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Vatukoula Gold Share Price - VGM

Share Name Share Symbol Market Type Share ISIN Share Description
Vatukoula Gold LSE:VGM London Ordinary Share GB00B52ZLG09 ORD 5P
  Price Change Price Change % Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00 +0.00% 2.30 0.00 0.00 - - - 0 05:00:10
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m) RN NRN
General Financial 39.1 -16.9 -12.7 - 7.94

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Date Time Title Posts
11/11/201517:31Vatukoula Mines - VGM - Going For Gold1,249
07/8/201409:08VGM Civilized Thread13,520
20/5/201313:09Vatukoula Gold Mines1,072
23/3/201212:06VGM Civilised and moderated.1,354
22/6/201108:32...has this donkey any sparkle and shine left since 1934...14

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Vatukoula Gold Top Chat Posts

atlantic57: VGM Share price static and still no quarterly update , disappointing but not surprising given the quality of the Management.
johncraven: Quite a big push up for gold but will it help the shattered VGM share price....
craignet8: Chinese Investor 18 Apr'13 - 10:51 - 334 of 336 Serious Buying ! ---------------------------------------------------- What is wrong with you? Seriously? hahaha VGm share price off 16% again today, down below 8 PENCE now. You need help my friend :D
yanzui: Don't think i've seen this write up on here. Posted by Charleyduck on the Motley Fool site: Good read. From the 29th February 2012. Vatukoula Gold Mines (VGM) A producer of gold for 70 years. They lost private investor support last year. They should recover it this year and next. Gold? I see the gold price is dropping 5% as I type - $1,785 to $1,690 in six hours - typical! a different big discussion point but in my view it will hold in the $1,600 to $2,000 range for a year or two yet. Something to watch though! Size of VGM business? - £48 million revenue last year from producing 52,000 ounces of gold at their operation on Fiji. Reason to pick it for this year's competition? Recovery of investor's trust the start to be demonstrated this year. Reason to pick it as an investment for a longer, two or three year, term? Recovery to the historic levels of production achieved by the previous owners which was between 100,000 and 140,000 ounces of gold every year for the 18 years 1988 to 2004. Therefore a double recovery story rather than a breaking new ground story...... "Should be easy then?" ....... Not so far, it seems. Will it win the competition? I do not think so, but a top twenty finish would be nice. 150% increase on the 70.25p to 175p at the end of the year ought to be possible IF they do what they say this time. Basic data The mine has been producing gold and for more than 70 years (7million ounces) It has been 100% owned by VGM since 2008 It has 790,000 ounces of gold Reserves in a Resource totalling 4.2 million ounces of gold (1.4million measured; 1.3million indicated; 1.5million inferred) Income last year was £48million Current Market cap £72.5million Shares in issue 88.56 million Current Share price at close 29th Feb 2012 was 81.9p (70.25p at start of competition) Cash at year end £6.2million No debt Net loss last year of £2.3million after a profit of £4.5million the year before Listing? - On AIM, and planning to also be on TSX later this year So the opportunity here is for a double recovery but at what risk and what went wrong last year? Like others, I have been invested here for two and a half years. Last year was not good. A "learning experience", they say maybe - but not good for the pocket over the last year! The signs are that this year the payback from a series of initiatives will, at last, take effect. Firstly, for those new to VGM, here is an overview of the business extracted from the Annual Report:- "The Vatukoula Gold Mine is located in the northern part of the main island in Fiji, approximately ten kilometres inland from the coast and within the Tavua Basin. The mine is located at the foot of the hills that make up the Tavua volcanic crater. [My Note: It is extinct...!.... More than 3 million years ago and the islands were then pushed away from the "ring of fire"] The mine operates within three Special Mining Leases which covers a total area of 1,255 hectares. In addition VGM can explore on areas outside the current mining leases via Special Prospecting Licenses which covers over 19,000 hectares of the surrounding Tavua volcano. The Vatukoula Gold Mine is currently both an open pit and underground operation, however in the medium-term it will become predominantly an underground mine. Underground production is sourced from four mining areas; Smith Shaft, Philip Shaft, R1 Cayzer Shaft and Emperor Decline. The Smith and Philip Shafts, and the Emperor Decline serve as the main accesses to the underground workings for personnel and materials, and are used for ore and waste haulage. Once the ore is hauled to the surface it is crushed, enriched and refined at our on-site treatment plant, to produce Gold Dore. Gold Dore produced at the mine is typically 80% gold, 19% silver and 1% base metals such as copper and iron. The Gold Dore is sold to the Perth Mint in Australia. VGM has onsite workshops, assay labs and produces its own power via diesel generators. Vatukoula Gold Mines Plc. is a UK public company with its headquarters in London. The Group reports in Pounds Sterling (£) in accordance with IFRS as adopted by the EU." What went wrong in 2011? First an apology In early 2010 I was very supportive of VGM, they were my pick for the NFSC that year and did ok (up 200% from 67p to 201p). Although I did a cautionary "it is unlikely to gain much from here" post on 7th November 2010, I was still optimistic for the year ahead and the longer term. Even during the setbacks in early 2011, as the price dropped progressively I remained optimistic that the