10-Feb-2024: Thought I'd have a look tonight on whether gold HAS been a decent investment over the past 5 years, 3 years and 1 year.
Obviously holding physical gold has provided positive returns:
But what I prefer is to have gold exposure via companies that own a lot of gold that is still underground - not yet mined - and I have a strong preference for those gold companies who are already in production rather than those who are just explorers or project developers, because producers have less downside risk generally speaking. Then you can reduce the risk even more by choosing multi-mine owners who are producing gold from 3 or more mines, and even better if those mines are in safe and reliable places, like Australia, New Zealand, North America or Canada. I prefer them to have the majority of (preferably all of) their gold mines right here in Australia.
With that in mind, here's how the main 14 ASX-listed and Australian-headquartered gold companies that I have been following over the past 5 years have fared, from a share price performance perspective:
There are more than 14, but I thought that graph was already too crowded, so I left a few out, more on them in a minute. That graph above is of the 13 main gold producers plus the largest gold project developer in Australia (in terms of market cap) - De Grey Mining DEG), whose market value is currently $2.22 Billion. To give you some perspective on how large that m/cap is, only three of Australia's pure-play gold producers (so not including BHP or Sandfire Resources [SFR] who produce copper with gold as a byproduct; by "pure-play" I mean companies where gold is the main commodity they produce) ...[only 3 Aussie pure-play gold producers] have larger market caps than De Grey (DEG), and those three are Northern Star Resources (NST, currently $15.4 billion), Evolution Mining (EVN, $6.3 billion) and Perseus Mining (PRU, $2.4 billion).
I have not included Newcrest Mining (NCM), who were Australia's largest gold producer up until late last year, because they are no longer listed here since being acquired by New York Stock Exchange-listed Newmont Corporation (a.k.a. Newmont GoldCorp). NEM is the ASX ticker code for Newmont CDIs here but the graph data for NEM only goes back to the NCM acquisition late last year. Believe me, NCM didn't shoot the lights out - they had a fairly ordinary 5 years.
Other than De Grey (DEG), all of those companies in that graph above do produce gold from one or more gold mines, or have part-ownership of at least one gold producing mine in the case of Gold Road Resources (GOR).
De Grey Mining (DEG, +1,220%) and Capricorn Metals (CMM, +1,176%) are WAY above the others in terms of the % increase in their SP over the past 5 years, with Genesis Minerals (GMD) coming in at #3 with a +407% return. Red 5 (RED, +153%) also did well after being smashed in prior years.
It pays to note that Raleigh Finlayson moved from NST to GMD in September/October 2021 when he organised a financial bailout of the struggling company and took over as the Genesis Minerals (GMD) Managing Director (MD) soon afterwards - and you can see above where the GMD SP spiked up and away from the pack at that time, so the GMD outperformance has all come since Raleigh got involved with the company in the latter half of 2021 and then took over as GMD's MD in early 2022. I did a "Valuation" write up on Genesis Minerals here yesterday - click here to read that.
Here's the same 5 year period with the S&P/ASX200 Accumulation (or Total Return) Index (XJO) along with a small handful of gold miners that didn't fit on the chart above:
Firstly, I've just realised that this chart is not over 5 years, it's over 4 years, 6 months, and two weeks, because OBM were in a trading suspension from 20-July-2018 to 28-June-2019, so that's the common starting point for those companies and the index on that graph - 28th June 2019, which is why the ASX200 TR Index (XJO) only shows a +14.95% return when it was actually +26% over 5 years. These returns are NOT per annum returns - they're just simple % returns over each period. That 26% return for the XJO over the full five years is shown on the graph below, with KCN's performance.
In the graph above, West African Resources (WAF) has performed well, mostly in the first 3 years, then falling quite a lot in the most recent year, but still providing a +173% return over 5 years. Calidus (CAI) and Ora Banda (OBM) have taken their shareholders on a rollercoaster ride but OBM has finished higher (+61.67%) due to outperformance in the past 6 months and Calidus has finished down (-51.52%) due to a declining share price over the past 2 years. Pantoro (PNR) is a company I had a small stake in a few years ago, but lately I've just traded small PNR holdings for fun occasionally on Strawman.com and have had no exposure to them in real life. They've had the worst return out of those 5 goldies (-80.95%). Resolute Mining (RSG) was second worst, at -66.33%.
I had forgotten all about KCN - Kingsgate Consolidated until after I'd completed all of these graphs, but here's how KCN's SP has performed over the past 5 years (below). They're a special case because their only producing mine, Chatree, in Thailand, was shut down by the Thai Government a few years ago, and KCN has only been allowed back into Thailand and allowed to restart the mine in recent months. The spike up in the second half of 2021 was on news that the Thai Government were prepared to discuss terms regarding KCN coming back in to run Chatree again, but it took almost 2 more years for KCN to get Chatree back into production, and some punters lost interest in 2023.
KCN were trading at around 15 to 17 cents/share 5 years ago, and they're trading at around $1.19 to $1.20 now, so that's why they're showing a +624% return, however 5 years ago they had no mine and no income or cashflow, and they looked like they were going to the wall, so they're not a typical case. I mean they technically owned a mine, but they weren't allowed anywhere near it five years ago.
That black line in the graph above is the S&P/ASX200 TR (total return) Index (XJO) return over the past 5 years.
