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Real-Time news about River Diamonds (London Stock Exchange): 0 recent articles
|droftarts: Perhaps they thought that the share price was going to be a lot higher in RVD and the purchase would be self financing through the sale of some of their existing RVD shares? Or maybe they had a source of finance lined up but due to the credit crunch that has now been withdrawn? IMHO|
|silveraw: OK not the 28,000oz predicted by RVD but that was always going to be very very hard to achieve with a new start operation and the unknowns that always arise. (power issues now resolved) What I do see is a very positive statement that shows a steady upwards hike in production and subsequent gold production. So what do we have here...well NO DEBT and another $13.7m to bank from the gold produced up to 14th July. We now have a strong cash generative situation going forward. Where will this be at the year end....who knows. But with the progressive attitude of the company I cannot see any down side so will be getting more shares to hold for the profits to come from a climbing future share price.
A name change to reflect the ownership off 2 gold mines has to be good as gold is where the money is at the moment. Any diamond income would be a bonus along with the silver (not mentioned in the RNS)|
|silveraw: And still they sell. I wonder how low it has to go before the sellers give up.
At the current share price the company is valued at £54m (1.88 billion shares in issue.)
Gold in the ground minimum 800,000 ozs assume production costs at $450 oz then at gold in the ground at current values is $920 - $450 = $470 an ounce x 800,000 = $3.76 billion. They are also seeking to increase the mines output which would increase the gold in the ground value even more. PLUS they have just finished their first full months gold production and will announce the pour results very soon. Gold will now be produced EVERY month adding to profits.
They also have 100% ownership of another gold mine in Brazil plus diamond exploration assets in Sierra Leone ( licence being renegotiated)
The share price is a complete nonsense as the current valuation per share is a minimum of 20pence|
|seagreen: In all fairness to the boys on the MM's desk there has clearly been a bit of a seller around and until he is cleared out we will just have to sit and suffer someone has just spat otu 500,000 at 3.75, but if they bought in at less than 2p thats a good turn.
I posted earlier on the traders thread a comparison with Hambeldon
HMB market cap £62.5m targeting to rehit 40k oz production of gold in Kazakstan
RVD market cap £67.41m targeting to rehit 120k oz production of gold in Fiji
3 times the production level in a safer environment virtualy the same market cap? You would expect RVD to be at least 12p then?
looking at the Collins Steweart note Feb 07 on HMB that says their market cap should be circa £140m or 30p share on a like for like assets in the ground basis compared to other gold companies as thet have 3.5m oz in the ground...........
Poor old RVD has only got 5.1m oz in the ground which would give it on a similar like for like basis of $72 in the ground a market cap of £184m or 11p
although the gold price has moved from $600 odd to over $900 and acording to the Hithcins note the comparable rate is now $97 in the ground which would give HMB a market cap/share price of 40p a share on a comparable basis and RVD a market cap/share price of 15p.
BUT RIGHT NOW IT AINT!!
Looks to me as though we have two undervalued gold mines with very good grades|
|silveraw: We do now and again have a go at the mm's for what we consider unfair pricing of a share. In the case of RVD could there possibly be a more clear cut case of this bearing in mind the shares traded since the relist.
To date by my calculations 76,454,750 more shares have been bought than sold so how do the mm's explain a share price of 4.50/5.00 on relist compared to the current share price of 3.75/4.25 ? it is a complete nonsense that the more shares that are bought the lower the share price The sooner they let this share find it's own level the better for all of us.|
|seagreen: IMA I did mean 100,000 oz per year production would give a valuation of 10p, I now realise this was using the old number of shares in issue and not knowing the final market cap valuation and number of share in issue on relisting.
There are now 1,685,155,387 shares currently in issue per AIM relisting document.
SOME NEW REWORKINGS OF NUMBERS
1) ON A PER ANNUAL OZ PRODUCTION BASIS at an exchange rate of US£1.998:
On the very conservative industry standard of US$2,000 per annual oz, you get a market cap of just over £100M or a share price of 5.9p (current mkt cap = £71,619,103.95 @4.25p).