management would deliver on their forecasts. I am sorry if the posts over that period encouraged you to buy in at those higher levels. I personally also added at that time in the 177p 167p range in January, February and March. In April, Shanklin100 posted his doubts about management forecasts, but I favoured the management being given one last chance to meet their 75,000 ounce forecast. He was right to be sceptical and I was wrong. Sorry. On 31st May 2011, they opened at 142p but then announced their forecast for the year of 75,000 ounces of gold would be reduced down to 55,000 ounces. A severe reduction considering the confident assurances two months earlier. They also announced that they had raised £6 million from Zesiger by a placing at 125p. That seemed low but within a month VGM was down to 92p investors had lost trust in the Company. There followed several months of trying to find out exactly what was going on. Together with another shareholder, I met the CEO, Dave Paxton, in VGM's London office to get some answers to some serious questions. It was clear a major shift in management and strategy was underway and whilst we were re-assured that the Company was not in irredeemable decline it was difficult to be certain how long it would be before the changes took effect and how effective the investment they were making in the future would prove to be. "Prove to be" rather sums up the position. We, and the vast majority of shareholders, had lost confidence and could not take forecasts or projections on trust in the same way as we did in 2010. Their year end was 31st August and in September 2011 it was announced that they had still marginally undershot their 55,000 ounce forecast with production of 52,157 ounces. Despite income of £48 million they would go into bottom line loss having been in profit the previous year. The planned recovery to historic production levels had clearly stalled. What was the underlying problem? There had been insufficient investment in underground development by the previous owners in the last few years of running the mine down to closure. Last year, no amount of pushing of the labour force by the then mine manager could get the production up. Perhaps the Executive Director who had been the mine manager 10 to 15 years ago also had too optimistic an expectation. He managed 100,000 ounces to 120,000 ounces a year ok back then after all. The first quarter exposed the weaknesses. As an emergency measure the accelerated development was conceived. This was insufficient and the second quarter was worse than expected. I guess they kept a brave face on it while planning more radical corrective measures. The then mine manager was coming up to retirement. Time to plan for, and perhaps head-hunt, a replacement. The new man would need to buy-in to new initiatives and procedures and hopefully bring some of his own. Guessing with the benefit of hindsight, this process probably started in February/March and the new mine manager may have been selected by April/May. Normal notice periods meant he was unable to start until July. The old mine manager retired, perhaps a smidge early, in May/June. Dave Paxton, the ceo, was acting mine manager for a month before the new man, Dave Whittle, started in late July. Once Dave Whittle was in place at the mine, the new procedures and initiatives that had probably been discussed in May, June and early July could be confirmed and brought in to action. How they addressed this, is all set out in detail in the Annual Report which was published in December 2011. http://www.vgmplc.com/downloads/Vatukoula%20AR%202011%20Low-res.pdf The new procedures and initiatives, in brief The Appointment of David Whittle as General Manager in July paved the way for a variety of operational improvements. They set about improving relationships within the workforce through a review of their mining operations in consultation with the senior mine operations teams. The objective was to optimise operations in the short and long term. They introduced a number of initiatives to reduce dilution and increase the grade mined. As well as improving the motivation of staff at all levels, they introduced improved processes, such as split-firing of development drives to blast the ore and waste separately. Mining practices were improved such as the use of truck chutes to reduce the need for underground loaders, the reintroduction of sweeping teams to remove the remaining material in mined stopes, and the use of water cannons in the underground stopes to recover more of the fines. All these improvements should help reduce their cash cost per ounce - by mining less waste rock and increasing the percentage of gold bearing ore. As well as improved mining disciplines and processes, they made a number of senior management changes including key appointments in the Geological, Mine Planning, Maintenance, and Supply Departments. In their annual Report they say that "We are confident that these actions will build a solid foundation from which to expand our production" and "With these appointments, we believe that we now have in place a management team with the required experience, professional skill set and hunger to develop the mine and deliver on its full potential." Investors are waiting to see if these initiatives bear fruit. What are their current forecasts? In the RNS on 21st September 2011 they stated "We expect to produce approximately 65,000 ounces of gold in the financial year ending August 2012." To August 2012: 65,000 ounces To August 2013: 75,000 ounces (in the January 2012 Corporate Presentation, page 11) http://www.vgmplc.com/downloads/VGM%20Jan%2012%20CorpPDF.pdf To August 2014: 100,000 ounces (verbally at the AGM on 31st January 2012) How will we know if the above initiatives will enable them to deliver on their forecasts this year? I suppose they will only succeed in proving they have