I'll pop that first 5-year graph back in here again so you can compare the XJO's +26% return (the All Ords Index wasn't much different) to the 14 goldies that I have been following over the past few years:
And here are those same 14 companies over the past 3 years:
And here they are over just 1 year - the most recent twelve months:
Now I somehow managed to make Silver Lake Resources (SLR) and Gold Road Resources (GOR) the same colour (dark green), however that didn't matter much on the one year chart (directly above) because their returns were so close together - GOR was -2.71% and SLR is behind that with -3.60%. On the 5 year chart they were also close, at +78% and +74% respectively, however on the 3 year chart GOR had a positive return of +20.59% and SLR had a negative return of -29.84% - I've marked the SLR dark green line on the 3 year graph, so GOR is the other dark green line on that (3 year) chart above (second one up).
Here are my takeaways from these graphs.
That chart above also contains Emerald Resources (EMR) which has a lot of ex-RRL (ex-Regis Resources) people there (as does CMM, Capricorn Metals), and I have owned some EMR at various times both here and in one of my real money portfolios. They've gone up by almost +300% over 3 years and by +639% over 5 years, so they've done very well, however the reason why I forgot about them up until a few minutes ago, and why many gold companies do not include them in their peer comparison tables and charts in their presentations is that EMR currently only have one gold producing mine - Okvau - and it is in Cambodia, so in that respect some consider Emerald Resources to be in a class of their own because while Cambodia is certainly considered a risky place to mine, there aren't any other Australian gold miners active in Cambodia so the risks are hard to quantify as there is very little experience to rely on in terms of studying the past to try to predict the future. Emerald has done well, no doubt, but I still consider them very risky because they are mining gold in Cambodia. They've been taking over a company called Bulleye Mining who have two gold projects in WA - their North Laverton project which contains the Bungarra Mine, and their Southern Cross gold project, however that takeover has been dragging on for over two years now, I sh!t you not; there's some stubborn shareholders who refuse to sell, despite the Bulleye Board and management recommending the deal to their shareholders, so Emerald can't get to 90% and move to compulsory acquisition of the remainder. Emerald’s equity position in Bullseye was 78.05% at last notification (on January 25th), but it's been very slow progress with gaining more in recent months. Meanwhile Emerald's MD, Morgan Hart has become the Chairman of the Bullseye Board, and Mark Clements, who is a Non-Executive Director and Company Secretary at Emerald, also has those two roles at Bullseye, so it seems to just be a matter of time. It seems that Emerald have effective control of Bullseye now, they just have a pesky shareholder or two that won't sell at the price they're offering. It's fair to assume that Emerald will be progressing one or both of those two WA gold projects that come with Bullseye Mining, but for now they're considered a Cambodian gold miner.
Anyway, that last graph was about bigger not always being better in terms of capital appreciation or total shareholder returns. Those $2 Billion plus companies aren't going broke, but they may not provide the best returns either. Here's a quick list of those 8 companies with some market caps (from the ASX website tonight) and their 3 year share price returns (as shown above), and a management rating from me - with DK meaning I Don't Know (I'm unfamiliar with their current management), and the other ratings being Rubbish, Poor, OK, Good, Very Good or Excellent.
In order of best 3 year share price return down to worst 3 year share price return:
What we can see there is that the largest companies are down the bottom with the lowest 3-year share price returns, and the mid-sized companies with m/caps between $1.5 and $2 Billion have performed best, and they also have Very Good to Excellent Management teams and high quality gold projects. All 8 of those companies have one or more high quality gold projects, but some of them (like EVN) also have some poor quality mines that detract from their overall performance, usually because of costs that are much too high.
Of those eight I currently hold NST and GMD in my real money portfolios as well as here, and I also hold a small CMM position here, and have held them previously IRL. I have previously held EMR and EVN both here and in my real money portfolios, but not currently.
In terms of emerging gold producers, Bellevue Gold (BGL) looks promising to me, and I recently added some BGL to my SMSF, because the commissioning of their mill has gone smoothly enough and their mill ramp up to nameplate capacity is also on track. They've been around for a few years, but they only poured their first gold in October (2023). Bellevue Gold has a market cap today of $1.51 Billion and I think they've got "Good" management and an excellent project at Bellevue - it will probably be the highest grade gold mine in Australia, but if they don't find more gold there they are probably expensive at current levels, even though their share price has come down a fair way in recent months. I don't rate their management any higher than "Good" because (a) they haven't yet established a track record of good capital allocation and other decisions, and (b) around one year ago they said they had sufficient cash to get through to gold production and wouldn't need to raise any more capital, the share price shot up, and they promptly called for a trading halt and announced a capital raising. That caused me to sell out at the time and I thought their management were "Rubbish", but I've come around over the last 3 months and I'm back onboard with them now. While I like to trust management to tell the truth and do what they say they're going to do, I also would much prefer them to raise capital when their share price is nice and high, not when it has been smashed down low, so I guess I've squared away my concerns somewhat and given them a second chance.
FWIW, as they have been a project developer for most of the past three years and an explorer before that, and they've only been a gold producer for the past 4 months... BGL's share price returns over 1, 3 and 5 years have been +16.5%, +33.2% and +110.5% respectively.
Obviously past performance can not be relied upon as an accurate indicator of future performance, and nothing I say here should be thought of as investment advice because it's not, it's just my thoughts and experiences. Anyway, hope some of this is helpful to somebody. For reference, I'm 58 in a couple of weeks and my risk tolerance used to be a lot higher than it is now. I am a lot more risk-averse than I used to be. Mostly because I don't enjoy losing money. Anyway, time for some ZZZzzzzz's again...
'Nite all!
