Vatukoula Gold Share Discussion Threads

[chinese investor] 14/8/2013 18:26

Today I ask David Paxton the CEO of Vatukoula Gold about the news on 12th August that his company has secured $40 million in new financing from China's Zhongrun and where it leaves investors with the shares at 8.15p.
Q. I thought this $40 million was to be all in the form of debt – what changed?A. Our partners Zhongrun opted to finance the company through a combination of debt and equity.  There was a window of opportunity for Zhongrun to purchase additional shares, above the 30% limit and they decided to invest as a combination of debt and equity. 
Q. The debt element ($20 million) looks a tad expensive – am I missing something?A. Yes although the interest rate is 13%, the interest is only payable after 3 years.  We have a 3 year grace period.  At that time we expect the mine to be generating cash – so it fits well with our plans. 
Following this news your Chinese shareholder will own 55% of Vatukoula – why is it not making a mandatory bid?A. Under the existing takeover rules, Vatukoula is considered a foreign company, as the majority of directors are overseas, so there is no requirement that an offer should be made, or a whitewash obtained.  We are informed that this rule changes on the 29th September this year – hence the window of opportunity for Zhongrun.
Q. Do you regard yourself as "independent" or "in play?"A. With Zhongrun holding approximately 60% of the company – I do not see VGM plc as ether independent or in-play.  However Zhongrun are an investment company with an eye to developing an international mining company.  We believe VGM plc is the initial part of that – so we look forward to an interesting development period. 
  Q. On a proforma basis what is the new market capitalisation?A. The new shares in issue will be 322 million, at the current price of 8p, roughly US$40 million, but I would expect a lower pricing once the new shares are issued.  So in reality a US$20 to US$30 million valuation.
Q. In the last quarter your cash costs were c$1800 oz. With the gold price at $1300 can you hope to make any money at all?A. As we have stated all along – Vatukoula is in a development stage.  We have been trying to finance this development stage for over 18 months.  We expect, once we have upgraded our development and underground ore transport fleet, we will be able to achieve our targeted level of 100,000 ounces per year.  An underground mine has high fixed costs.  If you double production, you halve your fixed costs on a per ounce basis.  That and a higher expected grade will result in much lower costs on a per ounce basis.  We believe that our cash costs will be less than US$1,000 per ounce, and as such we will be one of the lowest cost underground mines. 
Q. What will this new cash be used for?A. There is no one big item.  WE need to upgrade our underground fleet.  We would like to add to our heavy-vehicle maintenance team – a heavy-vehicle rebuild team – which takes tired old equipment and takes it down to the bone and rebuilds.  This we will do with some new equipment and then use that group to keep our fleet at optimal availability.  We also have to build a new tailings dam – this will be the biggest single item.  Also included is a reequipping both shafts below 18 level.  We see the majority of production coming from these lower levels.
   Q. On the basis of that planned capex what sort of output level and at what all in cash cost are you targeting and by when?A.  We maintain our target rate of over 100,000 ounces per year.  At that stage we expect that the cash cost of production to be in the region of US$900 per ounce.
Q. We used to hear a lot about how you would build a biomass plant using sugar to slash your energy costs. Is that plan still a runner and if so when will it happen, how will it be financed and what would the impact be on cash costs?A.  Now that we have secured the funds – our top priority will be to replace our reliance on diesel power.  The Fiji Sugar Corporation – have completed detailed design plans for a biomass project that is designed to provide Vatukoula power.  But they have not yet been able to secure the funds to develop this project.  WE feel that we are forced to go it alone with some other form of power – be it gas, heavy oil or an alternate biomass project.  We will be investigating.
Q. Where do you see the gold price heading?A. Although gold is out of favour in the western world, there is huge demand in the east.  We hear numerous stories about physical gold buying in China and Hong Kong.  The cost profiles of most of the international mining companies has risen in line with the oil price.  Oil provides more than one cost input for mining – explosives are sourced from hydro-carbons, Heavy vehicles rely on diesel rubber and lubricants – all oil priced based and transport to and from the mine relies on diesel.  Of course power is very dependent in most cases on power.  So most of the major input costs, other than the workforce are based on the international oil price. 
So given the higher cost of production – based on the increase in the oil price and the increase in the workforce cost, plus the larger take by the operating countries, the gold price must eventually rise or the supply with diminish.  So over the longer term I see an increased gold price – based on the supply demand balance in the physical market.
Q. And what gold price do you need to be cash neutral or better?A.  We expect this to be – on a sustainable basis approximately US$1,100 per ounce.
Q. I am sure you are aware that Vatukoula shareholders have not made money from this stock. Why should they average down at this point?A.  I still believe that Vatukoula has a long profitable future.  We have known for over 18 months that we require additional capital to complete the development at the mine.  We now have the funds to proceed with this development.  Although the market value of Vatukoula has decreased considerably – we still believe that there is value in the future production at the mine, and we expect to use that base for expansion in the future.
Thank you Dave. We will do another Q&A in a few months to review progress.