Due to the long mine life on US$3,000you get a market cap of £150M or a share price of 8.9p
There has been talk on the board of production being ramped higher and indeed in the year 2000 they produced their highest ever return of 140,000oz per annum. Certainly between 1996 and 2005 before the troubles in 2006 the mine was constantly producing in excess of 100,000 oz a year.
If you rework the numbers
@US$2,000 per annual oz
@120,000 p.a. share price = 7p
@140,000 p.a. share price = 8p
@US$3,000 per annual oz
@120,000 p.a. share price = 9p
@140,000 p.a. share price = 11p
(Although if they invested in a new shaft people accept production could increase to 300,000 oz per annum but the capex would be large, but clearly a larger player in the gold industry might be tempted as by spending around £100M your cash flow would shoot and your valuation would go up 3 times.)
2) ON A PER OZ IN THE GROUND BASIS at todays exchange rate
This is where it gets exciting we are currently only valued at US$29 per oz in the ground per the compliant report which indicated 5.15M oz times US$29 divided by 1.998 gives a share price of around 0.045p
If you rework the numbers on the same basis as Highland Gold which are currently valued at US$190 per oz in the ground and it is in Russia, you get a market cap for RVD of £480M or a share price of 28.8p
Now what is also amusing is that when I did my comparison of CEY's share price and assets in the ground, guess what I forgot the Government owns half the project so again if we compare ourselves to the non producing CEY in my post above guess what we get 32p for RVD not 16p.
So I still feel that when production ramps up we should hit around 10p and if we get taken out we could well see a price in excess of 20p
1)Actualy the Hitchins research figures are now working on 120,000 oz per year annual production.
2)Other comparisons on oz in the ground basis versus market cap are
HighLand gold US$190
Hoschild US$420 (This is a gold equivalent figure)
Kazach Gold US$64
Peter Hambro US$254
But would welcome any comments if I have screwed up on the numbers|
|instarich: Found an interesting point on the RVD website and wonder what effect it will have on the share price. My immediate worry is that it will hold the share price down for a few days maybe longer if they try to off load. The troubled American bank Bear Sterns hold 40,000,000 shares or 4.79% of RVD stock. Anyone else have a view?|
|goldeneye5: Good Minesite article, Climate is looking good for the likes of RVD, and those proving up resources like CDG. Majors will be following with interest.
Here Come the Gold Stocks!
By David Galland of Casey Research
You'd have to be a monk living in isolated penury to miss the fact that gold is on a tear. Specifically, it has risen from U$278 on January 4th 2002 to US$950 last week, a gain of 242 per cent in just over 6 years. Over the same period, the trembling S&P 500 is up an anemic 22 per cent.
In a gold bull market, an investor would expect the profits on gold stocks to be a multiple of those to be had from bullion. That leverage comes from simple arithmetic: once a gold producer covers its production costs, then each 1 per cent rise in the price of gold can translate into a 5 per cent, 10 per cent or even richer improvement in the bottom line. For a company such as Barrick, with 125 million ounces in proven and probable reserves, even a US$1 per ounce increase in the price of gold can mean big money.
And so we see that between January 2002 and last week, the gold stocks were in fact up 612 per cent. So far, so good.
Yet, the gold stocks have stalled in recent months; between August 1, 2007 and February 21, 2008 gold bullion rose 42 per cent, but gold stocks were up just 37 per cent.
What's going on? Is it that, in their concern over the broader equity markets, people have forgotten that gold stocks are associated with gold? Or is something else at work here?
The answer is "something else."
While there are a number of plausible reasons for gold stocks lagging of late, we have come to the conclusion that the true explanation reaches much farther into the past. It's that the managements of the gold producers have only recently escaped the state of fear they operated under during gold's 20 year bear market.
Consider: as recently as the year 2002, gold was still trading near US$280. Against that number was a cash cost of around US$250 per ounce for a typical company. That cost figure is about as low as the number could go, and it was the response of an industry beaten down and huddling in a trench.