RED: Red 5 and Silver Lake Resources to Merge
SLR: Red 5 and Silver Lake Resources to Merge
RED: Red 5 Investor Webcast Presentation - Silver Lake Merger
SLR: Presentation - Red 5 and Silver Lake Resources to Merge
Interesting that this is being done via Red 5 acquiring Silver Lake, particularly interesting because based on their last traded prices prior to this announcement, which are Friday's closing prices because this announcement was released before the market opened today (Monday), Silver Lake was a slightly larger company than Red 5, or at least SLR's m/cap was slightly greater than RED's:
However, RED's SP went up one cent today (+3.03%) to $0.34, so their m/cap now (after this announcement) is $1.18 billion
And SLR's SP went down -14.5 cps (-11.46%) to $1.12, so their m/cap is now $1.05 billion, so they were larger than RED on Friday, but they're smaller than RED now.
It's as if they knew the market would react this way, like they're calling it a "Merger of Equals" but the market is saying that RED's getting the best end of the deal and SLR is not, hence the SLR sell-down today while RED rose +3% against a very negative sector move.
RED was one of a very small number of goldies who were NOT in the red today.
Here's some interesting slides from SLR's presentation:
The people in the pink blocks above are from RED and those in Blue are from SLR. Even though RED is technically acquiring SLR, SLR's current MD/CEO, Luke Tonkin, and SLR's current CFO, Struan Richards, get to keep their jobs in the merged company. RED's current MD, Mark Williams, does not, and both Mark Williams and RED's current CFO, David Coyne, will leave the company (cease employment) upon the implementation of this scheme. RED's Chairman, Russell Clark is keeping that Chairman role within the merged company. It FEELS like SLR is taking over RED, even though that's not technically the case. Red is actually taking over SLR at a -10.8% discount to SLR's last traded price, according to the Money of Mine (MoM) podcast guys - more on that below the next slide. [I do note that Trav has rounded SLR's last traded price up half a cent to $1.27, so it might be a smidge less than a -10.8% discount.]
Red5 Dangles the Carrot for Genesis in $2.2Bn Merger with Silver Lake | Daily Mining Show - YouTube
0:00:00 Preview
0:00:00 Introduction
0:01:08 Silver Lake's alternative marketing strategies
0:07:02 Red 5 MERGING with Silver Lake Resources
0:43:00 Potential Lynas and MP Materials merger
0:44:29 Centaurus get Environmental approvals
0:45:09 Silvercorp/Orecorp update
0:45:36 New Copper producer on the ASX
The best thing about SLR is their large cash balance. The worst thing about RED is their debt and lack of cash, and to a lesser extent their out-of-the-money hedgebook. Putting the two companies together certainly makes sense for RED, as they need SLR's cash, and SLR will have better prospects to spend their cash on than they appear to have currently - in terms of exploration spending in highly prospective areas. And it will frustrate the hell out of Raleigh Finlayson at Genesis (GMD) who wants Leonora all to himself (or within his company, Genesis Minerals). Luke Tonkin might not have stopped the Gwalia sale from going through (from SBM to GMD), but he might just end up with RED, unless this deal gets trumped by Raleigh/GMD with a better deal.
Matty had some fun with the old film clip to Genesis' "That's All" superimposing Ral's head over the top of Phil Collins - You know the song - "Always the same, it's just a Shame, That's all!" - click here for the 1983 original and click here for Matty's version today.
Trav has a real good theory on why the deal is structured as SLR being the target and RED being the acquirer, instead of being the other way around, and that is because for Raleigh and GMD to try to block this, he would have to buy a blocking stake in SLR, the target company, which would be very unlikely to appeal to Raleigh, as SLR don't own any assets that he wants, however if they had structured it the OTHER way around, with SLR buying RED, Raleigh could have easily just bought 10% or more of RED to block it, which he probably wouldn't have had much of an issue with because RED owns the KOTH mill which Raleigh has previously wanted within GMD. So - in terms of buying a blocking stake - you have to look at what you then own if the deal falls over, and if this deal announced today did fall over at some point before the scheme implementation date, Raleigh's not going to want to end up with a stake in SLR, ...but he likely wouldn't mind a stake in RED, especially if it helps prevent SLR from gaining control of RED.
The way the deal is structured, if GMD buys up RED shares now, it doesn't have any affect on this deal except for the ability of Raleigh to vote his RED shares against the scheme at the shareholders' meeting, and he wouldn't have enough of a stake to block the scheme going ahead.
So that all makes a LOT of sense. I hold GMD shares, but no RED or SLR shares, so I do have some indirect interest in how this plays out. I'm backing Raleigh to build up Genesis (GMD) into a major player in the Aussie Gold Sector, however I had already figured that would probably be without RED's KOTH (King Of The Hills) gold mill back when SLR bought 11.08% of RED as a "strategic investment" in September. I'm guessing that Ral steps aside and lets this one through to the keeper, but I don't know the man well enough to be confident about that.
However... Trav also points out that it is usual for the target company to have a "fudiciary out" clause built in, in case somebody lobs in a superior offer, but not customary for the acquirer to have one, but in this case, RED (the acquirer of SLR under this scheme) DO have a "fudiciary out" clause, as he discusses in the poddy. And one of the reasons for that is that Gascoyne Resources had a takeover scheme under consideration back in 2021 for Gascoyne to acquire Firefly Resources (not to be confused with FireFly Metals [FFM], the new name for the company formerly known as AuTeco) and then Westgold Resources (WGX) made an offer to acquire Gascoyne and then improved that to an even better offer, but Westgold's offers to acquire Gascoyne were conditional on Gascoyne abandoning it's takeover of Firefly Resources, and Gascoyne didn't have a "out" clause that allowed them to do that, and while Firefly Resources (the target company) DID have an "out" clause, they wanted the deal with Gascoyne to go through obviously. Westgold submitted to the WA Supreme Court - when trying to get orders to delay the Gascoyne-Firefly deal shareholder meetings - that Gascoyne directors were breaching their fiduciary duties by not recommending its 3-for-11 scrip bid despite Gascoyne acknowledging it was superior to its deal with Firefly. [Court nod for Gascoyne-Firefly tie-up | The West Australian 01-Nov-2021] The problem was the Gascoyne directors had not given themselves the ability to do that in the scheme implementation deed that they had signed with Firefly Resources. And that's because it had NOT been customary for the Acquirer in a deal to have an "out" clause built in for the possible eventuality that a better offer emerged for them, it was only customary for the Target company to insist on that clause be in there for them.
