Gold Stock Opportunities

I'm going for it because it looks like the strongest of the mid sized producers.
The management has so far been very good.
The mines are in Australia: benefit from lower sovereign risk and lower AUD.
No debt and substantial cash and bullion.
ASIC projected as $1050/oz
Will benefit from a higher A$ gold price, with leverage, but other way if gold declines
561k ozs sold in fy16, 600k ozs projected fy18
Has been paying a dividend
Has been replacing its mined ozs and growing reserves cheaply from in and near mine exploration. Has been discovering ounces that didnt make it to resource status by fy16 cut-off

One of the recent presentations explains things:
http://www.stocknessmonster.com

I dont know whether it will get cheaper, but obviously I thought it was worth getting some in low $4's
 
From p17 of Denver Gold Forum presentation, September:

Why Invest in Northern Star

Highly profitable: Net profit after tax up 65% to A$151.4M in FY16; underlying
free cash flow of A$224.3M; dividends up 40% from A5ps to A7ps

Strong balance sheet: no debt; A$326M in cash & equivalents (30 Jun 2016)

Emphasis on financial returns: Past 5 years avg TSR of 52% & Return on
Equity of 30%

One of the few ASX-listed gold miners with critical mass and asset diversity:
forecast production of 485koz-515koz in FY17 at an AISC of US$728-
US$765/oz, 75% profit margins at the current gold price, with production rising
to 600koz per annum from CY18 onwards

Record of strong growth with much more to come: Concentrated centres
strategy to drive increased production and a simplified business model;
increasingly valuable

Aggressive exploration strategy delivering outstanding results; total
Resources rose to 9.25Moz in FY16 (after depletion); average Reserve cost of
discovery just US$36/oz; a further four discoveries not included in FY16

estimate, A$60M spend for FY17
Committed A$70M to expansion capital in FY17; this will underpin growth in
production

Strong management team, including many former contracting executives
 
Reported reaction to Denver Gold forum presentation by m.d of Northern Star:
http://resourcesrisingstars.com.au/infopage/9198

Earlier article distinguishing NST's proclaimed style as a business first, miner second. Means it focuses on usual metrics like Return on Equity, cashflow and earnings per share. Will not make dilutive and expensive acquistions while it can organically grow by expanding its current mines. Compared to Evolution Mining EVN which article implies has increased production and resources at high cost.
http://resourcesrisingstars.com.au/infopage/6550

Disclosure: held
Sentiment: hold, and look for buying opportunity
 
NST - in for a few more today @ 3.84
#longtermconviction #mad #donttakeanynotice #bored
This is not an NST thread, post yur gold stock opportunities
 
Appreciate the NST commentary - I'm already a holder but I found that info to be quite informative. I'm looking to pick up some more, but after the most recent drop, I believe it might go further.

I'm in EVN and BLK as well. I like the management at EVN but Jake Klein is much more risk averse, I think it's probably one of the best blue chip gold miners on the ASX. Not a fan of Newcrest.

One big lesson I've learned this year is to just not get to emotionally attached to these stocks and try and have a plan to take profits. We has a great run at the beginning of the year and things finally seemed to be on the up and up, but then bang! It's just a reminder how volatile this sector is.

I'm still a big believer in metals long term, It just would have been nice to have some cash spare so I could take advantage of these opportunities!
 
Comparison fy12 - fy16
from comsec

EVN
Book Value ($): 1.37, 0.98, 1.02, 1.11, 1.04
Return on Equity (%): 3.50, 10.20, 7.40, 9.40, 9.20

NST
Book Value ($): 0.23, 0.26, 0.42, 0.55, 0.75
Return on Equity (%): 23.20, 25.20, 15.80, 33.70, 36.90

@Abossy

I was keen on EVN also, but have cooled off a lot. Firstly I got a nose twitch when I noticed that the M.D got awarded a 776,479 swag of performance rights recently. I've made some lines of comparison above that faces EVN and NST off on two basic business metrics over a 5 year period (fy12- fy16 inclusive).

Those are book value (equity per share), and Return On Equity (ROE). However, a related critical comparison is the amount of share dilution occurring, and here also NST is a better business for the shareholder. While the EVN shareholder has been diluted by almost double over the 5 years, NST has gone up from 400m shrs to 600m. The M.D of EVN is being diluted a lot less than his shareholders due to his free performance rights.

In terms of book value, EVN is floundering, being actually worth less now than at the start of the 5 year period.
In terms of return on that book value (ROE), Evolution is ok, but lame compared to NST.
So with NST, you get a business that not only has stronger ROE, but the equity per share on which that return bears has dramatically risen.

Debt positions: while NST is debt free and holds a large cash and bullion account, EVN has $279m long term debt as at fy16, a hefty accounts payable item, and small cash position.

Will have another look at BLK
 
So the previous is a simple comparison of EVN and NST as to their quality as businesses, but says nothing at all about how they compare on price.

NST has a price to book ratio P/B of almost 6. That is high, NST is not cheap, even after this correction so far.
EVN has a price to book ratio P/B of 2.4
Once you take into account differences in debt and cash/bullion assets it might be fair to say that NST is at least twice as expensive as EVN on this metric.

