ASX:VAU
Vault Minerals Ltd
Investment Summary
The fund managers believe Vault Minerals Ltd presents a compelling investment opportunity due to its recent merger of Red 5 and Silver Lake Resources. In their opinion, this merger has created a well-capitalised, diversified gold producer with over 400koz p.a. production and established infrastructure in a Tier 1 jurisdiction (Western Australia). The company has shown strong performance, with share price increases of 18.2% in January and 22% in October, driven by strength in gold prices and solid cash flow generation, including a reported production of 97koz. Despite these gains, Vault still trades at a significant discount to peers across various valuation measures such as EV/Resource, EV/Reserve, EV/Production, and EV/EBITDA. The fund managers view the current pricing as an attractive entry point for long-term investors as the company prepares for further growth through exploration and a fully funded expansion of the KOTH plant.
Commentary From The Managers
Blackwattle Investment Partners
31 Jan 2025
$0.39
- Vault Minerals rose 18.2% in January on continued strength in the gold price.
- Solid production of 97koz and strong cash flow generation reported in the December quarterly.
- Vault was formed by the merger of Red 5 (RED) and Silver Lake Resources (SLR) in June 2024.
- The combination of RED’s King of the Hill (KOTH) operation and SLR’s strong balance sheet has created a well-capitalised producer.
- New combined operations yield a diversified ~400koz p.a. with established infrastructure in a Tier 1 jurisdiction (Western Australia).
- The new balance sheet is enabling exploration drilling and a fully funded 20% expansion to the KOTH plant.
- Despite the rally, the company trades at a significant discount to peers on multiple measures including EV/Resource, EV/Reserve, EV/Production, and EV/EBITDA.
- Blackwattle Investment Partners continues to hold due to the potential for growth and value realisation.
Blackwattle Investment Partners
31 Oct 2024
$0.40
- Vault Minerals Ltd is a gold producer formed from the merger of Red 5 (RED) and Silver Lake Resources (SLR).
- This merger combines RED’s King of the Hill operation with SLR’s strong balance sheet, creating a well-capitalised producer.
- The company has established infrastructure in a Tier 1 jurisdiction, Western Australia, facilitating future growth.
- Post-merger, VAU’s share price experienced a decline of ~30%, despite a ~10% increase in gold prices.
- This price drop provided an opportunity for Blackwattle Investment Partners to build a position at a significant discount to peers.
- Key valuation measures showing this discount include EV/Resource, EV/Reserve, EV/Production, and EV/EBITDA.
- In October, Vault was one of the best performing gold companies on the ASX, with a 22% increase in share price.
- Blackwattle Investment Partners continues to hold its position based on these favorable developments.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.