In this case the Acquirer (RED) DOES have such a clause (13.8), and Trav points out that both RED's COO and their CFO are ex-Gascoyne:
Fool me once...
So the door is open for Raleigh Finlayson's Genesis Minerals (GMD) to lob in a bid for RED directly - to acquire the whole company - as long as it is clearly superior (for RED shareholders) to the current proposed scheme (the merger between SLR and RED where RED are acquiring SLR) and apparently the RED Board fought hard to have that "out" clause included in the scheme (as explained on the conference call today). The fact that RED's current CEO/MD and their CFO are set to leave the company (their employment will cease) if this scheme is implemented, MAY suggest that they are hoping that GMD do come over the top in this way, or else that they just don't want to work for Luke Tonkin. Speculation of course.
My thoughts are that Genesis don't REALLY need KOTH now, so they don't really need RED, and there are other, much cheaper companies/projects they could buy, some of which I've discussed recently here in the "gold thread". RED look expensive for what they are:
At 15 to 20 cents per share last year RED looked OK, but no so much up around 30 to 40 cps. Below is a chart of the respective performances (in percentage terms) of RED, SLR and GMD against the ASX200 index over the past year. If SLR hadn't dropped -11.46% today they would have been a bee's whisker above the smallish return of the XJO (S&P200 Accumulation Index) but SLR have instead underperformed the XJO (after today's drop). However, RED has outperformed even GMD - and RED really aren't THAT good. There's a takeover premium already built into the RED share price in my opinion.
If I was Ral, I'd let this one through, but I'm not, so let's see what he does...
27-Jan-2024: There's still three trading days left in January for our gold miners, exploration companies and project developers to lodge their December Quarter Activities Reports and in the case of Exploration companies (companies who are not gold Producers), their Appendix 5B Cash Flow Reports as well, however most have reported already, or provided updates, and there have been some decent share price moves with some of the goldies that have reported already, and also some more muted responses from the market:
SPR, Spartan Resources, Thursday 25th Jan, +6.25%, +6.25%, SPR-Quarterly-Activities-and-Appendix-5B-Cash-Flow-Report.PDF
NST, Northern Star Resources, Wednesday 24th Jan, +6.04%, +6.79%, NST-December-2023-Quarterly-Activities-Report.PDF
PRU, Perseus Mining, Wednesday 24th Jan, +4.51%, +5.07%, PRU-December-Quarter-Report.PDF plus PRU-December-Quarter-Webinar-Presentation.PDF See also ORR-Media-report-regarding-Perseus-Mining-Limited.PDF [18th Jan] and PRU-Perseus-announces-intention-to-make-takeover-bid-for-ORR-OreCorp-Limited.PDF [22nd Jan]. PRU's SP has risen +9.06% since the day before that M&A announcement by OreCorp (ORR) on the 18th. ORR's SP is up +8.57% over the same period (since Jan 17th) however they are not recommending the PRU offer, preferring a similar offer from Silvercorp Metals Inc (TSX/NYSE: SVM), which is discussed in OreCorp's Report, linked to below. PRU already owns 19.9% of ORR (OreCorp).
GMD, Genesis Minerals, Wednesday 24th Jan (12:31pm), +3.59%, +2.29%, GMD-Quarterly-Activities-Report-and-Appendix-5B-Cashflow-Report-December-2023.PDF
RED, Red 5, Update only on Monday 8th Jan, +3.57%, +16.07% (from 28 cps to 32.5 cps), RED-December-Qtr-Positions-Red-5-to-Achieve-Top-End-of-Guidance.PDF
RRL, Regis Resources, Thursday 25th Jan, +2.86%, +2.86%, RRL-Quarterly-Activities-Report.PDF
CMM, Capricorn Metals, Update only on Tuesday 9th Jan, +1.37%, +3.20%, KGP-Continues-to-Deliver-Outstanding-Cash-Generation.PDF - They also released an exploration update on Thursday (25th): CMM-Quarterly-Exploration-Update.PDF and their SP rose by +2.27% on the day. CMM's Full Quarterly Activities Report is still to come - by middle of this coming week.
EMR, Emerald Resources, Update only on Monday 8th Jan, +1.34%, +9.03%, EMR-Another-Impressive-Quarter---Okvau-Quarterly-Gold-Production.PDF. EMR also released the following on the 24th: Significant-Exploration-Results-Continue-at-EMR-Prospects(24Jan).PDF (SP +0.94%) and this on the 25th: EMR-Recommended-and-Unconditional-Takeover-Offer-for-Bullseye-Mining-Extended (again).PDF (+1.56%). EMR now own 78.05% of Bullseye Mining - a takeover which has been going on since 7th December 2021, so for over TWO YEARS now!
