Gympie Gold Ltd (GYM) – Undergoing a Dramatic Transformation

• Gympie Gold Limited is a gold and coal company that is undergoing a dramatic transformation, resulting in increased gold and coal production, higher profitability and growth in earnings for its shareholders.
• The old-timers failed to recognise the significance of the ore shoots in the Inglewood structure and their relationship to the Gympie Veins which are all recent breakthroughs in understanding GYM’s gold mineralisation. This is already reaping benefits resulting in a sudden spate of discoveries of stockworks, ore shoots and Gympie Veins, which with the new 1mtpa decline and move towards rubber-tyred mechanisation all point to production growth at its QLD operation
• One of the first conclusions that we made on completing a valuation of Gympie is “where is the mistake”, because the valuation using a 7% NPV or constant money cashflow (the norm for gold is 5% and for coal is possibly 7%) was more than double its share price of A$1.07, so we “hacked” the model, and yet the valuation was still more than double its share price of A$1.07 (since risen to A$1.18).