The weekend Aussie pretty well laid out BHP’s intentions - Anglo American off & Nickel west likely shuttered until prices improve and the lower quality Indonesian nickel flooding the market is ‘right sided’.

I'm yet to fully understand the West Musgrave situation, but given its material size to GNG going forward, the position requires clarification. It’s reasonable value atm, but I wonder whether this issue is hanging heavy on SP.

Surprised by this result. EBIT as a % of Rev slipped from historical of around 8% to just 5.5% though the company say 2H will return to normal. And they turned in a negative Cash Ops for various reasons which they outlined. But not good for the future of a coy which has such a high Div payout ratio of around 90% and they maintained a steady 9c for the 1H result.

Given their FY23 rev estimate of between $500 to $530m and the fact they booked $331m in 1h that leaves around $185m Rev in 2h.

On this basis I cannot see NPAT above $22.5m or 13.5c.

As to the cash flow scenario, this is a company which regularly reports Cash Ops well above NPAT + D&A - so there must be around $30 to $35m in cash sloshing around somewhere waiting to hit the GNG Bank account - so maybe a reasonable final divvy of 5c+ is still possible.

GNG is a solid well led company paying a fabulous dividend, and long may it continue to do so. Big Plus: Net debt of -$72.94m

Hmmm, the forecast revenue for FY23 at between $500m and $530m is a bit of a shock. Although, perhaps it shouldn't be as FY22 was an absolute cracker - but we retail investors want more and more every year. I'm seeing difficulty in getting NPAT above $28.3m v $34.7m for FY22. This will surely impact dividends as well. I was thinking a repeat do the 19c ff from last year but 15c is more realistic. Still, this is a decent return from a better than decent company, and its trading around its value, so I will hold. Market may not be so kind though.

Good to see we have won the Bellevue EPC contract. Another $87.8m to the order book - Bouquet given.

But - brickbat also due as to the poor reporting of ALL of the facts which had to be gleaned by reading the BGL announcement.

Yep, $87.8m is the price but it is FIXED! A bit of a worry in these supply and labour constrained times.

AND we virtually had to buy it by accepting up to $7.5m in BGL shares. That's more than the likely NPAT on the job.

I haven't made up my mind on the commeciality of this deal but the non reporting of it by GNG is pretty poor.

If you believe the old saw about the 'pick and shovel' suppliers making more money than the average gold miners themselves, then GNG is a damn good bet in this modern age. It certainly suits my style of investment as I am after a good dividend flow as well as a strong Balance Sheet and direct exposure to gold miners (Australian based only thanks - sovereign risk elsewhere is too large and volatile these days) just doesn't quite cut it (NST a possible exception). Yet when you look at the investment categories which handle recessionary times (and that's where we are headed, surely) then gold isn't a bad place to be.

So, I've opted for GNG as my default gold play and I'll list the BUY reasons as follows (and a big shout out to Bear77 for his commentary on this company)

(1) GNG specialize in design & construction of gold processing plants in Australia - win most EPC contracts

(2) They have diversity in their income streams

(3) Good pipeline of orders (approx 1 year)

(4) Strong stable management

(5) Huge insider & institution support >90% - though liquidity can/could be a possible downside

(6) no debt

(7) A significant dividend payer - I expect a ff div of 20c to 24c each year over the next 3 years and grossed up that's nothing to be sneezed at against a SP of less than $2  

Possible SP catalysts include:

(1) Contract wins to bolster the order book

(2) Pick up in Au price in AUD to stimulate opening up new discoveries - currently AUD $2,643/oz

(3) Stronger analyst support - GNG is really flying below the radar.