SLR, Silver Lake Resources, Update only on Monday 8th Jan, +2.21%, +6.19%, SLR-December-Quarter-Sales-Results.PDF
DEG, De Grey Mining, Tuesday 23rd Jan, +1.28%, +2.13%, DEG-Quarterly-Activities-Report---December-2023.PDF and DEG-Quarterly-Cash-Flows-Report---December-2023.PDF
TIE, Tietto Minerals, Update only on Monday 8th Jan, +0.83%, +1.67%, Tietto-Update-Record-Monthly-Production-at-Abujar-Gold-Project.PDF. TIE are also under a 58 cps (A$0.58/share) takeover offer by Zhaojin Capital, a wholly-owned subsidiary of the Chinese company Zhaojin Mining Industry Company, which currently holds around 7.02% of TIE, or did in October when they first launched this takeover. TIE have mostly been trading at higher levels since the takeover offer was disclosed; During January their trading range has been mostly between 60 and 62 cps. Despite this, Zhaojin have not raised their offer price (above 58 cps) but have simply extended the offer period.
ALK, Alkane Resources, Monday 15th Jan, +0.00%, -13.39%, ALK-Quarterly-Activities-Report.PDF. Two days after that Dec Qtr Activities Report was released mid-month, they released this: Director-Share-Sale,-Appendix-3Y-and-ASIC-Form-604(17Jan).PDF. While Alkane's Chairman, Ian Gandel has only sold ~7.32% (~8.7m shares) of the 118.8 million shares that he held - and still holds ~110.1m shares (~18.3% of ALK's shares on issue) - and has stated that he "remains a significant long-term shareholder of the Company and has no present intention to sell any further shares in the short or medium term", the market didn't like the sell down at all, with the ALK share price falling -10.57% from the previous days close (61.5 cps on the 16th) to now (55 cps).
OBM, Ora Banda Mining, Thursday 18th Jan, +0.00%, +0.00%, OBM-December-2023-Quarterly-Activities-and-Cashflow-Reports.PDF
SBM, St Barbara, Thursday 25th Jan, +0.00%, +0.00%, SBM-Quarterly-Report-Q2-FY24.PDF plus they also released the following update two days earlier (on the 23rd): Simberi Resource Definition Drilling Update
SMI, Santana Minerals, Thursday 25th Jan, -0.38%, -0.38%, SMI-Quarterly-Activities-and-Cashflow-Reports.PDF. SMI had plenty to announce during January, including a response to an ASX speeding ticket, Board changes, drilling results and a project update - see here: https://www.santanaminerals.com/asx-announcements. Their SP is now $1.295, which is +28.22% higher than the $1.01 share price they finished December with, so I don't think there were any nasty surprises in their quarterly report. They've had a good month!
WAF, West African Resources, Thursday 25th Jan, -0.53%, -0.53%, WAF-Quarterly-Activities-Report.PDF and WAF-Quarterly-Cashflow-Report.PDF. WAF also released an update earlier in the month - on Wednesday 10th: WAF-2023-Guidance-achieved-with-226,823oz-gold-produced.PDF and their SP rose +1.6% on the day, but is now back to 94 cps which is the same as where they closed on the 9th - being the day before that update.
KCN, Kingsgate Consolidated, Tuesday 23rd Jan, -0.83%, +6.22%, KCN-Quarterly-Activities-and-Appendix-5B-Cash-Flow-Report.PDF. KCN also released this back on the 3rd: KCN-TAFTA-Update(3Jan).PDF (SP down -3.75% on the day), this on the 5th: KCN-High-Grade-Gold-Intercepts-at-Chatree(5Jan).PDF (SP + 0.40%), and this on the 9th: KCN-High-Grade-Gold-Intercepts-at-Chatree---Updated-Table-1(9Jan).PDF (SP +1.58%). However, since the day before the Jan 3rd TAFTA update announcement, KCN's SP has fallen -4.12% from $1.335 then to $1.28 now.
ORR, OreCorp (formerly Silver Stone Resources), Thursday 25th Jan, -0.87%, -0.87%, ORR-Quarterly-Activities-and-Appendix-5B-Cash-Flow-Report.PDF, OreCorp are not on my watchlist and are developing the Nyanzaga Gold Project in northwest Tanzania (in Africa); they are currently under takeover offer from both Silvercorp Metals Inc (TSX/NYSE: SVM) and Perseus Mining (PRU, discussed above) - see here: ORR-Response-to-announcement-regarding-takeover-bid-by-Perseus.PDF. The ORR Board is recommending the Silvercorp offer over the Perseus Offer, as discussed in their ORR-Quarterly-Activities-and-Appendix-5B-Cash-Flow-Report.PDF, despite PRU already owning 19.9% of ORR. ORR's SP is up +8.57% since PRU's interest in ORR was disclosed to the market on the 18th Jan, and ORR is up +31.03% since the day before the Silvercorp deal was announced back on August 7th (43.5 cps to 57 cps now).
PNR, Pantoro, Monday 22nd Jan, -2.27%, -6.82%, PNR-Quarterly-Activities-and-Appendix-5B-Cash-Flow-Report.PDF, and they also released an update back on the Mon 8th: PNR-December-2023-Quarter-Production-Update(8Jan).PDF and their SP fell -7.55% on that day, and is now down -22.64% at 4.1 cps compared to their previous day's close (5.3 cps on Fri 5th). They also released the following on the 17th: PNR-Underground-Development-to-Commence-at-Scotia(17Jan, before market opened).PDF plus PNR-Addendum---Underground-Development-to-Commence-at-Scotia(17Jan, 4.54pm).PDF (SP down -6.25% on the 17th).