overcome their previous inability to deliver to their forecasts when they announce that they have indeed produced the 65,000 ounces they are forecasting this year.....but there may be already some tiny indications that they should succeed this year:- Firstly, this year they have been much more cautious in their forecasting:- It seems that in previous years, the gold production target has been largely influenced as a target by the then mine manager together with the then executive director who was the mine manager himself many years ago. Neither is now employed by the Company. I was told that this year, in building up their forecast, the old mine manager having left and the new mine manager having only just arrived - they started by asking the section leaders to build up their section plans in the form of tonnages they expected to bring up and an indication of the grades in their area; they asked the geologists to review the grade expectations and agree the reasonableness of the section forecasts. Having consolidated all those totals, the Main Board reviewed it and reduced the tonnages by 10% and reduced the gold grades by 10% to arrive at their formal forecast of 65,000 ounces. Another indication that they may have been more conservative in their forecast this year came from conversations I had at the AGM on 31st January 2012. The Canadian Zinc Directors (non-execs at VGM) were at the AGM and I spoke with both. They said that, before listing in Toronto, VGM needed to get a couple of good quarters under their belt and be absolutely confident of meeting their forecasts in the future. He was very clear that if they got it wrong in Canada they would be punished even more severely than they were here in London last year. I spoke separately to Kiran Morzaria, VGM's FD, and he said exactly the same so I believe that view to be strongly held by the whole Board. So they have compelling reasons to have provided the market with a cautious, but not unreasonably low, forecast for this year. There are some indications that they are delivering to this forecast. Q1 was reported in December and production was at 15,684 ounces, nicely ahead for the H1 30oz / H2 35oz split that might be a reasonable expectation [my figures, not from VGM]. Secondly, this year their reporting has been more prompt:- Indications of a turn round in the Company are their quicker production of year-end figures, the quarterly update and the Annual Report. The Annual Report was some two months earlier than the previous year even though it was 30% longer and very comprehensive in its detailed reports. Their year-end figures were also announced two months earlier (RNS in December 2011 previous year had not been until the end of February) and their Q1 update was delivered in December rather than January. These improved timescales indicate that their office administration has improved (and that they can meet the tighter timescales that will be demanded by the Toronto exchange.............when they eventually list there). Thirdly, share purchases by fund:- Zesiger, the fund that took 5% of the company in May last year in a placing at 125p, added more, and announced on 20th December that they were now over 9%. They must have better access than us to assess the effect of last year's changes and underground investment, and must like what they see. Fourthly, the new mine management and initiatives:- As mentioned above, the new, younger, General Manager of the Gold Mine on Fiji was appointed last July. In the annual report the ceo said that Dave Whittle "has vast experience in underground mining and has managed mining operations in the Pacific Islands. His underground experience will assist in placing the Vatukoula Gold Mine in the long-term sustainable position that we are looking to achieve." And finally the underground development work should pay dividends this year. As we know, the reason for the difficulty in accurately predicting gold production is the variability of gold grade in the seams which are relatively narrow. In order to be more accurate in their forecasts, and to be more confident that they can maintain the higher production levels when they get there, they are doing significantly more underground development work than planned at the start of last year. It became clear that too little development work had been done by the previous owners, understandably, as they ran the mine down to a halt in the low gold price era of 2004 to 2006. Again from the AR "We have instigated a number of measures to assist mining, and in particular grade control. We have returned our stope mining to traditional longwall stopes, with the addition that we are designing new stopes to produce over a much longer time horizon. This involves longer setting up but we believe it will provide smoother production when commissioned." So, IMHO, putting all the above indications together does suggest to me that they have done a lot to overcome their historic inability to deliver on their forecasts. How are they getting on so far? So far they have reported Q1 (Sept Nov) and finish Q2 in the next few days (Dec Feb), and I would expect them to report an operational update during week commencing 19th March 2012. The Company has given no breakdown of their forecasts into quarters or half years, which is a pity. The best I could get at the AGM was that the amount of gold produced each half year should steadily ramp up to the 100,000 ounces in 2014. We can perhaps therefore deduce an approximate profile from what we do know. We know that H2 last year production was 22k ounces, and we were told in the December update that the gold grade in Q1 this year was 32% up on the previous year. So as a rough guide we might deduce that H1 this year will be about 38% up on H2 last year. H2 would therefore be a further 13% up on that. The profile of a steady build-up, to serve as an approximate