VAU - Vault Minerals

ParleVouFrancois said:

Are you sure you can't change your orders? I had a sell order in for 25 cents before the halt, and I removed it, I double checked and can't seem to see it at all? Perhaps I misunderstood you.

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There arent any sell orders for .250 on the list.
Once its into suspension it is locked until reopen this im 99% sure of.
If it was still in trading halt you can change your order though I believe.
If this isnt the case can someone please tell me how it works?
Cheers Huitzii

Hi Huitzii, not sure exactly what question you are asking, but I can confirm with you what will happen with RED, now that its in voluntary suspension. Upon its request to be re-instated, which could happen fairly soon once it has completed and announced its funding arrangement, then the market for RED will be erased as to what you may now see on the screen, and it starts afresh, with all new Bids and Offers being taken only - anything you see now is old history and will not be placed on the new market for RED once it resumes trading.
I hope that clarifies your question?

beatle said:

Hi Huitzii, not sure exactly what question you are asking, but I can confirm with you what will happen with RED, now that its in voluntary suspension. Upon its request to be re-instated, which could happen fairly soon once it has completed and announced its funding arrangement, then the market for RED will be erased as to what you may now see on the screen, and it starts afresh, with all new Bids and Offers being taken only - anything you see now is old history and will not be placed on the new market for RED once it resumes trading.
I hope that clarifies your question?

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WOW are you saying it will be like an online auction on reopen?
Cheers Huitzii

Upon resumption of trading in RED it will be the re-commencement of Bids/Offers being taken, as is the normal basis for all shares on the ASX, except that RED will have none of the past Bids/Offers included, so if you had a previous order in you may have to reinvoke the request, depending upon your arrangements with your broker.

What sort of pricing are we likely to see when it opens up again? and for all those long term investors what is the price people think RED will go to in the future? considering al goes well for its projects.

beatle said:

Upon resumption of trading in RED it will be the re-commencement of Bids/Offers being taken, as is the normal basis for all shares on the ASX, except that RED will have none of the past Bids/Offers included, so if you had a previous order in you may have to reinvoke the request, depending upon your arrangements with your broker.

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So in regard to an unfilled order & with what your saying that i would have to pay an additional brokerage fee if i wish to complete the order? Why should i have to pay double brokerage?

Thats an interesting question Jancha, I guess it depends upon your exact arrangements with your broker, but there may be some way to negotiate a deal with the broker - its a rare occurrence and I've not been involved in such a situation previously.

First Timer - you are asking a $64 question, but it will depend a bit on what the insto's want to do - either to let it find its way with small retail clients putting in a short term market, or if the insto's want to show a bit of leadership and give us all what we want - a move up in price.

But the longer term price in my view is UP!!! The insto's are not buying shares today for a quick profit, they are in RED for a big ride upwards I believe.

Hi Beatle, you may have missed my post re Rugby. Would be interested in your thoughts on the activity adjacent to Mapawa and the possibility of a joint venture? Also, what are the odds that the CR is at a premium? AB

Hi Anderbond, its an interesting post you made re Rugby and the adjacency of its recently acquired Mabuhay to RED's Mapawa project. Seems as though there may be lots of exciting news ahead for both, and hopefully Mapawa finally gets the recognition that we have long waited for. But as for a JV, I guess we will need to see how things pan out for both projects first, my overall view has been that Mapawa would be an interesting supplement to a major development covering Philex's Boyongan/Bayugo projects - if that were to happen then I could see RED being a major player in the district, not just producing around 100,000 ozs annually from Siana but a considerably larger amount of gold and copper from a joint venture with Philex. If Mabuhay was included then it would seem a logical fit if its an extension of the same Mapawa LSY lode, but I really don't have any information about its exact location with respect to LSY. Its a shame that RED didn't do a deal with Pelican, since its also a WA based ASX listed company and the deal done with Rugby seems fairly soft with minimal money upfront.

As for the placement price being at a premium to last price (of 20.5 cents) well I'm not holding my breath, my expectation will be that its in the 15 - 20%discount price range 16.5 - 17.5 cents. And of course if its below that range then it will be touch and go whether its above the 15% level - in which case the final tranche will be subject to shareholder approval at a general meeting, but I don't think the company nor insto's would want that happen, so I'm presuming the pricing to be above that level required for shareholder approval.

Whatever the price of the placement, and accepting its at a discount, I still believe RED will not be long before it starts making its move towards the Siana valuation. Who knows, we might even see a Mapawa drilling update soon after to make the news a bit more positive after the dilutionary affects of the placement.

