RE:RE:RE:RE:RE:RE:RE:Market Maker
shinshin, happy to hear you are open to a range of opinions, unlike many posters on SH. I am not dedicated to one stock, including THX, and I am not here to promote a stock because posting on SH wouldn't make any difference. I have mentioned THX and some others as examples to show that some stocks show promise for the future, while others should make you think twice about the market valuation vs future prospects.
Your best source of information on any company is the company's official reports, disclosures and documents (all available on SEDAR and their websites. A knowledge of the industry and of financial issues helps in understanding those reports. I am not going to produce a free research report comparing the two companies, but I will make a few quick comments which you can verify yourself from a deeper analysis of the data.
RBX
- RBX is mining a very low-grade deposit, and was losing money when gold prices were lower. Actually they were saved from going down the tubes a few years back by higher gold prices. But higher costs are now a very strong headwind, making the company's future profitability doubtful.
- They claim to have extended the mine life by drilling out new reserves. But are those reserves profitable in the real world, as opposed to in their paper studies? The original pit must be getting very marginal to mine, otherwise why would they suddenly be pressed to do a huge amount of stripping to access the new pits.
- As mentioned before, in 9 months of 2021, they had to spend every nickel of cash flow (and a little more) on 'capital' costs just to continue mining. This creates an increase in reported equity on paper, but the money is spent making holes in the ground and cash flow was negative. In fact those capital costs were more like operating costs, because they had to spend the money just to keep the current mine operating, not to develop new deposits (except for a tiny amoutn spent on exploration, with no significant results produced), let alone a new project.
- People keep repeating that RBX is a low-cost mine, but in 2021 that was blown away. They exceeded their project AISC by several hundred dollars per oz (dig it out of the reports), making a joke of their own projections. This was not due to external factors, but due to their own spectacularly poor planning and projections.
- RBX has said the big expenditures are behind them, and they expect to return to making a profit. But where is the new mine plan, and where are the new projections? And if they were revealed, how credible would they be after the 2021 blowout?
- Even after the recent decline in the share price (which some still believe 'should never have happened'), RBX still has a market cap of almost $200 million. Will RBX make enough free cash flow after all costs to repay this amount to investors in the next few years? It takes a huge amount of blind faith to believe that they will.
THX
- THX has had a pretty good run as they brought a new mine into production, as expected and predicted. However, full production was delayed by some teething problems with the new plant, which is not unusual. These issues have been successfully overcome, but the rise in share price has been slowed down as a result. The question investors need to answer for themselves is, does the current sp represent good value when the market comes around to understanding the assets and the profit?
- Unlike RBX, THX is not just talking about a new project, it already has a very advanced 2nd exploration project and even a 3rd. Based on THX's record, to me their positive view of the new project in Senegal is credible. But even without any new project, THX's high-grade mine in Nigeria can more than justify the market cap, and will only get better with ongoing exploration.
- It happens that THX and RBX now have roughly the same market cap. The question is, which company has greater value (and is creating more value), and which one is facing serious challenges just to generate enough funds to keep operating? It's up to you to make your own analysis.