half yearly guide might therefore be as follows:- H2 2011.....22k (actual) H1 2012.....30.5k.....38% up on previous half. H2 2012.....34.5k.....13% ditto.....................equals 65,000 ounces for full year H1 2013.....36.5k......6% ditto H2 2013.....38.5k......5% ditto......................equals 75,000 ounces for full year H1 2014.....46.0k.....19% ditto H2 2014.....54.0k.....17% ditto......................equals 100,000 ounces for full year The Actual production in Q1 was 15.68k ounces, and this was a quarter where they said the grades encountered were particularly good. Therefore to meet the above profile, Q2 will need to be 14.82k. More than that would be a bonus and make the achievement of the year end forecast a little safer. We shall find out in week commencing 19th March. Gold Price? Has been trading in the $1,700 to $1,790 range in the last month (February) but as I write it is dropping from $1,785 at 3pm today to be below $1,700 tonight after Ben Bernanke said there would be no more QE....therefore it could be seen as being good for the US Dollar....and therefore bad for gold. If it were to stay down it would be negative for VGM's profit margin. Personally, I think there is still enough uncertainty / sovereign debt etc. in the world, with inflation being a sovereign exit aid, that gold will remain a store of value. Cost of production ? VGM is seen as a high cost producer because last year the 53,461 ounces they shipped cost them $1,349 an ounce. This was high because of the huge amount of waste rock being extracted while they do the accelerated development work underground. Their aim is to get the cost down to $800 an ounce when they are producing 100,000 ounces a year (2014). On the face of it this is a massive reduction....But it is not really......All they have to do is finish the development work, mine 17% more ore and get the grade back to historic levels......That's All !!..... I know it is not that simple! Briefly, starting from their total cash costs in the last quarter of $20,150,000, add the cost of mining an additional 21,000 tons of ore brings this to $21,262,000. If the grade was back up to the historic level of 6.5 grams per tonne they would be producing at 26,400 ounces a quarter which would be close on $800 per ounce. (theoretical because it is at October 2011 price levels and excludes inflation of costs up to whenever they achieve 25,000 ounces a quarter) So not too difficult to reduce the cost per ounce if the number of ounces goes up as planned. Even at $800 per ounce they are a relatively high cash cost operator producing 100,000 oz per year compared to, say Medusa. But, if they could achieve it, at $1,600 gold they should be throwing off £48million a year in cash which would justify a market cap rather higher than their present £72.5million Initiatives for the longer term? Cost reductions There are two initiatives that will help this year......the improved systems of working underground more efficient working, safer working, more discipline and training all as set up by the new mine manager, Dave Whittle and his team. This will make the labour force more productive. Secondly, at the AGM, we were reminded that the previous owners of the mine had become pretty poor at paying their bills before closing it down. At first the suppliers to VGM had been cautious and demanded early (sometimes pre-) payment terms. Now that VGM have demonstrated a good track record with their settlement of invoices, suppliers are keener. So they are re-negotiating terms and setting up longer term supply chain agreements at better prices. In the longer term there are two initiatives that we have heard about before the biomass power station in conjunction with Fiji Sugar Corporation (at present expected to complete feasibility, financing and procurement this year. Then, 18 months to two years to build, so operational late 2014) and expected to save about $100 an ounce off the cost per ounce. Also the possibility of adding a bacterial leach recovery plant ( better recovery rate 90 to 95% as opposed to 83 to 85%) that is about 10 or 12% more gold from the same mined ore. Extensions to the existing gold resources They found new extensions to the existing underground ore bodies and one significant new orebody all as set out in their RNS on 12 October. It is here http://www.investegate.co.uk/Article.aspx?id=201110120700170030Q This is part of an on-going exploration programme which should extend the life of the mine well past my lifetime! The Directors have aspirations to be producing at 200,000 ounces a year, and with a resource of 4.2million ounces at present, before the latest exploration finds, this is not outside the bounds of possibility but of no real benefit in this NFSC year !! Drivers for the share price in the rest of this year? May 2012 Half year accounts June 2012 Q3 Operational Update September 2012 Q4 and year end Operational Update December 2012 Annual Results December 2012 Q1 2013 Operational Update Mid year Update on arrangements for bagasse fired power station with Fiji Sugar Corporation Second half of calendar year Listing on TSX, perhaps. Useful links for Further Research Website:- http://www.vgmplc.com/June Q1 Operational Report:- http://www.investegate.co.uk/Article.aspx?id=201112140700199103T Exploration Update :- http://www.investegate.co.uk/Article.aspx?id=201110120700170030Q Annual Report dated December 2011:- http://www.vgmplc.com/downloads/Vatukoula%20AR%202011%20Low-res.pdf
benjib5151: The VGM share price has gone up a fair bit since the original price was agreed as has the gold price. So the investment case for the chinese has only got more compelling in the last few weeks. I suspect one of the reasons the price was so decent is that more than one party were interested. If i was you i would put on a trading position at the very least, or even a long term position...
