Looks like ramp up has been slow. This will impact the valuation

Bit of a bad call on me. This means the 35 mtpa won't happen next year.

I'll need to include this and come up with a new price. Going to take time.

Explains why the share price has been in freefall. I haven't topped up on this yet.

On top of this, they are doing some earn in agreements with Peel Mining (PEX)

[held]

Updating the valuation after announcement of the $1.50 special dividend.

As an extra, I've done a sensitivity analysis on the NPV discount vs Iron Ore and MTPA processed against NPV discount modelling different price scenarios.

Looks like everyone got a bit excited over the special dividend today. Was expecting no change but it is what it is.

I've used the long term price of Iron Ore of $141 AUD ($85 USD and 0.60AUDtoUSD) which is very conservative. Currently Iron Ore is around $150 AUD.

[held]

Revised valuation taking into account operational costs and dividends so this is a more complete picture of RHI.

Looking at past quarterlies, the operation cash outflow is around 450K which equates to 1.8m per annum although last quarter they got a tax refund of 1.2m. I'm going to exclude that one off and just say they spend 1.8m per year running the show.

Also converted long term IO price of $85 to AUD.

Share price has to be around $7-7.40 (before special dividend of $1.20). Once special dividend is paid I predict the share price will stay around 5.80. So that will be our 12 month price target I think although the current price has probably factored this in.

With royalty the main income, the sums are quite easy to calculate so I have probably missed something here just a caveat.

I could even include fluctuations in commodity prices to make it more realistic but no time for that right now. Point is RHI is fully valued no matter which way you look at it unless MinRes announces another upgrade.

[held]

52 week high at $6.80 today (19 Apr). FOMO has finally arrived

MinRes making Onslow their flagship project with the progress video right at the beginning of the FY24 presentation.

Has been good for Red Hill, not so good for Develop. Unfortunately I hold less RHI than DVP so this has not been a perfect "hedge". Because I think Red Hill is "boring" even though "boring" can sometimes be "good".

And Joshua Pitt track record has been average till now (marketindex). I guess the saying "Every dog will have its day" applies here?

A few bits of info to take away for more valuation into the research as again I think I've undervalued this somewhat (see previous straw on Financials)

Stage 1 is 35 mtpa. How long to wait till Stage 2? How big will be Stage 2? 50mtpa? 75mtpa?

Map of the JV. Have to verify if there is more than just Red Hill in this royalty. Obviously more upside if there is.

[held DVP and RHI]

This is just simple back of the envelope stuff

Assuming that MinRes will stick with 35mtpa, I get the total royalty value just around $495m using NPV8

My last calculation used 16mtpa because I divided the 500mt reserve by 30 years which works out to be 16mtpa. So I inadvertently underpriced RHI by mistake.

Also the above assuming that MinRes will want to get a head start on Onslow as much as they can even if the reserve is less than 30 years..

The above calculation does not include dividends, expenditure spending on exploration and other projects. I've also not included any potential ramp up (say 35 to 50 mtpa) which will add more upside.

[held]

Giving the Iron ore majors (and the Iron ore price) a run for their money

Popped 10% today from 5.25 to 5.75 possibly on the back of recent updates on the Onslow project from Minires.

Markets obviously factoring high prob of $1.20 dividend (see previous straw).

I also added CZR here since the company is in discussions on joint development of infrastructure for the Pannawonica (RHI) and Robe Mesa Project (CZR) which will obviously benefit both parties.

CZR is top performer so far as they are currently in discussions to sell their interest in Robe Mesa Project for $102 million to Miracle Iron resources (subsidiary of Shenzhen Naao Jiangian Invest Co (SNIC))

Such a development would probably benefit RHI as well if this goes as planned although the market is still divided on the probability of this being successful and hence coming off recent highs

Very illiquid though so buyer beware (and why not added in Strawman as it is too difficult to trade)

[held RHI]

Interesting to see the dividend payments (marketindex)

28 October 21 was around the time RHI received their first 200m payment from the Minres sale

There is currently a 200m payment from Minres due in June 2024 if all goes to plan.

Strong probability that there will be another large dividend payment from this, possibly $1.20 per share and will also put pressure on the share price.

Would be better if RHI saved the money for an acquisition that delivers better potential returns rather than spending money on exploration of their tenements which have been fairly average of late.

[held]

Some recent exploration results below. Not enough to declare a gold discovery yet.

I though the news above would be a negative but due to the upcoming MinRes payments and royalties (see my previous financials straws), the share price has stubbornly held firm and dividends are still being paid (have received the most recent payment).

Would be good if RHI can use the cash to find another promising project instead.

[held]

CEO and exploration manager Michael Wall excised 75K of options @3.50.

That's an extra 250K of cash. Definitely some conviction here.

RHI already has just less than 31m from last quarterly

So with 30m in the bank and then another 200m coming from MinRes June 2024

Add the royalty which probably has NPV of 150m (see last straw).

Minus the special dividend of 10c that was recently announced (63m*0.1=$6.3m)

Total NAV comes at about 344m vs current market cap of 300m (@4.75)

Only concerns are they haven't found much across their gold and base metal tenements and not much update on the environmental survey for the Pannawonica Iron Ore project with CZ Resources.

[held]

Understand this is poorly covered so I will keep short.

Once MiniRes goes to production, there will be a payment to RHI for 200m.

Then 0.75% royalty after that.

At current Iron ore price and 30 year production assuming production of around 16MtpA that equates to NPV11 of around 165m for the royalty (Being aggressive on the discount rate even if it is MinRes and because Iron Ore price volatility). So around $365m of payments back to the present from Onslow alone.

As I understand RHI already received 200m from MinRes in Sep 2021 so they have lots of cash to fund their exploration and other projects (Pannawonica Iron Ore, West Pilbara Gold Base metals etc etc).

Fairly valued now even after the dip today from the underwhelming gold drill results at Barkley. Possibly leaky going into the results today.

Not sure if I would buy, maybe wait a bit. $5 definitely was stretching it, feel sorry for whoever pulled that trigger!

Chart does look good though.

Despite the negative news on iron ore and lack of success on exploration, RHI is still going up. Hit 52 week high

Just checked the queue and nothing on sale

Still doing my sums on those payments but I think some smart guys has already beaten me to it :(

Maybe just pull the trigger and push it to $5?

Edit:Very keen buyers at 5+

Also announced gold drill results.