09-Feb-2024: I reckon they're close to fair value at current levels (closed today at $1.56 today, and at $1.61 yesterday). People say there is a management premium built in already - as there should be - because it's been earned. However, give this company about three years and they should be a top 7 Australian gold producer in terms of ounces produced p.a. (at over 300 koz per annum) and I have no doubt that unless things really turned pear-shaped for Raleigh, GMD will STILL be one of the top 5 Aussie gold producers in terms of market capitalisation. And my price target at that point would be a minimum of $2.35/share, so that's what I'm going with today, with a three year time frame, so by February 2027.

They could easily overshoot that target, but that's a reasonable target I think.

The following three slides are all taken from the recent joint presentation by Red 5 (RED) and Silver Lake Resources (SLR) [Presentation - Red 5 and Silver Lake Resources to Merge 05-Feb-2024] highlighting the benefits of merging the two companies together. I am using slides 7, 10 & 15 from that Presso because they show where all of the main ASX-listed (and Aussie HQ'd) gold producers sit in relation to each other on various metrics.

I have highlighted Genesis Minerals (GMD) in green. In the first slide that shows Gold Production for FY2024), I have shown where they expect to be within the next 3 years (at the left end of that green line) - at over 300 koz Au p.a. (300,000 ounces of gold per annum) [Source: Corporate-Presentation---Ready-set-grow---Assets-and-people-in-place-for-+300koz-p-a-27Nov2023.PDF]

Since they put that presentation together in November, Genesis have bought more gold: GMD-to-acquire-the-Bruno-Lewis-and-Raeside-gold-projects-14-Dec-2023.PDF plus Kin-Completes-Sale-of-WA-Gold-Deposits-for-Cash-and-Shares-09-Feb-2024.PDF

And here is slide 15 (below) from GMD's November 2023 Corporate Presentation that I talked about above.

So what Raleigh Finlayson did with Saracen Minerals was he acquired a number of quality gold projects, got them all or at least most of them into production, which dragged Saracen up to #4 in terms of Aussie Gold producers, with only Newcrest (now owned by US-based Newmont), Northern Star (NST) and Evolution Mining (EVN) producing more gold per year than Saracen did (in terms of Aussie-based and ASX-listed gold producers), and then Raleigh and NST's Bill Beament orchestrated a merger of the two companies which was achieved via NST acquiring Saracen.

So Saracen is now part of NST, and with Newcrest having been taken out by NYSE-listed Newmont Corp last year, NST is now Australia's largest ASX-listed and Australian-based gold producer.

Not long after the merger, Raleigh left NST on agreeable terms, and set up Genesis Minerals with plenty of financial backing - he is highly respected and has an excellent track record of value creation so he has plenty of people, particularly insto's and HNWI's, with money who are happy to back his latest venture. Then Bill Beament left NST himself and went to run Venturex, now known as Develop Global (which I also hold shares in).

So, back to Genesis. Can Raleigh do it again? Well, so far, so good.

Only two Aussie goldies (NST & EVN) have a greater Mineral Resource than Genesis' 15 Moz (15 million ounces); That's a LOT of gold. Genesis are only currently producing from one mill (Gwalia at Leonora) which is not being fully utilised (running well below capacity), however they have a second, larger mill at Laverton that they are going to fire up soon (the gold mill/plant formerly known as Dacian Gold's Mt Morgans Mill) and they have a lot of gold in various projects that is still in the ground or in ore stockpiles awaiting processing. And they have plans to fill both mills to capacity (see their presentation - link above - between the last two slides).

In terms of Gold Ore Reserves, the GMD Presso (first slide up from here, put together in November) suggests that they are in 5th position behind NST, EVN, PRU (Perseus Mining) and RSG (Resolute Mining), but the more recent RED/SLR slide suggests that GMD are one spot higher than that with only NST, EVN and WAF (West African Resources) ahead of them with greater Reserves, because the latest Reserve numbers from PRU and RSG are lower, probably due to either depletion through mining, or asset sales, or a combination of both.

GMD's table doesn't have WAF in it for some reason. Possibly because their latest numbers weren't available at the time? WAF first produced gold at Sanbrado, in Burkina Faso (West Africa) in March 2020, so they've been producing for a few years now, so it's not as though they've just started producing.

That's something worth pointing out, I tend to avoid West African gold miners, even when they are Australian managed, Australian headquartered, and ASX-listed, because I think the risks associated with mining in West Africa do not justify the potential upside - for me. Those West African miners include WAF, PRU and RSG - so if you take those three out of it, there's just NST and EVN ahead of GMD in terms of Reserves and Resources, and if the RED/SLR merger goes through then RED might move up to challenge GMD for third best gold ore Reserves.

I already hold NST, and I've recently sold out of EVN due to their increased reliance on copper production out of both Ernest Henry and Northparkes which they use to make their gold AISC look reasonable. Without those copper byproduct credits they are NOT low cost gold producers, which is what they market themselves as, and I don't like that, and I think they're due for a big downward re-rate, so I'm out of EVN.

So Genesis (GMD) is the next logical goldie for me to own, and I do.

If you look at the fourth chart on the second last slide above, the one titled, "EV / Resource (A$/oz Au Eq)", you'll see Genesis is 4th from the bottom, with their current share price and market cap valuing their Gold Resource at just A$112/ounce, while the current spot price is over A$3,100/ounce. And Genesis have Zero Hedging; yep, they're completely unhedged and totally exposed to a rising spot price.

So, what does that mean? I would suggest that means that they are actually still quite cheap - there are only three goldies that are even lower than $112/oz, and one of those is Westgold (WGX) who look cheap across most metrics actually - and I am looking to get some exposure to Westgold in my SMSF shortly as it happens - plus there's also two of those three West African goldies (WAF and RSG) who trade with a risk-discount in their share price which always makes them look cheaper than many of their peers - but they are also riskier than most of their peers because of where their mines are located.