a harris: the old shares vgm.l 'we do now expect the offer [ to acquire ] to come in at some point in September at the previously advertised rate of 3.72p per VGM share. We would recommend visiting the Company’s website (www.vgmplc.com) intermittently as further details will be posted in due course.' does anyone know if the delisted shares could have any alternate intrinsic value either now or in the future... ??
140661: The share price of VGM closed at 34.5p last Friday, its lowest value for over 3 years valuing the company at just £33m. At these levels VGM's share look incredibly cheap but why has the price fallen so far and why does VGM have so few supporters:? 1. exec management have let shareholders down big time in over promising and private investors have understandably deserted the stock. The large institutional shareholders already have significant holdings and while happy to hold are not buying any more. 2. management present poorly and have done a terrible job in attracting new investors. 3. most small gold miners have had their share prices crucified over the past 6 months although VGM's share price has significantly underperformed the sector. 4. incompetent broker who has failed to get behind the shares and does not care. By way of example the latest half year results did not result in any change to WH Ireland's profit estimate for this year despite it being blatantly obvious the company would fail to meet the old forecast of £12m profit this year. As a result of the above factors VGM has been an easy share to short and the price has been destroyed as a result. The result is a share price that has fallen 85% from its high reached 18 months ago and a price down 70% over the last year. In my humble opinion despite the obvious deficiencies of management this share is now trading well below its real worth. More importantly, we have the beginnings of a potentially significant positive move in the gold price. Fridays' rise was the largest single day move upwards for 2 years and there is a growing feeling that further QE is inevitable leading to a further strengthening in the gold price. Finally, we are starting a quarter where VGM's management expect production to reach 20koz maybe 22koz, thereby generating significant profits this quarter. I have called this wrong for some time and now stand on a hefty loss, however, I am not selling and am buying more at these levels. The recent fall has allowed me to average down to a price of 45p and I remain convinced my shareholding in VGM will soon be showing a healthy profit. Disappointingly this will have nothing to do with VGM's management who have done a poor job but rather to a market which has over reacted and now resulted in a share price which significantly under values a company making profits, with significant cash reserves, significant exploration upside, 40 years of existing production, falling costs, supportive large shareholders and a rising gold price. Strangely the incompetence of this management has created a wonderful buying opportunity for those with the cash to take advantage. GLAH
flyingswan: How low can VGM go? I sold my VGM share at 200p at Christmas time last year. With the funds, I bought into ADH and glad I did, from recent VGM share price. ADH is down a little from recent highs but not as much as VGM. When would be a good time to get back into VGM? Should I wait for St Ledgers Day - 15th September, when the Sell in May People come back in?
nielsc: stodgy, What is depressing? The chat on this bb, gold price, VGM share price? As I said earlier I think the share price will drift around these levels until we get closer to the Q3 results or an indication that VGM is indeed producing more gold to meet it's 75k oz target for year end Aug 2011. Cheers, Niels
chinese investor: Zhongrun obviously didn't want to cause controversy by leaving existing shareholders with nothing so they've made the December 3.72p offer. If they hadn't made the offer the share price would be under 1p by now. They deliberately created uncertainty with the offer to flush out weak holders. Now they don't have to pay 3.72p to mop up shares.

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