Sunday, October 3, 2010

Tribune Resources NL (TBR)

An update to the below profile of Tribune Resources was posted to the blog September 20th, 2011 (click below link):

Follow up for Tribune Resources

Tribune Resources made a new 52 week high on Friday, closing the day 30% higher than the day prior.



Over the past financial year Tribune has not released any investor presentations. Their market announcements contain no flashy graphics and contain little more than the bare facts. I have seen no broker reports or recommendations. Often there is little depth with only a few buyers and sellers on each side.

What a boring company you must be thinking! Why the big move? For the answers you need to read their Annual Report.

Here are some key figures (some as of 30th June from 2010 Annual Report):

Share price: $1.485 (from close October 1st)
Number of shares: 50.3m
Number of options: 4.5m
Market cap (not inclusive of options): $74.7m
Profit for the Year: $19.3m
Earning Per Share: 39.63c (35.95c Diluted)
Cash: $12.9m
Gold in hand (+ in transit):  $55m (spot value as of 30th June)
Gold resource: 478k oz @ 14.2g/t (Tribune's portion, leases & stockpiles)
Position in Rand Mining: $13.3m (26.5m Shares x $0.50)
Market Cap / Resource = $156 p/oz
Top 20 Shareholders hold: 87.7% (73.3% held by top 5)

Tribune holds stakes in Western Australian Gold projects as well as a 100% interest in an Ghana exploration project.

Projects and Ownership:

Kundana (36.75% interest) - Rand Mining holds 12.25% interest*
Seven Mile Hill (50% interest) - Rand Mining holds 50% interest*
Mt Celia (100% interest)
Ghana (100% interest)

*Note: Tribune holds 43% interest in Rand Mining and Rand Mining holds 23% interest in Tribune Resources, so in an indirect way Tribune has a larger interest in these projects than is first apparent.

Further to the above (from the Annual Report) a further 18,189.353 ounces of gold have been credited to Tribune from a recent toll treatment campaign, with a further campaign to have occurred starting mid August with expectations it would be complete by the end of September, so we should expect an announcement about this anytime.


Kundana (East)

Located 25km North West of Kalgoorlie this project is the location of Tribune's Gold resource and source of their revenue. The project ownership is split between Tribune, Rand Mining and Gilt-Edge Mining (wholly owned by Barrick).

There are multiple deposits located within the boundaries of this project.
339,600 tonnes of ore were extracted (from Raleigh deposit) over the financial year at a grade of 13.4g/t (higher than the last 2 financial years), Tribune's cut is 127,373 tonnes (or 55,000 ounces of Gold).

The ore is processed at the Greenfields plant located near Coolgardie.

Agreements are being drafted for financing and development of the Rubicon-Pegasus-Hornet project (other deposits located within the project area).

Ghana

The project area covers 27.5 sq/km and lies immediately along strike from the Perseus (ASX: PRU) Ayanfuri project (which hosts a resource of 5.3m ounces of Gold). Although Tribune's project area doesn't currently have a defined resource there are several prospects (Dadieso, Japa & Abwaso) within the project area which have returned promising drilling results.

Other untested Au anomalies are under review, where further inspection and geological survey work will be carried out with trenching to follow should results warrant.


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Tribune has a lot of potential. The biggest risk here is the liquidity, with the top 20 holding almost 88% that only leaves a small amount for day to day trading on the ASX (assuming no larger players decide to liquidate).

Further to this the very tight registry means that the company is run almost as if it were privately owned, you will have to read between the lines to discover their future intentions. Their plans are not hand fed to the buyer like they often are by a company that markets itself. That said, those that have some confidence reading an annual report will let the figures tell the story.

I suspect that the share price will appreciate further from here into next week, the rally that started after the half yearly report in March lasted approximately 3 weeks and peaked more than 50% higher than the close on March 12th (last trading day before report) and we are in a much more favorable time for Gold stocks today based on sentiment. However, the risk is that even if you take a position and the share price appreciates it may not be that easy to offload at the peak. For a value investor with a medium to long term outlook, Tribune (in my opinion) represents excellent value if you can buy a position around current prices.



BB.


Disclosure: Position held in TBR. Not investment advice. Do your own research.

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