Considering the theory of efficient markets, the price of assets (SP) would reflect all available information. If markets were efficient, it would be impossible to do better than them, or worse. In this context, it is necessary to analyze the information available on Robex to try to verify the veracity of this theory.
Logically, the first check consists of analyzing the profitability parameters of the last 4 quarters (2021-Q4 to 2022-Q3). The earnings per share obtained for this period is 3.3 cents, which makes it possible to obtain a price-earnings ratio of 10 with an SP of 33 cents. Assuming that 10 is an adequate price-earnings ratio, regardless of the particularities of Robex, the efficiency theory seems to apply to the current SP.
For the next financial statements, the period will be shifted by 1 quarter, from 2022-Q1 to 2022-Q4. From now on, certain hypotheses can be calculated. In particular, the effect of the change in POG on international markets. In 2021-Q4, gold was sold at the price of CAD$2266 while in 2022-Q4 the average price was CAD$2351. For an equivalent quantity of ounce of gold sold, the profit difference would be +1,318,528$ CAD. On 601,203,403 shares, the change in earnings per share would be +0.2193 cents.
As of 2021-Q4, a provision of CAD$7,714,916 has been recorded for tax adjustments. Out of 601,203,403 shares, the disappearance of this provision in 2022-Q4 will increase earnings per share by +1.2832 cents. In the short term, I consider it best to limit the assumptions to these adjustments.
In 2022-Q4, the merger of the Sycamore business was completed, which required an addition to share capital. The quantity of outstanding shares is now 843,363,403. Consequently, the dilution of the adjustments limits the increase in net earnings to 0.1132 cents per share for a total of 3.4492 cents over 1 year. By respecting the price earnings ratio of 10, justified by the theory of efficiency, we can determine that the SP of Robex will be 34.5 cents after the publication of the annual financial statements. In short, the application of the theory of efficiency, which implies a persistence of the absence of speculation, hypothesizes that the SP of Robex will be stable for a few more months.
Otherwise, a return to speculation means that the valuation could adjust accordingly to numerous quantitative and/or qualitative criteria. In particular, the conclusion of the financing of the Kiniero project; the NPV of the Kiniero/Mansounia project; the amount of mineral reserves and resources; drilling results; the discovery of extension or new mineralized zones; the potential for growth in both internal and external operations; the value and potential of exploration permits; the migration of trading from the stock to Toronto; consolidation of shares; … Overall, a general increase in the valuation of gold companies which is consequent to the increase in POG; a feeling of protection against the risks of economic and/or security disasters; protection against the debasement of hard currencies; …
For Robex, this important list of events are all reasons that can justify an increase in SP in the short and medium term. Failing this, the start of the Kiniero plant, scheduled for 2024-Q1, will have the effect of increasing the overall production capacity by 4. The application of the theory of efficiency will necessarily be beneficial for the SP and with the contribution of some quantitative and/or qualitative criteria, the adjustment of the SP could be dizzying.
Considering that investor sentiment and/or the return of speculation are uncontrollable factors, TIME and patience are resources that must be had. Nevertheless, the financial results progression expected for the beginning of 2024 is worth the wait and accumulating shares during this period is definitely a good idea.
Before concluding for real, I must mention that the recent progression of the POG, and the persistence of this value in 2023, could generate ~12,000,000$ CAD of additional free casflow for the year.