To me that is worth it, because I suspect NST's book value will continue to rise, making the P/B ratio lower conceptually if the price stays the same .
There's no evidence at all yet that EVN's book value will rise.
Also you expect to pay more for a higher ROE company.
Also you expect to pay more for a management like Northern Star's. They are more likely to expand production and reserves without overpaying. They are increasing reserves from 'in and near mine' exploration, not through recent acquisition. They are likely to dilute the shares less than EVN.

It does lead me suspect that NST might get cheaper though, given that there is also a charting argument for this.

BLK is just a mine in development. Its still aspirational and is only aiming at 100k ozs in the near term. BLK only has losses over the last 5 years, so there is no basis for comparison. Trader's stock, imo. It's P/B is 9.4, more than that of NST, all on the promise of profitability and growth.
 
finicky said:
BLK is just a mine in development. Its still aspirational and is only aiming at 100k ozs in the near term.
Click to expand...

Aiming at 200k, capacity of 100k. Slight difference.

Mid term, 200k easy.



Edit:

NST $3.86

BLK $0.75
 
From BLK's own presentation at Brisbane in August.
Page 5

Blackham Strategy
Australia's next +100,000ozpa gold producer with EBITDA $60-70Mpa

Expansion options study underway to expand annual production
to175-230kozpa
Click to expand...

They themselves use the terms "strategy" and "next" in reference to 100,00 oz producer
Then they refer to an "expansion" "options" "study" in reference to the mid-point 200,000 ozs

75c is very expensive for an unproven, soon to be producer when put into perspective against equity. As mentioned, mutiple of 9.4. It will have to be massively profitable to justify it.
 
finicky said:
From BLK's own presentation at Brisbane in August.
Page 5

Blackham Strategy
Australia's next +100,000ozpa gold producer with EBITDA $60-70Mpa

Expansion options study underway to expand annual production
to175-230kozpa
Click to expand...

They themselves use the terms "strategy" and "next" in reference to 100,00 oz producer
Then they refer to an "expansion" "options" "study" in reference to the mid-point 200,000 ozs

75c is very expensive for an unproven, soon to be producer when put into perspective against equity. As mentioned, mutiple of 9.4. It will have to be massively profitable to justify it.
Click to expand...



Ahh well there ya go.

Be interesting to see the return, 2 months, 6 months, 12 months, 18 months, 24 months, 36 months from now.

I'm sure at the end of it you'll be justifying a great argument why one should buy BLK @ $2.50, which one would have thought, defeats the purpose of this thread .... Opportunity.

We could find the safe conservative SMF stocks all day long (if that is anyone's intention), but isn't this thread about opportunity?


Maybe the thread should be renamed to Gold Stock Cushion Fluffers.
 
Opportunity takes into account risk as well as anticipated reward.
As a timorous cushion fluffer I'll continue to go for NST which is cheaper than BLK, and is distinguished as a thriving business
Every f'g dollar made by most recs on the stocks sub-forum has been made off other shareholders. BGS, BLK, PLS etc, Not one dollar of profit to claim.
 
finicky said:
Opportunity takes into account risk as well as anticipated reward.
As a timorous cushion fluffer I'll continue to go for NST which is cheaper than BLK, and is distinguished as a thriving business
Every f'g dollar made by most recs on the stocks sub-forum has been made off other shareholders. BGS, BLK, PLS etc, Not one dollar of profit to claim.
Click to expand...


Welcome back from the Bahamas, trust you enjoyed your break mate. :P


"Every f'g dollar made by most recs on the stocks sub-forum has been made off other shareholders"

No shit?!.

And?
 
finicky said:
Opportunity

BGS, BLK, PLS etc, Not one dollar of profit to claim.
Click to expand...

BGS .04 to .53 in 12 months = 1225%

BLK .20 to 1.18 in 12 months = 490%

PLS .22 to .87 in 12 months = 294.45%


NST 2.36 to 5.89 in 12 months = 149.57%
 
RRL reached the $3 area. I added today at 3.03 but am mostly in from 30c higher
As posted, $3 was my first chart target. Also posted on chances in the 2.50 - 2.25 range
For those still interested in quality gold miners, worth a look?
 
VanEck GDX etf

Heavy 8% fall overnight, and is that now an active head and shoulders? Neckline @ 22 broken this week.
Appears to be the highest ever weekly selling volume for GDX.
Perfect timing for me to have pretty much completed buying RRL and NST, but could be great opp coming up for believers in a resurgent bull market.

If I understand correctly, selling by etf participants forces selling of constituent mining stocks by the fund's manager (VanEck). That should mean selling of stocks like NST, RRL, EVN, SAR and some other Australian goldies soon, if not Monday? Would be pleased to be corrected by anyone more familiar with the process.
As at 11 Nov, the GDX was holding: 36m NST, 30m RRL, 97m EVN, 48m SAR
Seems a fair amount of selling potential if GDX has embarked on further downtrend?

Click or Tap thumb
VanEck Gold Miners etf, weekly
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