"I’m not sure what the realistic value of Ravenswood is but I think any of those companies, even SLR, would be able to digest it.
The problem is that all of those other companies want mines with higher production/lower costs than Ravenswood. They want the higher quality assets that each already has. SBM has been in the market for a 200koz project at A$1000/oz for more than a year. Of course no one wants to venture to riskier jurisdictions like Africa either".
I don't see how you come to these conclusion. Seems like more subtle RSG bashing on your part to me.
You say all these other companies want higher production/lower costs than Ravenswood.
SLR is merging with DRM. Doray's Deflector asset had production of a little under 65kozs in FY2018 at an AISC of $1,190 and thier July 2018 LOM plan only encompassed 4 years of mine life with an AISC of $1,070/oz. I recall that you were one of those who believed the original $1,000 ASIC call for that mine which got a lot of investors, even so called sophisticated investors, caught up in a share price rout.
The updated July 2018 feasibilty for Ravenswood shows a 13 year mine life with an AISC of $1,097/oz. I would suggest that Ravenswood is a better asset than Deflector.
Then you have companies like NST buying assets like WestGold's South Kalgoorlie mine. The mine was producing between 30koz and 40kozs per annum when it was sold and only had reserves of 250kozs. If it wasn't for WGX getting paid in over priced NST stock I'd say NST got the short end of the stick on that deal. Of course any asset vended into NST gets its value rehypothicated two or three times over night because NST is such a "great" miner.
The truth is what gold companies value assets at and what the market values assets at are two completely different beasts. NST has just publicly announced that a fair value for a 49% share in its East Kundana joint venture is $150 million, despite it being the backbone of its share market success since 2014. The implied market value of that asset based on NST's FY2018 production profile is over $1 billion, which makes for a very large discrepency between what the boys in the back-room are prepared to pay and what the market is paying.
Even if Ravenswood sold for $150 million cash it still represents cash per share of 19.8 cents. Not too bad a dividend on a stock currently worth $1.14 IMO.
If NST sold their 51% share of the EKJV for the same price being offered to their JVpartners TBR/RND that would represent cash per share of 24.4 cents. Not very good considering it's a srock worth $9.15 and that 51% share contributed to 23.7% of their total gold production for 2018.
People need to be careful between the difference between what markets pay and what companies pay.
You've only got to look at the price of NCM in the last gold bull market. It traded at over $42 on exhurberance and less than $8 dollars on reality. The destruction of value created in this period due to the banksters making bubbles in these gold stocks gave the gold mining industry a bad name that lingers today. Unfortunately I think history is repeating itself and we haven't even seen the bull market market for gold back yet.
RSG offers a pretty transparent and fair valuation IMO based on all the information in the market. Try and figure out how NST are going based on their new grouping of mines into "centres", you've got no chance. Esh
RSG Price at posting:
$1.14 Sentiment: Buy Disclosure: Held
(20min delay)