[phoenix1234] 14/8/2013 18:23

Q&A with Dave Paxton of Vatukoula Gold

[atlantic57] 14/8/2013 17:37

Chine good luck i put the certificate in the bottom drawer in 2010.
Currently sitting on a huge loss.

[chinese investor] 14/8/2013 14:30

knalid,
Thanks.
Hopefully the Fijiian Workers are not Digging Out Lots of Loss Making Gold.
Hopefully they are Developing New Streams !

[khalid] 14/8/2013 11:38

Chinese Investor: I don't think the shares are sold this morning and I think they are buys and are listed in the sell section.Don't worry things might get better.Good luck.

[chinese investor] 14/8/2013 07:43

I've put my Share Certificates in a Drawer.
I'll be Bringing them out in Three Year's Time !

[bikwik] 14/8/2013 01:29

Chinese, you may be right one day, but don't get yourself all worked up about it. Go and sit down quietly and relax. Personally I like the chart, a nice head and shoulders "base pattern" and once gold has finished the current consolidation, then yes its going up.

[atlantic57] 13/8/2013 14:08

Chinese with the number of shares in issue and the debt taken on the next 12 months will clearly show which way this is going.


However surely if it looks like it will succeed then the Chinese will simply mop up the rest of the equity

[khalid] 13/8/2013 12:13

Chinese investor Why is the sell orders pouring in?

[chinese investor] 13/8/2013 07:49

Gold Looking Good !

[hazl] 12/8/2013 15:59

my buy still not showing up. Had some of these years ago.

good luck folks!

[chinese investor] 12/8/2013 15:24

Price of Gold $2,000 per Oz
Extraction Cost $1,000 per Oz
100,000 Oz Annually

$100 Million Annually
PE 10

Therefore it will be Capped at $1 Billion (i.e. £680 Million) !!

340 Million Shares ---> £2 a Share !!!

[chinese investor] 12/8/2013 14:29

VGM have joint brokers now !
I wonder who arranged the money for VGM ?

Vatukoula, the AIM listed gold producer focused on Fiji, is pleased to announce that it has appointed Daniel Stewart & Company Plc as joint broker with immediate effect to act alongside WH Ireland.

[chinese investor] 12/8/2013 14:27

Meanwhile Price Of Gold Zooms !

[atlantic57] 12/8/2013 13:37

Surely on the balance of probability given Paxton's record they are likely to fail.

If on the other end they succeed the Chinese will surely gobble up the rest of the Company.I Don't know what the rules are here but surely the effect of the mass dilution today is to simply present the Company to the Chinese investors for peanuts.

Thank you David Paxton for looking after private investors!

[chinese investor] 12/8/2013 13:00

Will the Chinese Government part finance the Power Plant ?

[california joe] 12/8/2013 12:58

10.34 12.08.2013

Vatukoula Gold Mines Plc (LON:VGM) had its price target cut by WH Ireland from GBX 20 ($0.31) to GBX 12 ($0.19). WH Ireland currently has a buy rating on the stock.

[johncraven] 12/8/2013 12:43

Think these are going to rocket

[phalen] 12/8/2013 12:08

double bottom here ...could easy go to 26p

[chinese investor] 12/8/2013 12:00

I'm confident MIDAS in "The Daily Mail" will mention VGM !

[chinese investor] 12/8/2013 11:45

Looking Good !

[chinese investor] 12/8/2013 09:43

VGM are now mortgaged to the hilt BUT they will be here in three years time.
Hopefully the price of gold will be over $2,000 an oz by then and extraction costs will be around $1,000 an oz.