Caution lingers after the reason for it has gone. As gold began its upward move in 2002, it did so against the backdrop of an industry still in mothballs and still run by managers whose primary skills were cost cutting and frugality. This is important on a number of fronts.
Firstly, having been trained in the acid bath of razor-thin margins, management was intensely skeptical about gold's rally. They suspected it might be just another bear market trap, ready to punish unwary optimists who parted with cash to ramp up production.
Secondly, in the hunkered-down years, miners focused on the higher-grade, easy-to-mine material that gave them the best shot at turning a profit, however small that might be. And being in survival mode, they were extremely cautious about buying new equipment or maintaining a large workforce. Employee rosters were reduced to the bare minimum.
Thirdly, because staying in business was such an urgent goal, they were willing, even eager, to sell future production at a set price -- a perfectly rational strategy in a bear market, because it at least assured they would receive a price that covered the known costs.
With all these factors taken together, it's easy to understand why the industry was slow to respond when gold started rising. In fact, it was only in February 2003, with gold trending over US$350, that Barrick, the world's largest gold miner, began the expensive process of unwinding its hedges. And it wasn't until November of that year that the company announced it would stop forward selling altogether and would eliminate its entire hedge book.
Once the turning point came when management finally realized the bull market was for real -- the industry began to scramble to catch up. Which, in a choo-choo industry like mining, means hiring and training lots of people, buying or refurbishing the equipment needed to re-establish production on second-tier deposits, upgrading facilities, building expensive new mills, and so on and so forth. And, of course, dealing with the challenge and expense of unwinding hundreds of millions of dollars worth of forward hedge contracts.
The rebuilding of the gold mining industry, in short, really only began in earnest over the past few years.
As would be expected, the costs associated with rebuilding the industry sent big hits to the bottom line, resulting in the kind of ugly financial metrics that repel institutional investors.
The metrics were not at all helped by the shift away from high-grade ore, because the lower the grade, the more the material you have to dig, hoist, haul and process, meaning increased production costs. In addition, the industry rebuild occurred against a backdrop of generally rising inflation and a falling dollar, which helped push the cash cost of production up by more than double from the mothball years, keeping the miners unattractive as investments.
By contrast, the base metals companies, which had hit bottom earlier, near the end of 1998, had already emerged from the mothball stage, thanks to increasing demand from China and elsewhere. They were, as a result, well on the road to recovery when the big price increases for base metals kicked off in 2004. So, while the gold miners have been widely shunned as ugly ducklings in recent times, the base metals sector has been enjoying salad days, reflected in multi-billion mergers and acquisitions and, of course, sharply higher share prices.
Here at Casey Research, we are of the firm opinion that, now that the biggest costs related to restarting their industry are behind them, the big gold companies are poised to take off. The proof should come in rapidly improving margins which, lo and behold, we have begun to see in the quarterly reports now being released.
Just last week, Goldcorp announced that fourth-quarter profit had nearly quadrupled over the same quarter the year before. And then Kinross announced that it, too, had posted a record quarter, with profits up almost three-fold over the fourth quarter of 2006. Meanwhile, Barrick reported that net profit for 2007 was 28 per cent ahead of 2006. In addition, Barrick is feeling sufficiently flush (and optimistic) that it's buying out Rio Tinto's 40 per cent interest in the Cortez Hills joint venture for US$1.695 billion... cash.
And the exception to this picture of profit eggs finally hatching is only superficially an exception. Newmont announced a loss of US$1.8 billion in 2007. But most of it came from a one-time house cleaning -- US$531 million to unwind 18.5 million ounces of forward gold sales and a US$1.6 billion non-cash charge to terminate operations related to merchant banking. Look past those elements, which are an overdue recognition of money that went down the drain years ago, and you find that Newmont's mining business is actually in a healthy position. Looked at from another angle, Newmont took these charges now because they could afford to do so and because they felt that the damage to their share price would be softened by the strong performance of their current operations. Now that they've cleaned up the books, they too are dressed up to join the profit party.
It won't be long before others also note the pending improvements to the bottom lines of the big gold companies. The investment herd, we are convinced, is coming and, we expect, coming soon.