WGX, Westgold Resources, Update only on Thursday 4th Jan, -2.4%, -0.48%, WGX-Q2-FY24-Production-Update(4Jan).PDF. Westgold also released the following updates during the month: Westgold-Commences-Trading-on-US-OTCQX-Market(9Jan).PDF (+1.82% on the day), WGX-Exploration-Update(16Jan).PDF (+3.34% on the day), WGX-Exploration-Update---Revised-(16Jan-After-Market-Close).PDF (+0% the following day), and WGX-Bluebird-Exploration-Update(25Jan).PDF (+0.98% on the day). Their full Quarterly Activities Report is still on its way.
KIN, Kin Mining, Monday 22nd Jan, -3.12%, -4.69%, KIN-December-2023-Quarterly-Activities-Report.PDF and KIN-December-2023-Quarterly-Cashflow-Report.PDF. KIN also released this back on Jan 8th: KIN-High-Grade-VMS-Mineralisation-Discovered-at-Cardinia-East(8Jan).PDF (& their SP rose +7.94% on the day - but is now -3.17% below their previous day's share price - which was 6.3 cps - and they're now 6.1 cps).
BCN, Beacon Minerals, Update only on Thursday 11th Jan, -3.85%, -7.69%, BCN-Jaurdi-Gold-Project-December-Quarter-Production-Update(11Jan).PDF
GOR, Gold Road Resources, Update only on Wednesday 3rd Jan, -8.95%, -12.53%, GOR-December-2023-Quarter-Production-Update.PDF
KAU, Kaiser Reef, Tuesday 23rd Jan, -11.11%, -11.11%, KAU-Quarterly-Activities-and-Appendix-5B-Cash-Flow-Report.PDF. KAU also released this on the 22nd: KAU-Nuggetty-Historic-Gold-Mine-Drilling-Commenced(22Jan).PDF (their share price closed unchanged on the 22nd).
CAI, Calidus Resources, Thursday 25th Jan (1:29pm), -12.82%, -12.82%, CAI-Quarterly-Activities-Report-and-Quarterly-Cashflow-Report.PDF. CAI had plenty in the way of news flow during January, but the market didn't seem to like most of it: CAI-Outstanding-Drill-Results-Grow-Potential-at-Bulletin-Deposit(9Jan, 8.15am).PDF and CAI-Outstanding-Drill-Results-Grow-Potential---Amended(9Jan, 2.59pm).PDF (SP -4.76%), CAI-Warrawoona-positioned-for-a-strong-H2-FY2024(10Jan).PDF and Calidus-Investor-Webinar-Presentation(10Jan).PDF (SP -2.5%), CAI-Warrawoona-positioned-for-a-strong-H2-FY2024---Amended(11Jan).PDF (SP +2.56%), CAI-Potential-lithium-corridor-defined-at-Tabba-Tabba-South(15Jan).PDF (+0%), and CAI-Shallow,-high-grade-intercepts-continue-at-Bulletin(18Jan).PDF (+2.44%). The last closing price for CAI before the earliest of those announcements, being the Drill Results on the 9th, was 21 cps (8th Jan close) and CAI is now trading at 17 cps, which is -19.05% lower, so not a good month for CAI shareholders.
YRL, Yandal Resources, Monday 22nd Jan, -15.15%, -16.16%, YRL-Quarterly-Activities-and-Appendix-5B-Cash-Flow-Report.PDF. Back on the 12th Jan, they emerged from a trading halt with this: YRL-Response-to-ASX-Price-Query(12Jan).PDF and YRL-Oblique-Phase-Two-RC-Drilling-Results(12Jan).PDF and their SP fell -16.13% on that day (12th). Before that, they had last traded at 15.5 cps (on the 10th) and they're now trading at 8.3 cps, some -46.45% lower. It sounds like they've been smashed, right? However they're actually trading now at the same price ($0.083) that they were back at the end of December. The recent fall has to be looked at within the context that their SP rose +96.2% in two weeks from 7.9 cps on 28th December to 15.5 cps on 10th Jan before the trading pause and subsequent trading halt was implemented pending their response to that speeding ticket (their response is linked to above). I have commented here previously that they're a very small company with very low liquidity and their share price can have BIG moves on SMALL volume - and the past month has certainly proven that. YRL are way too illiquid and volatile for me!
EVN, Evolution Mining, Wednesday 17th Jan, -17.33%, -15.47%, EVN-December-2023-Quarterly-Report.PDF plus EVN-Exploration-Success-Continues-at-Cowal-and-Ernest-Henry.PDF [I posted a straw on EVN's report on that day, see here: https://strawman.com/reports/EVN/Bear77?view-straw=25009] I sold all of my real money portfolio EVN shares on Thursday (25th Jan).
The following goldies have only released updates in Jan (links above) but not their full reports - those full quarterly reports (and in the case of exploration companies also their Appendix 5B Cash Flow Reports) should be released on either Monday, Tuesday or Wednesday (the last three trading days of January) unless they apply for and are granted an extension:
CMM (Capricorn Metals), EMR, (Emerald Resources), GOR (Gold Road Resources), TIE (Tietto Minerals), SLR (Silver Lake Resources), WGX (Westgold Resources), RED, (Red 5) and BCN (Beacon Minerals).