In summary, while GMD can look expensive based on their current production, they are about to ramp up production significantly, like more than double it, and they do NOT look expensive based on the gold that they own that is still in the ground.

And it's not low grade stuff either - have a look at this:

Tower Hill is just one of GMD's development projects and it's got higher grades than the world-class Tropicana open pit gold mine (30% owned by Regis, 70% owned and operated by AngloGold Ashanti) - and Tropicana is very profitable. Note - those mines in that chart are single open pit deposits only, so no underground mines or projects. And open pit gold is a lot easier and cheaper to truck out than gold is from underground mines.

So where is Tower Hill? Somewhere remote? A long way from Infrastructure? Yeah, Nah! It's just 2 km north of Gwalia:

Here's another look at a peer comparison based on gold reserves and resources from a September 2023 North American Investor Presentation by GMD:

In that slide the two ASX100 goldies (NST & EVN) have been removed and so have all of the West African and other goldies that do not have gold mines here in Australia - so they (GMD) are saying their "peer group" is small to mid-tier ASX-listed gold producers who have mines here in Australia.

Have a look at who is backing Genesis:

Below is that "Ownership Geographic" blown up so it's easier to read:

Insto ownership accounts for 70% of their shares on issue, split as follows: 52% owned by Australian Institutions, 10% North American insto's, 7% UK insto's, and 1% owned by European insto's (ex-UK). 29% Free Float (Retail) but it looks like the 2.4% owned by the Genesis Board and Management may be included in that 29%, so that leaves 26.6%. Not too bad, but it underlines how much institutional backing this company has because of what Raleigh Finlayson (GMD's founder and MD) managed to achieve with Saracen Minerals previously.

And it looks like he's on his way to doing something similar with Genesis.

Slides sourced from: INTRODUCING GENESIS - A growing Australian gold house - CORPORATE PRESENTATION - NORTH AMERICA - September 2023 and Corporate-Presentation---Ready-set-grow---Assets-and-people-in-place-for-+300koz-p-a-27Nov2023.PDF

See also: GMD-Quarterly-Activities-Report---December-2023.PDF

So, I see GMD as a no-brainer in terms of me choosing to have exposure to them at this point. There's plenty of upside from here.

And for those people with a higher risk tolerance, have a gander at the three projects within that 50km radius of GMD's Gwalia mill at Leonora (within the smallest circle) there that are named in Brown instead of Blue - meaning they are NOT already owned by Genesis - there's KIN's Cardinia project, Saturn Metals (STN's) Apollo Hill project, and Red 5's (RED's) KOTH (King of the Hills) mine and mill.

KOTH is already in play with the proposed SLR/RED merger, so I hope Raleigh doesn't come over the top with an even higher offer for RED than what SLR have proposed with their reverse takeover (RED acquiring SLR). Raleigh just doesn't need KOTH that badly - he wants it, but he doesn't need it, and if he clearly overpays for that asset, it could shake the market's confidence in both him and his company. It might not, but it might. But he doesn't need to do it - it would cost over $1 billion and it's really not a good acquisition at the price in my view.

And since that map was put together in September, GMD have bought part of KIN's Cardinia project, the Bruno-Lewis gold project and the Raeside high-grade gold project - see here: GMD-to-acquire-the-Bruno-Lewis-and-Raeside-gold-projects-14-Dec-2023.PDF

Here's the updated map (below) that GMD included in that mid-December announcement:

Now there's just RED's KOTH and STN's Apollo Hill left inside that 50km radius circle - that isn't already owned by GMD. If I was a betting man, I might take a small bite of STN - whose shares are trading at around 16 to 17 cents/share and whose market cap is only $30 million. RED's market cap is $1.14 Billion. GMD's is $1.76 Billion.

Of course RED has a working gold mine and working gold mill and STN just have a gold project that they are trying to develop, so it's like comparing an apple to a truckload of oranges. But I'd have thought that taking over STN or just buying Apollo Hill from STN would make a lot more sense than trying to trump SLR once again to attempt to takeover RED.

Acquiring Apollo Hill would also mean that Genesis would own every decent gold deposit between Leonora and Laverton, as that last map (above) shows.

There would still be Focus Minerals's (FML's) Laverton mill just north of Laverton, but Focus is now a 63% owned subsidiary of Shanghai-listed Shandong Gold International Mining Corporation, and I doubt they would sell to an Australian company unless it was at a very high price, and I doubt Raleigh would be interested in any of FML's assets anyway. He already has plenty of mill capacity at Laverton.

And his focus is really on Leonora - as the maps clearly show. Anyway, time to catch some Zzzz's. That'll do Donkey. That'll do.

Bill and Raleigh when the NST-Saracen merger was announced in early October 2020.

Raleigh Finlayson in March 2020 in the Saracen office (before the merger).

Same again below.

Shortly after the merger with NST.

Raleigh last year. Now running Genesis.

At the Genesis Minerals Office.

https://www.livewiremarkets.com/wires/station-life-to-building-a-gold-mine-to-buying-half-of-the-super-pit-in-kalgoorlie-raleigh-finlayson-md-of-genesis-minerals-podcast

Raleigh and sister Marnie Finlayson, who is an executive at Rio Tinto and is also on the NST Board.

Marnie and Raleigh Finlayson: Rio’s lithium star and her Genesis CEO brother (afr.com)

(24) Raleigh Finlayson | LinkedIn

Genesis Minerals Limited | Perth WA | Facebook

https://genesisminerals.com.au/