Resolute Mining - How Low will it go ?

[Beagle]

Third biggest established Gold miner in Australia. Projected production in the year ended 30 June 2013 450,000 ounces at a cash cost of $830.
PE of 3.2 !! It was $1.80 in January 2013, now 73.5 cents.

I know the Gold and Silver sector is having a crisis of confidence but this stock is being priced very harshly in my opinion but looking at the chart it looks like its a bit early to take a counter cylical view on this one yet. Significant holders appear to be trimming their positions.

Will it be a speculative counter cyclical buy soon ?

Any views you'd like to share on this stock ? Where do you think it will bottom out ?

[Skol]

Worst case scenario-gold goes to $500. What will happen to RSG? Probably shut down.

[Daytr]

Yep cheap as chips like most goldies. Resolute have been the perennial under achiever in my book although they have improved in recent years by upping production & slowly reducing cash costs. The cash costs are still too high though particularly if you are operating in somewhere like Mali & I would like to see their cash costs average around $100/toz lower than the current $830. In saying all that with a market cap of just $520M they are very cheap I agree.

[Beagle]

Worst case scenario-gold goes to $500. What will happen to RSG? Probably shut down.

One would think if the gold price heads much lower from here they will soon to forced into taking forward cover on the gold price, I understand they're presently unhedged.

$A seems to have started a new downward trend which may be helpful in the medium term.

[percy]

RSG is the code.
I learnt last night from KW that buying stocks in a down trend is the best way to throw your money away.
Stay away until the trend changes.Going by the charts that is unlikely to happen any time soon.

[Daytr]

I doubt they will be quick to hedge as they paid something like $80M or might have been more to close out their hedge book about 2 years ago. So it would look pretty bad to go & reinstate hedging. If the miners start hedging, I'm with Skol & gold will go a lot lower, if they don't & have discipline then the cost of production will kick in & support gold.

[Beagle]

RSG is the code.
I learnt last night from KW that buying stocks in a down trend is the best way to throw your money away.
Stay away until the trend changes.Going by the charts that is unlikely to happen any time soon.

I hear you mate and won't buy until the chart says its clearly bottomed-out. I'd rather let others have the first 10-15% of a new upward trend in due course than catch what appears to be a falling knife at the moment. I've put it on my watch list though because history tell's me there's lot of money to be made if you get the timing right by buying out of favour companies with dirt cheap PE ratio's. I think waiting until the price has clearly intersected the 100 day moving average with a new uptrend is a nice simple tool that's useful with stocks like this. 100 day moving average is currently at $1.20 so I'm happy bide my time.
Thanks for the warning. Fear and Greed, the two greatest motivators, Greed was starting to get the better of me:ohmy:

[percy]

I hear you mate and won't buy until the chart says its clearly bottomed-out. I'd rather let others have the first 10-15% of a new upward trend in due course than catch what appears to be a falling knife at the moment. I've put it on my watch list though because history tell's me there's lot of money to be made if you get the timing right by buying out of favour companies with dirt cheap PE ratio's. I think waiting until the price has clearly intersected the 100 day moving average with a new uptrend is a nice simple tool that's useful with stocks like this. 100 day moving average is currently at $1.20 so I'm happy bide my time.
Thanks for the warning. Fear and Greed, the two greatest motivators, Greed was starting to get the better of me:ohmy:

You are onto it.
I should have known.!!!

[Beagle]

You are onto it.
I should have known.!!!

Always good to bounce idea's around though and I am grateful for everyone's thoughts.
Interesting to note on CNBC that George Soros and some of the other whales are bailing out of Gold and Silver. Could be quite a while till we see a new up-trend I reckon.

[Joshuatree]

BDR , NST, MML, PGI i believe are the cheapest producers by far, worth putting them on ones watch list and doing ones RESEARCH for when a turnaround in Gold price/sentiment happens

[Beagle]

BDR , NST, MML, PGI i believe are the cheapest producers by far, worth putting them on ones watch list for when a turnaround in Gold price/sentiment happens

Thanks for those tips, much appreciated:)

[Daytr]

Soros has been bailing out of gold but has gone long call options on junior miners... ;-)

[Daytr]

I updated my research on RSG & bought in. I dealt with these guys over a 15 year period. Very straight shooters, however were always constrained by an out of the money hedge book & also some difficult mines. Operationally they seem to be more on the boil & I like the fact they are buying distressed assets at very good prices. $340M MC with around 350k of production which is likely to increase in the future with the acquisitions they have made. Also have plenty of resources/reserves. RSG should be one of the better performers in my book on a rising gold price.

[Bobcat.]

Yes Daytr, RSG has some appeal. I looked at this stock earlier (November) and got disinterested because of their AISC (~$1,200/oz AUD), high debt, and lack of hedging...but it's worth another look as the sp drfits to around 50c...since
a) AISC forecasted to improve in 2014
b) lack of hedging is less of a concern now given POG support is confirmed above $1200
c) $28m CAPEX reductions on the Syama expansion project is freeing up working capital

I'm watching the RSI (currently ~45) and anticipating an imminent bounce off somewhere between 51 and 53c. Trading to it.

BC

[Daytr]

BC, they have $95M of debt which isn't huge considering the amount of production they have. I also think their ASIC is forecast to be between $A1000 & A$1100 for 2014. So with a A$ POG over A$1400 should give them EBITDA of around A$120M!