Just to be clear - here's an excerpt from the ASX's Guidance Note 31 relating to mining entities' reporting obligations under the ASX listing rules, and specifically how they define a "mining exploration entity" vs. a "mining producing entity":
Source: https://www.asx.com.au/documents/rules/gn31_reporting_on_mining_activities.pdf
Also: ASX-Rules-gn23-amendments-01-12-19.pdf and ASX-Rules-Chapter05.pdf (Chapter 5 is titled "Additional Reporting on mining and oil and gas production and exploration activities")
In summary, most companies that have transitioned to being producers and have notified the ASX of this fact, and where the ASX have accepted that they are now producers, are no longer required to lodge Appendix 5B Cash Flow Reports each quarter to the ASX. In terms of quarterly reports, they only need to lodge quarterly activity reports. However, if they cease production, as happened with Kingsgate Consolidated (KCN) in recent years when their only producing mine - in Thailand - was shut down by the Thai government and the company was basically told to leave the country, then they would usually have to start lodging those 5B Cash Flow Reports again, because they are no longer producers, and that's what KCN had to do, and they are still lodging them because they've only restarted production at their Chatree gold mine in recent months, so are only re-establishing themselves as gold producers again now.
The following goldies have not released their full December Quarter Reports yet (or any production updates during January) - and are expected to do so on either Monday, Tuesday or Wednesday (the last three trading days of January):
NEM (Newmont, formerly Newcrest Mining), BGL (Bellevue Gold), RMS (Ramelius Resources), RSG (Resolute Mining), TBR (Tribune Resources), RND (Rand Mining), AUC (Ausgold), STK (Strickland Metals), M2M (Mt Malcolm Mines), LSA (Lachlan Star), STN (Saturn Metals), TGM (Theta Gold Mines), MDX (Mindax), CYL (Catalyst Metals) and PDI (Predictive Discovery).
Actually, NEM is only a CDI here in Australia because their primary listing is on the New York Stock Exchange, not the ASX, so I'm not sure whether they are required to lodge a quarterly activity report with the ASX - probably not, but those other companies certainly are.
Often the ones with the worst news (or more bad than good news) tend to report as late in the month as possible...
As mentioned above, there is some M&A activity with PRU, ORR, EMR and TIE.
Southern Cross Gold (SXG) have a financial year that runs from June 1st to May 31st, so they released their half year report in January for the half year ending November 30th, and their quarters complete at the end of August (Q1), November (Q2), February (Q3) and May (Q4). They released plenty in January - see here: https://www.southerncrossgold.com.au/investor/asx-announcements. However their share price is currently $1.085, which is -13.89% below their $1.26 share price (SP) at the end of December.
Disclosure: Of the gold sector companies mentioned above, I hold NST, GMD and CMM here, plus a tiny PNR position, and I own NST, GMD, RRL, GOR, RMS and BGL in my real money portfolios (including my SMSF). On Thursday I sold all of my EVN shares and bought a position in BGL (Bellevue Gold) in my SMSF. I'll probably do a Bull Case straw for BGL shortly.
The ASX sent Yandal a speeding ticket ("please explain", aka "price query") and put them in a trading pause during the late morning, and that was then rolled into a trading halt about 26 minutes later - see here: YRL-Trading-Halt.PDF
Yandal did NOT reply with the usual "No Idea" response, so they know there's something they need to explain, and they're taking some time to prepare that announcement; they've indicated that it should be done by market open on Friday morning (12th Jan). I'd be expecting something tomorrow (Thursday 11th).
It's likely to either be M&A related - or drilling results.
We shall see.
I don't hold YRL shares - too small and illiquid for me.
Santana Minerals (SMI) - another goldie I do not hold - were also issued with a "speeding ticket" by the ASX today, however they DID give the usual "no idea" response: Santana-Minerals-Response-to-ASX-Price-Query.PDF
They closed up +14.57% today at $1.14, but earlier in the day they got up as high as $1.31, which was +31.7% higher than their 99.5cps close yesterday (hence the price query from the ASX).
Santana just pointed to their Investor-Presentation.PDF from two days ago as the only possible explanation they were aware of - for the sharp upward spike in their share price today - and other than that... no idea.
And this was on a day when Gold was the worst performing sector, closely followed by Metals & Mining, Materials and Resources.
Another struggling goldie, Calidus Resources (CAI) can't seem to catch a break, with share price moves that were up or down between 4% and 5% on Wednesday, Thursday and Friday last week, on no news, and then this week they've released three relatively positive announcements, and their share price did this:
Tuesday 9th January 2024: CAI-Outstanding-Drill-Results-Grow-Potential---Amended.PDF - closed down -4.76% at 20 cps.
Wednesday 10th January 2024: CAI-Warrawoona-positioned-for-a-strong-H2-FY2024.PDF - plus CAI-Calidus-Investor-Webinar-Presentation.PDF - closed down -2.5% at 19.5 cps.
[Note: Additional: An ammended version of that first announcement on Wednesday was released on Thursday 11th: CAI-Warrawoona-Positioned-For-Strong-H2-FY2024-Amended.pdf - they need to get a lot better at proof reading these announcements BEFORE they release them, coz these ammended versions have become rather common for CAI.]
Their lowest close last week was 20.5 cps and their highest close was 21.5 cps, and their SP is now lower than that range, @ 19.5 cps, despite releasing what they would have considered to be positive news this week.
I don't hold them either.
What else? Oh, Capricorn Metals (CMM), who I hold here on Strawman but not IRL, released this update on their Karlawinda Gold Project (KGP) yesterday: CMM-KGP-Continues-to-Deliver-Outstanding-Cash-Generation.PDF
Their SP rose +6 cps (+1.37%) on the day, but closed down -4 cps (-0.9%) today - at $4.39. They've had a good run. Commsec's TA (probably more automated analysis than artificial intelligence) says they're in a near-term downtrend and are bearish. Looks quite a lot like a flagpole with a pennant to me, and while they're currently at the lower end of that pennant (the support line), that support line is rising more than the upper edge (the resistance line) is falling - so they're making higher lows MORE than they're making lower highs (the lows are rising more than the highs are falling), so I still regard them as being in a longer term uptrend. If they breakout to the downside of that pennant, that would be negative, but I don't see that yet. Mind you, I'm not at all proficient at TA so take that lot with a grain or 6 of salt.
