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Voted on a straw in #Guidance Update for Northern Star Resources Limited by Bear77
a month ago
#Guidance Update

13-August-2020:  Resources & Reserves, and Guidance Update (ex-KCGM)


FY21 production guidance (ex-KCGM) is 720koz-820koz; Production (ex-KCGM) is forecast to rise to ~900koz in FY22 and ~1Moz in FY23, driving down AISC by 10%; Resources increase by 3.2Moz, underwriting longer mine lives and increased cashflow.


Resources at June 30, 2020

  • Group Resources increased by 3.2Moz to 22.3Moz (after depletion of 912,000oz and acquisition of Bronzewing Project); Resources per share have grown by +120% over the past five years (ex-KCGM)
  • Importantly, Measured and Indicated Resources increased 29% to 13.8Moz; This underpins continued replacement of Reserves in coming years
  • Increased inventory will underpin further organic production growth, longer mine lives and cashflow
  • Resources breakdown:
    • Pogo up 13% to 6.7Moz at 9.8gpt; This is the largest Resource in Pogo’s history
    • Jundee up 16% to 5.3Moz, with a further 1.6Moz at Bronzewing to be included as part of the Yandal Operations
    • Kalgoorlie Operations at 6.8Moz
      • Kanowna up 16% to 2.2Moz, 100% Kundana at 1.2Moz, 51% Kundana at 1.0Moz, South Kalgoorlie at 1.9Moz
  • In FY20, NST acquired the 1.6Moz Bronzewing Project and agreed to divest the 1.6Moz Mt Olympus Project

Reserves at June 30, 2020

  • Group Reserves increased 12%, or 600,000oz, to 6Moz (after depletion of 912,000oz); Reserves per share have grown by 180% over the past five years (despite production of 3.6Moz)
  • Reserves are calculated conservatively using an assumed gold price of A$1,750/oz and US$1,350/oz compared with the current spot price of ~A$2,700/oz (US$1,940/oz)
  • Reserves breakdown:
    • Jundee up 25% to 2Moz (despite depletion of 379,500oz), with a further 800,000oz at Bronzewing to be included as part of the now consolidated Yandal Operations
    • Pogo Reserve of 1.5Moz (despite depletion of 200,700oz), grade up 7% to 8gpt, despite only drilling 62% of budgeted drill metres due to COVID-19 restrictions
    • Kalgoorlie reduced 25% to 1.6Moz (after depletion of 330,200oz); New estimate reflects a significant reduction in the Raleigh Reserve and a higher cost base used in the calculations
      • Kanowna at 700koz, 100% Kundana at 300koz, 51% Kundana at 400koz and South Kalgoorlie at 200koz
  • Considerable opportunity to further grow Reserves with conversion of the +22Moz Resource base


  • FY21 production guidance for Australian operations (ex-KCGM) is 540,000-600,000oz at AISC of A$1,425- A$1,525/oz (US$1,025-US$1,096/oz)
    • Jundee Operations 270,000-300,000oz at A$1,200-A$1,275/oz (US$863-US$917/oz)
    • Kalgoorlie Operations 270,000-300,000oz at A$1,650-A$1,750/oz (US$1,186-US$1,258/oz)
  • FY21 production guidance for Pogo is 180,000-220,000oz at AISC of US$1,200-US$1,400/oz; Guidance takes into account the impact of COVID-19 on operational restrictions
  • FY21 expansionary capital budget of A$99M, comprising:
    • A$50M (US$35M) at Pogo, with most of this applied to increasing processing capacity to 1.3Mtpa
    • A$37M at Jundee, predominantly for surface infrastructure upgrades and bringing on new production areas
    • A$12M at Kalgoorlie Operations for capital works

--- click on the link at the top for the full announcement ---

[I hold NST - they are my #1 Australian Gold Producer pick, and have been for the past decade.]

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Voted on a straw in #Business Model/Strategy for Imagion Biosystems Limited by Zamberdine
4 months ago
#Business Model/Strategy

This is an interesting company.  They are proposing to develop a new biomedical imaging technology that uses magnetic nanoparticles that are specifically targeted to a cancer type.

There are two parts to the strategy.  The first which they have delivered on to some extent is the synthesis of iron oxide particles coated with a stealth polymer coating and conjugated with antibodies that target breast cancer.  The in vitro cell studies for this in breast cancer cell lines looked convincing and the toxicology studies showed low toxicity.  I haven't seen any animal work, but they seem to be looking to do some first in human studies this year. Still a long way to go here but a good start.  They have sold $300k of the nanoparticles to an Israeli company. 