[Bobcat.]

BC, they have $95M of debt which isn't huge considering the amount of production they have. I also think their ASIC is forecast to be between $A1000 & A$1100 for 2014. So with a A$ POG over A$1400 should give them EBITDA of around A$120M!

Yes, I see now that their debt is not so bad. AISC for 2014 is forecasted to be $1175/oz (AUD) - see page 3 of this November CEO presentation:

http://www.asx.com.au/asxpdf/20131126/pdf/42l4lc7w5w4djr.pdf

Anyway, with the POG lifting this morning to 1253USD (as I write this), we will almost certainly see a lift in RSG's price Monday, alongside most other PM digger stocks. Your investment yesterday does look to be a good one.

BC

[Daytr]

I have been looking around for what I consider one of the most unloved gold producers & I think RSG fits the bill.
One of the largest producers on the ASX & diversified production.
They have never been the most dynamic of companies however they seem to be getting better & keeping costs down & are exposed to both the USD & AUD gold price. They also have some pretty good reserves & new ore being drilled.
With a market cap of just over A$250M I think they are a bargain here.
Gold price dependent obviously.
If we have indeed put in a triple bottom in gold we should see the SP a hell of a lot higher than the current 38/9c.
As such I bought in today.

[Daytr]

Well it just shows what a difference 18 months makes since the last post. They went from 38c up to around 76c & now are trading 25c! Obviously the Ebola scare is caused havoc on the SP as they have operations in West Africa. With the SP having basically halved mostly on the back of Ebola I think the risk is more than priced in. I also think that the West is now awake to the threat of the spread of Ebola & is reacting with funding & assistance to contain the spread of the disease.
I must say I have never been that impressed with the management, they are too reactionary imo but I weighed this in my decision to buy in today vs the current valuation. The tipping point was their stellar recent drill results. Quite incredible on their newly acquired project in Ghana. A couple of highlights below.
Assays from surface and underground diamond drilling included 30.9 metres at 13.32g/t gold from 276.7 metres, 40 metres at 20.62g/t gold from 431 metres, 22 metres at 11.81g/t gold from 109 metres, and 24 metres at 6.52g/t gold from 118 metres.

At market cap now of around $170M pretty decent production & a very large reserve / resource base at the current SP I think they are possible takeover target as well.

[Daytr]

Flicked in out of RSG for a good profit. Bought back in today lower than my previous buy!
Ridiculous price at current POG and AUD.
Sentiment weighing obviously however I wouldn't be surprised to see another surge like last week.
Hard to believe RSG was trading 70c only a few months ago and now its 22c and A$Gold is higher !

[Daytr]

RSG building nicely today up 11%!
Buying bids building as well.
$150M market cap on a miner producing 400-440k ounces.
That's what I call upside exposure to the gold price.
3-4 months ago they were trading triple what they are now.
Mostly because they have production in West Africa & ebola, which has had no impact on them at all.
They also have a higher AUD Gold price for their Aussie production.
Happy days!

[Daytr]

Very nice close up 13% for the day!
Not bad considering a few goldies were off particularly at the start of the day.

[Daytr]

Quarterly due out any day. I'm expecting a bumper with reduced costs mostly due to lower fuel prices.
Lower Aussie should see much better returns for their Aussie production as well.

[Daytr]

Good quarterly, perhaps a turning point.

[Daytr]

I've bought back into these puppies. I looked back at the start of the thread & in 2013 at 73c I thought it was cheap.
A lot has happened to the POG in that time & its now trading 24c which is pretty near its lows.
315k of production, some great & reasonably high grade resources & future projects.
A$150M market cap & they are starting to prove they can operate in a low POG environment & still repay debt.
Sitting on over A$50M in cash & equivalents.
A$118M of debt & reducing.
SP performance will be dictated by the POG obviously. The market is massively short & starting to stagnate.
Do the hedgies have another crack at forcing it lower or short cover a very large position?

[Daytr]

Great presentation at Diggers & Dealers from the new CEO of RSG.
Relatively low costs and large production and market cap of A$153M!
This is looking like very good value imo.

http://www.aspectfinancial.com.au/docserver/01647422.pdf?fileid=01647422&datedir=20150804&edt=MjAxNS0wOC0wNCswOTo1Mjo0MisxMjArNjY1NzA1MTcrZX RyYWRleG1sK3JlZGlyZWN0Ky9pbWFnZXNpZ25hbC9lcnJvcnBh Z2VzL0V0cmFkZVBERlRpbWVvdXQuaHRtbCsvaW1hZ2VzaWduYW wvZXJyb3JwYWdlcy9wZGZkZWxheWVkLmpzcA==&popup=true

[Joshuatree]

Wow from $153 mill mkt cap to re a $ 1billion now in less than a year ! s/p $1.55 atm up another 11% today

[JBmurc]

Looking cheap once again so in at $1.04 great growth profile ....T/A wise strong support at these levels>>

[JBmurc]

https://seekingalpha.com/article/4089576-resolute-mining-300k-oz-year-gold-producer-trading-near-52-week-lows

Summary

Resolute Mining is underperforming its peer group since the GDXJ rebalancing act ended on June 16.

The company remains fundamentally sound, featuring a strong balance sheet, aggressive growth profile, and high-quality long-life assets.

Shares of RMGGF are a buy at today's prices especially given the fact that the stock is trading at a 46% discount to the last fund raising.