The following is page 1 of that KGP update that they released yesterday (link to full announcement above):
Karlawinda is an example of low grades that are cheap to get out of the ground and process. The head grade is around 1 gram/tonne (1g of gold per tonne of dirt/ore) and their gold recovery is around 90% (has declined very slightly), but their costs are low. They're on track to achieve the mid-point (120Koz) of their FY24 guidance of 115,000 – 125,000 ounces with AISC (All-In Sustaining Costs) expected to be within their FY24 cost guidance range of $1,270 - $1,370 per ounce. That's an AISC guidance mid-point of A$1,320/ounce with a gold price that is currently over A$3,000/ounce and was as high as $3,150 in October.
Capricorn Metals' (CMM's) cash and gold on hand at the end of December 2023 was $160 million, an increase of $26.5 million from the prior quarter (Q1: $23.3m). The cash build of $26.5m was achieved after the payment of $1.7 million for accommodation units at the Mt Gibson Gold Project where they have committed to the purchase of 400 accommodation units for the project after obtaining regulatory approval to construct a new camp for the proposed mining operations (Mt Gibson being their planned 2nd gold mine).
Images Source: https://capmetals.com.au/projects/mount-gibson-gold/
CMM is a gold producer (@ Karlawinda) with a growth project (Mt Gibson) - and they have excellent management who have skin in the game and think/act like shareholders (company owners rather than just company managers). I should probably jump back on board this one in one of my real money portfolios as well...
One I do hold in real life as well as here is Genesis Minerals (GMD) and I've added to my GMD position in the past week as they've had a little pullback from $1.80+ levels; they recently made an all-time high of $1.91/share (intraday) - and they closed today at $1.59/share. They remain one of the 10 most shorted stocks on the ASX, but they've moved down to number 8 now according to https://www.shortman.com.au/; they were as high as #3 a few weeks ago, so the shorts have been reducing with GMD. They're surrounded on the short list by lithium stocks, uranium stocks, plus Syrah (graphite), IDP Education (IEL, at #6) and Flight Centre (FLT, at #7). Outside of the top 10 there are more mining stocks as well as WBT, BOQ, HVN and ACL (all in the top #20, between #11 and #15). PLS (Pilbara Minerals) remains at #1 with around 21% of its stock sold short. GMD (at #8) is just under 9% shorted.
I came across this earlier this week: GMD-Corporate-Presentation-Ready-Set-Grow-27-Nov-2023.pdf
It's from back in late November and was titled, "Ready Set Grow, Assets and people in place for +300,000 ounces per annum". Quite interesting!
There are 3 main slides that tell you MOST of what's worth knowing about GMD (apart from their MD, Raleigh Finlayson, who is a bit of legend in the industry). Slide 5 shows you how far they've come in just a couple of years.
Slide 6 shows you exactly where and what they are focused on (Leonora in the WA Goldfields):
Slide 7 shows you how they're going to get from here to +300koz pa (over 300 thousand ounces of gold produced each year):
Since that was all put together they've bought some more small gold projects to help fill up their Leonora and Laverton Mills (gold processing plants) - They announced in mid-December that they've entered into a binding Asset Sale Agreement to acquire the Bruno-Lewis and Raeside gold projects from Kin Mining (KIN.asx) - see here: GMD-to-acquire-the-Bruno-Lewis-and-Raeside-gold-projects-14-Dec-2023.PDF
Great progress to date by Raleigh Finlayson and the rest of the team at Genesis, happy to have some shares in this one. They're absolutely going to be a bigger and better company in 5 years than they are now.
Historical US$ Gold Price Performance
Historical A$ Gold Price Performance
Gold tends to be a good long-term investment, but the returns on individual companies that either produce gold or are gold explorers or project developers can vary greatly.
The main things to look out for are quality management teams with plenty of skin in the game - preferably people who have excellent prior track records of shareholder value creation in the space - and project quality. You need good projects and good management. Plenty of other things to look at and loads of factors that should be considered but those two are my starting points in the sector - management and project quality. And the quality of the project isn't just about the grades and the ounces, it's also about the location of the project and the access to infrastructure, among other things.
Capricorn (CMM) have shown with Karlawinda, as Regis Resources (RRL) did a few years back with Duketon, that you can make great money with low grade ore if it's easy to get at and easy to process. High grades can be uneconomic at scale if the're too deep, the ore is too complex (not easy to extract the gold consistently), or it's in the middle of nowhere, or in a high-risk location where you can be overun by armed rebels or militia or the country's government can move the goalposts - or kick you out of the country and take back the land.
Other examples of things to look out for are gold in narrow veins that can be hard to chase, locations that are prone to severe weather events, particularly heavy rain (flooding) and severe storms, Management that are in "semi-retirement" mode because they're already rich and no longer hungry, so they're happy to collect the salary and benefits but don't care much for the actual work, tenements where there are ownership disputes or where the miner has an agreement to buy the land, but doesn't own it yet, projects where the PFS and perhaps even the DFS were done primarily by the company's own management with some help from contractors, and where the assumptions therein may turn out to be a tad optimistic, gold mining companies run by geologists with limited chemical engineering or other engineering experience, and gold miners who engage in bad hedging (low priced hedging, often for 5 or more years, for the purposes of securing project finance). Just some of the bad experiences I've had in prior years; there are plenty more. Lots of pitfalls at the smaller end, that's for sure.