The second aspect is developing the instrumentation that can detect this particles for clinical use.  They have partners for instrument development, but the progress and role of each partner is not clear.  It is also not clear how far off the clinical instruments are from even getting a prototype.  There is a lot of work to do on the instrument side.  In theory the instrumentation they are developing is more sensitive, i.e. can detect smaller tumours, but it is not clear what sort of read out/image would be obtained. 

They can do the first in human studies using MRI systems, but these particles are not ideal contrast agents for use in MRI.  The physics means that particles make images duller (negative contrast) rather than brighter (positive contrast).  Positive contrast is easier to pick up.  In saying that they do have a partnership with Siemens a major MRI system supplier. 

All in all there is potential here, but still lots of work to do to show real clinical efficacy.  We are probably talking at least 10 years for their primary aim of developing clinical magnetic relaxometry scanners. 

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Voted on a straw in #Bear Case for Novatti Group Limited by CanadianAussie
5 months ago
#Bear Case

Bear Case

Looking at Novatti's financials (FY19-20 Annual Report) I'm getting a much different view than some of the ones already posted.

•Revenue has increased 31% yoy

•Net loss has more than doubled yoy

•Cash flow negative -$2.763M

•Less than 1 years cash runway suggesting another capital raise is on the near horizon

•Negative shareholders’ equity

Voted on a straw in #Thesis for Ava Risk Group Limited by StrongflatWite
5 months ago


  • Significant director ownership, with Directors and executives owning ~46 million shares (note this is mainly the chairman). Two Directors purchased significant volumes of shares on market during past 12 months. There are 235 million shares on issue so directors and executives own ~20% of company.
  • Gross margins are growing with more sales in higher margin areas
  • Low margin services are seeing economies of scale and growing to profitability
  • Cashflow growth aligns with profits growth - this is great, it means it is not all accounting bullshit
  • Current assets are >250% of current liabilities AND cash balance alone is greater than current liabilities


  • Services business is historically (and still is) low margin. Revenue grew by ~75% to over $25 million but EBITDA is still <10%
  • Significant portion of revenue is non-recurring (sales of fibre technologies, lock and access technology), which means they need new customers just to stand still let alone grow revenue


  • FFT only accounts for 36% of revenue but makes up 57% of EBITDA. This is non-recurring revenue so needs continual new sales to keep revenue going.
  • In the services division one customer accounted for $9.8 million revenue in FY20 (39% of this division’s revenue). 


  • FFT: The Indian Military Project accounted for ~$4.5 million of FFT revenue in FY20, or about 29% of total revenue for FFT for FY20…
    • this leaves ~$11.7 million revenue from this project to be delivered in FY21
    • Assuming the business maintains the same level of “non-Indian military revenue” in FY21 (~$12 million) then revenue in the FFT segment will double in FY21.
    • Assuming margins remain constant under the above assumptions then the FFT EBITDA could (conservatively) grow to ~$8.5 million….this means EBITDA from this segment alone could be 15% higher than total group earnings in FY20
  • Services: services revenue grew by 58% in FY20. Assuming growth halves to 30% in FY21 and that increasing scale means they are able to continue to increase EBIT margin to 15% (FY20 was 9.5%) then EBITDA could double to $4.9 million 
  • BQT: they are talking up big deals (deal done in May for ~$3 million with aus Government) and recent agreements for distribution in North America and Europe. Most of Aug Gov deal is to be delivered in first half of FY21…so potentially not unreasonable to expect an uplift in Revenue from this segment in FY21 of ~50% (FY20 revenue was $4.3 million)


  • At closing price of $0.275 and with 235 million shares on issue the market capitalisation is $64.7 million
    • The earnings multiple based on FY20 EBITDA is 8.7
    • The earnings multiple based on assumed FY21 EBITDA is 5.35
    • Assuming continued revenue growth and the cyber thematic as a tailwind an earnings multiple of 20x would not be crazy - this would create a valuation of $1.03 per share

How will I know if I got the thesis wrong?

  • Need more large FFT sales on the back of the Indian Military win - if no more of these then this is not a long-term opportunity
  • The mining tech needs to convert from pilots to recurring sales - there are multiple of these on the go
  • Need to see continued strong growth in services division and BQT as these need scale to be profitable
  • 1st half of FY21 should show all of the above to be true - if not consider selling
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