all tend to carry a degree of jurisdiction risk. For the reasons you outlined it's why I'm also spread across 15-20 countries including South Africa, Turkey, Australia, Senegal and the others you mentioned (except Scotland) haha

Amazing opportunity this morning once again. Can't believe the share price dipped below 118 again on that update.

Company confirms revenue this year will "Significantly Increase to Over $100 million at Current Metal Prices". Their calculations are rather conservative pricing gold at $1,480/oz this year.

Small reduction in output to 75-80k GEOs. Operating costs expected to rise. Exploration and development in three areas to expand production (next year?) fully funded. Other opportunities, possibly acquisitions or JVs being considered.

I'd like to see the company start buying back shares. The current share price is a joke. It was a joke before the markets were hit by the effects of the Corona virus but now it's crazy. Would prefer they hold off on acquisitions as well as companies without the cash in the bank are likely to get a whole lot cheaper.

Opex of $22/bbl likely to be lower this time around I think. Still some cushioning, but not much. Amazing price if you can hold for 6 months.