RE:Recent SP action is....Well said Human7, I absolutely agree with your perspective!
While the recent drop in share price is certainly disappointing, those with a longer term investment horizon (6 to 12 months minimum and not minutes) likely aren't too concerned and are very likely using this as a buying opportunity.
The recent drop in share price may seem to be the sole cause of the disappointing Q1 results but as you have pointed out, there are many other factors at play here helping to lower VGCX share price in the short term. Some additional factors that I see are:
- The recent drop in gold price due to the market mini tantrum because apparently inflation is still high and the Fed just might increase interest rates and not start to cut them as soon as previously believed. What a load of garbage, so if the Fed raises another 25 basis points the world comes to an end?...rediculous but hey if you want to manipulate the gold price you gotta make something up! Our new hedges are in my view a prudent move in these unpredicatable times and the closer the gold price gets to the hedge price the less VGCX has to pay out on the contract. If gold were to spike significantly then that would of course cost us some profit but then that's the price you pay for insurance and until VGCX is firmly producing 200K plus a year, having some hedges isn't such a dumb idea. The prior hedges at $1483 that thankfully finally expired in April were killing us and I see these new hedges as quite reasonable. If gold were to go to $2500 an ounce we will still do just fine (but I agree with Kegman that's unlikely unless a major macro event occurs).
- VGCX shares recently had a great run to about $11.16 and went well into the RSI Overbought range. It may have seemed like the stock was about to have a new major breakout but anyone using technical analysis would have used that indicator to take profits. Our new largest shareholder GMT Capital is a hedge fund and so you can bet they use the RSI and will be doing long and short trades as opportunities present themselves. Our next largest shareholder SPROTT may be doing the same so expect volatility. The Q1 results were merely a catalyst released at a bad time (just as the profit taking commenced) that helped spook the weaker retail investors into seeing doom and gloom and running for the exits, selling the big guys some more cheap shares so they can load up for the next run, which according to the RSI ioday is not that far off.
- AISC has been a concern being higher than we'd all like to see but no surprise there, as production decreases, AISC generally increases. However, as VGCX gets production numbers back towards 200K ounces in the coming quarters the AISC will decrease. So even if gold prices do drop further, the anticipated lower AISC should help mitigate it.
And one last point regarding Kegman's concern with VGCX debt and why they aren't paying it down faster. Well according to Page 17 of the May issue Investor Presentation, as at Dec 31st, VGCX had debt of $247.0 million and $211.7 million in gold inventory. Now it appears that the $247.0 million in debt is in US dollars while the $211.7 million in gold inventory is in CAD dollars (although it doesn't actually state which ....I wish they would clarify this). So based on what I believe was about 106,000 ounces in inventory at year end, the gold inventory is worth about $211.7 million CAD or $167 million US (which is based on cost rather than market value). I estimate market value to be about $32 million US more or about $197 million US total. So assuming we have a US long term debt level of $247 million US at year end and inventory of about $197 million US, how much actual debt does VGCX really have? And then deduct the $20 million cash on hand and the Long Term debt is really about about $30 to $40 million unless I'm completely misunderstanding this. I certainly welcome anyone on this board who wishes to weigh in and correct me on this if I'm completely misunderstanding this.
So in view of the above, how bad are things really? From what I'm seeing I'd say things are looking very good on a forward going basis and I'm certainly not giving up any of my cheap shares for GMT and SPROTT to grab at these prices. I've owned many gold stocks over the years and have held some real dogs so trust me, I know what a real dog of a stock looks like and this is clearly not one of them! I realiize that many of us long term shareholder's patience has been tested beyond what most humans can endure but I do believe those who are patient will be well rewarded in the coming months and I intend to be one of them.