Another interesting point, is that these two companies have a very similar market cap. I clearly prefer NST.
Production is much higher RRL about 80K/quarter versus NST 150K/quarter. The cashflow is also about double the amount of RRL.
Who cares if RRL has more reserves? Does anybody really know wether he will still be a shareholder of a certain company in ten years time ? So i think emphasis on reserves is overdone in most cases. What counts is the gold a company can produce right now in the present.
Reserves would only be an issue if NST would not be able to replenish depleted reserves. Right now NSTs mines have about 2-3 years of mine life left and that is enough for me. Of course the company should be able to keep the mine life in that range, when mine life falls to timeframes of 1 year or lower that would be an issue. But i am confident that BB and his team will be able to extend mine life with the current exploration program.
So IMO NST is relatively undervalued when compared to RRL. If NST will increase dividends (and most shareholders expect that to be announced shortly) i think there is a good chance that Northern Star will outperform RRL.
And don't forget that last month the portfolio rebalancing of the GDXJ meant some headwind for NST-which were reduced, and some tailwind for RRL which were heavily bought.
That effect was a"one hit wonder" and won't be repeated for the foreseeable future.
Quite to the contrary, if NST keeps fulfilling its guidances and in a few months with Pegasus online produces 600-650K, who knows as the second largest Australian gold producer, maybe the GDX might consider buying some of their shares, as right now Australia is rather underrepresented in this ETF with only NCM and OGC (which are also TSX listed) in their portfolio.
RRL Price at posting:
$2.14 Sentiment: None Disclosure: Not Held
NST Price at posting:
$1.70 Sentiment: Buy Disclosure: Held
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