RSG (ASX) Bottom here?

Originally posted by eshmun ↑

Hi Hotfire,

I'm not trying to prove anyone wrong or right, although I hope for my sake I am right.

What I'm trying to do is give perspective on where this company is at and the fabulous potential of this project and what to be altert for in terms of the company achieving its goals and meeting its value expectations.

In one of my previous posts I'd used the density of basalt and the cross-section of the ore drifts (5m x5m) from the JORC notes in the Syama feasibllty study to calculate the tonnage of 1 meter of "tunnel" advance at the mine. My calculation arrived at a figure of 75 tonnes per 1 metre of advance. In the recent update the company said it has built 15km of tunnels at Syama.

Assuming all the tunnels have the same cross sectional area as the ore drifts the 15km of advance represents a total tonnage of 11.25Mt.

In one of my previous posts I compared the steady state UG mining rate at Syama of 600kt/quarter to the ore hoisted by NST during the September 2018 quarter of 1.425Mt from all of its mines.

If my calculation is accurate the material moved so far in the UG tunnelling at Syama is equivalent to approximately 7.9 times the Sept 2018 quarterly ore hoisted from all of NST's mines (Kalgoorlie, Jundee and Pogo). In other words almost 8 quarters of ore production from all of NST's mines.

Underground developmemt at Syama started in the Dec 2016 quarter, so 8 quarters ago.

This demonstrates the progress that RSG has made. It has moved the same tonnage of rock, equivalent to all the ore mined from all of NST's mines over the last 8 quarters. The difference being that RSG has only derived small cash flow from this development in the last two quarters.

So for all the people whinging about the "cash burn", that's where the money has gone, to build a large scale UG mine that willl have the potential to scale to mine more ore than any single mine that NST own and will have a mine life longer than any of NST's mines, based on current reserves. RSG is building a significant asset that rivals any of SBM's, NST's or RRL's mines (I haven't finished my look at OGC and EVN to see if Syama has the potential to be King amongst the mines owned by its peer group).

The high rate of "cash burn" is actually a good thing as it brings the FCF forward. The worst thing RSG could have done is drag it's heals on this build.

If you can't comprehend the scale of what has been built and it's potential you really don't understand the RSG story IMO. The financiers aren't going to walk away from this project given the money that has been poured in to this point IMO. IMO they willl come to the party if required. I actually think the ~US $95 million in revenue that RSG will collect from gold sales for the Dec 2018 quarter together with the reported liquidity will see the project through. If not the funders will expand the credit facility IMO. Walking away from this mine on the cusp of commercial production is not an option IMO.

Maybe some of the knockers on this thread can "patriot up" and at least acknowledge the audacity of what this Australian company is trying to build, whether or not they think it will succeed or fail. I'm proud to be a shareholder in this cutting edge and innovative mine development. We need a bit more of the Aussie, Aussie, Aussie and less Aussie sledgeders.

Eshmun

Expand

In the post above I mentioned that development at Syama commenced 8 quarters ago in the Dec 2016 quarter..

I went back to check this when writing that post and found the quarterly activities report showing the estabishment of the portal (see figures 3 and 6).

The Dec 2016 quarterly report also said

"Syama underground mine development on schedule to deliver development ore in the first half of calendar year
2017 and first production ore in the second half of calendar year 2018."

"Cash, bullion and listed investments of A$283 million (September 2016: A$273 million) and net cash of A$253
million (September 2016: A$235 million)."

The company has stuck to the time line and currently has net debt of A$62 million.

That's a cash draw of $345 million in those 8 quarters. A big roll of the dice on this mine.

It's all about Syama UG and the next two quarters are critical to success or failure in terms of the short to medium term share price IMO. No way around this. Esh

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