So how to take maximum advantage of this situation? First and foremost, you want to be moving into the established producing companies post haste. The gangway on this ship is getting ready to be pulled up.
Secondly, you should seriously consider moving some funds into the higher-quality junior exploration stocks. History has proven that, absent an exciting discovery story, the big gold stocks must get in gear before investor sentiment can reach the critical mass needed to ignite the juniors.
History also shows that as profitable as the big gold companies are in a bull market, returns on the juniors can blow those away. Exponentially. This upside, of course, comes with a greater degree of risk.
But paradoxically, this risk has been largely mitigated by the majors' slow take-off. That's because, anticipating that the gold stocks would follow the metal higher and history shows no example of them not doing so investors have already poured record amounts of money into exploration programs. As a result, we now know which companies have the goods - significant discoveries that juniors have spent tens of millions to define and prove up with the clear intent of selling to the majors.
The missing element, of course, has been that, until recently, the majors didn't have enough free cash to make those acquisitions. That is about to change.
David Galland is the managing director of Casey Research, publishers of Doug Casey's monthly International Speculator advisory. For over 27 years Doug Casey and the Casey Research team have provided self-directed investors with unbiased research on investments with the potential to provide double- and triple-digit returns by tapping into evolving economic and investment trends ahead of the crowd.|
|seagreen: DD one hears a range of figures banded about RVD's value on this board and amongst friends..
What was initialy a bit of a punt having seen huge volumes go through has become for me a bit of a theoretical fun valuation exercise assuming that RVD will succeed in gaining 100% control of the mine and assuming TMP will take up to their maximum share of RVD without being in a take over situation.
If neither happens I have waisted many an hour on my excel spread sheets but its been fun!
I have tried to estimate what value RVD would be with a 100% owned mine in production at various annual oz production rates and compared it to other aim companies annual oz production valuations, needless to say gold prices and US$ rates could render any calculation meaningless.
My view is that if this transaction comes to be and that the gold production can be ramped up I estimate an equivalent share price of between 10p to 26p, but expect it to be at the lower end, but one cannot be sure until one knows how high they can get the annual output to and it might surprise to the high side.
I also posted earlier my estimates for TMP viewing Geoprgian assets at zero and including their last known cash value which showed a range from
When RVD comes back to the market
@ 4p TMP are worth circa 3.1
@ 5p TMP are worth circa 3.8p
@ 6p TMP are worth crca 4.4p
@ 7p TMP are worth circa 5.1p
@10p TMP are worth circa 7p
@15p TMP are worth circa 10p
As you can see I think RVD is likely to be worth a minimum of 10p in time to come I think TMP will trade towards 7p but as I think RVD will come back at circa 5p to 6p you can see why I think TMP shgares shoudl be trading between 3.8p to 4.4p and not 3p to 3.5p....(people were still buying large sums of RVD at 4.4p when it was suspended)
I have a sneaking feeling that for those who arepatient we might see RVD going towards 15p and TMP towards 10p....especialy as people were buying 1m lots of RVD prior to suspension..but anywhere in those regions would be fine and maybe we should be happy with RVD at 8p and TMP at 6pish.
Anyway it is all theory at present but it does seem the prices should not go done long term, which in this market I guess is a bonus.
Certainly I have had my figures checked on TMP prices but the key bit to the equation is what price RVD will come back at and where it will go.
But good luck to all there is certainly nothing we can do with rvd as we are suspended so you need to take your own long term view on RVD and muck about with the figures and come up with your own valuation models...then I am pretty sure my calculation on TMP equivalent is correct subject to how much TMP takes in the next placing.,...and you got Georgia in for free.|
|tasciovanus: I believe Westech are intending to operate Vatakoula with 700 people, but still have an obligation to the other 1300. My point is that RVD's share of any increase in value of Westech should be calculated after operating costs. Therefore much as I would love to be wrong, I think some of the RVD share price forecasts given today amount to rampant ramping! I speak as a holder for three years still waiting to get back my original investment.|
River Diamonds share price data is direct from the London Stock Exchange