Thanks Beatle. I too had the same thought as to why RED did not get involved in the adjacent tenement, as I am sure they would have been well aware of potential and the situation with Pelican Resources. As you say, it seems like a relatively soft play that Rugby has picked up. In terms of RED's involvement in the overall district, I feel that this will be fairly assured given the acumen and strength of the major backers that have become involved. Just how far this goes has to be seen, but IMO the Mapawa find is the major reason that the larger institutions have become involved. Siana may simply turn out to be the cash cow to help fund the ongoing development of Mapawa. To me it makes sense that before they go too far forward with Mapawa that they line up some major "friendly" backers. This hopefully means that if a predator appears looking for a bargain buy as the Mapawa drilling progresses, then there are sufficient "friendly" shareholders to ward off such a challenge. That is my thinking anyway. Others may disagree. By the way, my old RED sediment seems to have worked reasonably well so far in my readings. Not wanting to blow my trumpet though. I must say I am encouraged too by the appearance of a lot of new objective posters on this thread. So far we have more or less avoided all the twisted postings that appear in such numbers on HC. I see there is a lot of abusive criticism of management appearing yet again there. I might be old fashioned, but cannot see the reason why one would bother to post such stuff. If you don't have confidence in the management, why bother being involved? Personally, I have absolutely every confidence in the current management of RED as they finally bring to fruition a project that has encountered many hurdles along the way. There is very strong experience at work for all shareholders in the management team IMO. JUst have a look at the backgrounds of the "team". AB

Anderbond you make many points that I agree with, and I agree with you 100% that your call with the RED sediment has been spot on. I value your comments and predictions, and clearly your 3rd party source (which may not be the RED sediment) seems to know a fair amount with what's going on! (I only hope your question to me about placement price at a premium was a prediction of things to come, but it would be a (pleasant) surprise to me!).

As far as the new posters that are appearing, it is very positive. Interestingly, about 3 months ago when talking with CJ he told me that the majority of selling at that time had been at the expense of loss of smaller shareholders, and being replaced by larger shareholders - I wonder if the last couple of weeks positive share price movement has a turnaround with increasing numbers of smaller shareholders again. I hope so as it provides a bit more variety in the shareholder group.

With regard to Mapawa, I am very excited to think that the news flow could be increased appreciably with acceleration of exploration effort, and I do hope that they can increase the level of activity in the other parts of both Mapawa and Siana MPSA's soon to demonstrate to the market that RED's exploration portfolio is very exciting and worthy of considerable blue sky value - any corporate activity should always be defended by ensuring the market is well informed of the potential of the geological assets held, so that full value is extracted at the time of a possible takeover. That is also why I would prefer a spread of insto's and smaller shareholders, to ensure that there is not so much control in the hands of Matthews, Baker Steel etc. I don't have a problem with a takeover play, but only if it gets full value for us all.

Now we have another wait, I hope its not long, I want to get this thing started with open dialogue between RED and its shareholders and the general market once again!

Hi beatle.
I'm curious, is there a simple explanation of how you calculate your valuations, or is it possible you could email me anything that might point me in the right direction. I've said previously that this is one of the first stocks I've held for fundamental reasons rather than just charting, and it's quite relaxing to be able to ignore the technical signs of doom when one is confident in the fundamentals. One sime calc I Tried was the resource of approx 800,000 oz x pog 1350, less cost per oz 350 ish, less 37million prepay. Gives a figure around 7-800 mil I believe. This indicates to me that 700mil ish of gold is reflected by market cap 200mil - cheap? Obviously you use a more complex way to calc value? I'd be interested for future reference in other companies. How does the valuation change with respect to debt or equity of finance. I thought sp changed usually due to lower eps when dilution takes place but I would have thought that with a fixed resource the debt or equity would have same effect- ie debt reduces earnings, equity reduces eps. Please excuse my ignorance but I would like to learn more about fundamental analysis and valuing if possible
Thanks
Andrewk65

Hi Andrew, while not being as knowledgable about RED as Beatle is, I do know a thing or two about fundamental investing. The debt financing tends to be a "better" deal if you can pay off the debt with the assets you buy, e.g. the assets earn a higher % than the loan is charged in interest.

Using round numbers and a very simplified example:

How this works for a gold miner is that it makes say 20% margin on it's mine. That is, it needs say 1 million dollars to make a mine, that makes 200,000 a year. The loan charges say 8% per year on the balance. Lets also assume that there is currently 1 million shares on issue at 1 dollar.

Each scenario is 1 year after the either debt financing or debt issue.

Scenario 1:
The 1 million is debt funded.
Thus, 200,000 in profits is made, 80,000 in interest is charged, the 1 million shares have earnings per share of 12 cents each.

Scenario 2:
The 1 million is equity funded.
Thus, 200,000 in profits is made but there are 2 million in shares, thus the 2 million shares have earnings per share of 10 cents each.

(The numbers might be wrong in the above example, please check over them and correct, I've been awake for 18 hours atm)

Thus, if you loan from the bank at a lower rate then the return of capital by the company, it's earnings accretive, each dollar of earnings, after paying for the interest on the debt, is divvied up amongst the shares. If you loan it at a higher rate than the return on capital by the company, it works just the opposite, and is value destroying. When you issue more shares, the pie is bigger, but sliced into more smaller pieces, so to speak.

Sorry if this didn't help much as if it didn't Beatle will probably explain better, but hopefully it does.

