Tag Archives: gold

Taking Advantage of the Gold Price

25/8/16

ASX: AYC and ASX: KBL

Currently the fundamentals for the yellow metal seem to be on the uptrend

what with the ultra low interest rates all around the world (including the negative ones) the uncertainty in the European union with some of the not-so-well performing economies of Italy, Spain, Greece etc
The recent Brexit which has left the UK in the land of the unknown
The US with upcoming election and potential president Trump
China Slowing down
Bond prices at record lows

it seems like global growth and the search for yield is driving a lot of dollars into Gold
on top of that the 5 year lows of gold has put it in a position which has made it quite undervalued

Since December the Gold price has shot up 30% and is one of the best performing asset classes on the market

in light of all this a lot of the major Gold producers have increased significantly

there is some value for the smaller gold companies which are entering or have entered the production phase and have market caps which warrant some re-rating

my first pick is ASX:KBL – KBL mining

The Stats

Price $0.003
Mkt Cap ~$8M (fully diluted ~$14M)
Revenue generation: Gold producer
Why

Been producing gold since Sept 15 – ave over last 3 qtrs has been just under 7k oz = ~30k oz per year

current margin at gold prices currently mean they should be generating as much cashflow as their market cap or more

other factors to consider
still need to prove up a large enough resource

catalyst will be if they can keep generating cashflow from the existing reserves and shore up a resource large enough to warrant further mining

speculative buy at current price

my second pick is ASX:AYC – A1 Consolidated Gold

The Stats

Price $0.025
Mkt Cap ~$15M (fully diluted ~$30M)
Revenue generation: Gold producer
Why

Has JORC resource of 500oz +

aiming for 25koz of gold production

have proved the gold production facility is up to standard

Director recently purchased $100k worth of stock

current margin at gold prices currently mean they should be generating as much cashflow as their market cap or more

other factors to consider
still early stages of mining so not a sure thing
catalyst will be if they can keep generating cashflow and operate efficiently at the costs they claim

speculative buy at current price

Disclaimer : 

this is my own personal opinion

You should seek professional advice for your own investment decisions

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Oversold ? ASX:BDR, ASX: TGS

15 Sept 2015
I know its been a while but the market has been in a very volatile state
the volatility index (S&P ASX 200 VIX) is around the 20 plus mark which correlates to other large correction/recessionary periods
to get the picture it usually sits in the 9-15 range which is saying a lot

anyways as a result of this there are some interesting companies which may have taken an undue hammering in the market. I would consider them over-hammered

1. ASX:BDR
Beadell Resources Ltd

Corporate Snapshot

Market Cap 84 M
Share Price: $0.105
Cash @ June 2015 $ 11 M

What do they do:
– Gold Producer

Story so far
Had a particularly bad 2015 – Dive in profit and revenue

Reasons to get on Board
– 2016 is going better so far
– Costs are in Brazilian Real currency which has depreciated against USD as has the AUD
– this means Cash cost around 1,000 USD as long as Gold Price stays at $1100 then
potentially Profit could be in vicinity of $13 – 30M
– new mine plan and equipment should help to ensure better operational outcomes

Reasons to NOT get on board
– Rain and production issues seem to have dogged beadell
– gold price drops below $1,000

My thoughts
In this current environment gold will become a safe haven and this should positively impact gold producers

Verdict – Buy below 11c

As always This column is the personal opinion of the writer and does not imply any stock recommendations or offer financial advice. Readers should do further research of their own or talk to their adviser before acting on themes in this article. All prices and analysis at the Date of publication at the top of the post

2.
ASX:TGS
Tiger Resources Ltd

Corporate Snapshot

Market Cap 67 M
Share Price: $0.059
Cash @ June 2015 $ 31 M

What do they do:
– Copper Producer

Story so far
Had a particularly bad 2015 – Dive in profit
loss attributable to the 60% tax depreciation in the first year
Higher revenues
increase reserves from the buyout of the whole operation going from around 60% to 95%
was a lot of problems with the financing of that

Reasons to get on Board
– 2016 is going well and the development of the assets to increase production has started
– low cost operation (under $1.3-1.7/lb)
– 16 year life of Mine
– Funding seems to have been settled

Reasons to NOT get on board
– Country Risk – in Democratic Republic of Congo
– production doesn’t reach planned levels
– Copper price drops below $2/lb

My thoughts
low cost producer and still profitable at the current copper price

Verdict – Buy below 6c

As always This column is the personal opinion of the writer and does not imply any stock recommendations or offer financial advice. Readers should do further research of their own or talk to their adviser before acting on themes in this article. All prices and analysis at the Date of publication at the top of the post