Hi Andrew, with regard to your question about valuation. There are a number of ways to value an asset or a company based on its assets, but the most reliable and accurate basis is using discounted cash flow (DCF) analysis. This is used for modeling of all resource companies having reserves, and is used by the various mining analysts working generally within stockbroking companies. You will sometimes see the models of those stockbroking firms quoted and provided in a recommedation for a company, although often the model information they provide does not give all the details of various parameters and assumptions used for the analysis.

My valuations of RED all relate to the DCF analysis of the Siana, which the company holds 97.6% equity in, based on the schedule of mining and processing already provided in past company reports, and using my assumptions of commodities and exchange rate. The important thing with RED is that its quoted schedules for mining and processing have been already vetted by independent consultants working on behalf of the bank as part of the due diligence process for consideration of bank debt, and thus is reliability for estimation of the Net Present Value of the project are considered of good reliability.

Once you have determined the NPV of Siana that RED is attributed to hold, you simply can then divide by the shares on issue, much like what ParleVousFrancais has in his explanation.

Where the debt and equity comes in relates to plugging in either into the same model, and seeing what the final impact is on NPV and thence the NPV/share, ie estimate of value cps.

Debt is generally preferred as less shares are issued, unless the debt is excessively priced or the terms and conditions are excessively hard to achieve, but there is always a price to pay for the debt. Having debt generally keeps the company more focused on maintaining good practises in order to keep the bank happy and in conforming with the banking terms and conditions.

I don't have any particular references for you to look at it more closely, but suggest if you want to pursue it perhaps you should look for a reference on the internet using the key phrases, Mining Investment Analysis, and Discounted Cash Flow Analysis or more specifically there are courses provided by consultants or Securities Institute of Australia. I would give you one word of caution though in using the modeling process - an analysis using DCF modeling can give you an answer that maybe very inaccurate, if you just keep changing the inputs unrealistically, and therefore the input values are most important and should be scrutinised and questioned with the utmost attention to detail! As they say, rubbish in = rubbish out!

With the gold price up over night it would be great to have RED come out of the suspension and resume trading today, during the market session - here's hoping!

Just a note to Andrew, I did forget to say that many people get some indication of value for a company using comparative data for each company's gold projects, based on quoted resources etc, and using statistics, say for example Enterprise Value/ozs or many similar parameters, and as a rough indication it provides some idea of what a company may have compared to its peers. But again, its rubbish in = rubbish out, so you have to heavily scrutinise the information, make sure you are comparing apples with apples, if there are resources, are they likely to be within an economic pit, what are the recoveries etc etc.

The other way, to standardise the valuation process as you have thought might be acceptable, assuming some sort of annualised profit margin etc is just too general to be meaningful. The DCF method, if used correctly allows you a period by period (whether it be annual, quarterly or monthly data) to more accurately estimate the profitability etc - and like anything as imprecise as a reserve, as soon as you complete a schedule of mining and mineral production, its historic, there will be factors that make you deviate from the schedule. So its a best attempt to estimate, not something you want to sign off as money in the bank. If you want to do that, then keep your money in the bank, haha!

Good luck with your valuing! (And GOOD LUCK TO RED !!!).

We are on boys. the ann is coming through now. Up or down this baby is away

Hi Beatle , AB and all other RED club members. We are certainly a growing family...
First of all, AB a very interesting post yesterday, re: Rugby. It was great to see Mapawa get a mention. The size of Mapawa could truly be significant and obviously RED management have a little crystal ball at hand and can see the potential. Mapawa poses a very exciting future and now with the quarantined 20 million allowed for an accelerated exploration programme, with a bit of luck we do more with Mapawa than scratch the surface... Thanks AB, you certainly have some great sources...

Secondly, Ive been trying to get my head around this quotation of suspension, so i looked into some other ASX listed companies that are currently going through the same process. I found a company RDR, i know they have nothing to do with RED, all though i do believe they deal in gold and silver in WA. There quotation of suspension lasted 2 days before a request for reinstatement was announced to share holders and the general market. So maybe we have to sit back for another day or so before we hear anything. Although Beatle, you just mentioned that it may be possible for an announcement and for RED to come out of hiding, today, mid session. So thats a possibility to is it???

And how is this gold price. It can only mean great things for RED... As far as I'm concerned RED management couldn't have timed it any better, Price of gold through the roof, last trading price, 20.5 cents and near a 12 month high, then the release of the all anticipated Ann that we've all been waiting patiently for. I'm really looking forward to the next week or so.

Sorry for my lack of knowledge in this particular field, as i feel it is fairly rare to have a company your invested in, go through this process.

Wahoo, looks like where reinstated...

Come on RED...

This one's a tough one to call. SP will probably go down due to the share dilution at 0.17c but that could be outweighed by the positive news of oversubscription to the capital raising by Insitutional players.

Meh. Doesn't matter. Long term looks good

Well instead of the original 40 million we now have 75milion. Show the level of interest from inst. We know that it is these guys who move the share price and we are along for the ride. Looks like they are riding in our direction up up up. Look good on open.

Yep, guess the Market's liking the news of the oversubscription by Insto's. Up up and away