Resolute Mining (RMGGY), an Australian gold mining company, is at a fascinating crossroads. Their recent Q4 2018 earnings call presents a picture of steady progress, but a closer look at their financials reveals a silent transformation with the potential for explosive growth.

CEO John Welborn highlights Resolute's transition as an "investment phase in long life, low-cost mines." Their commitment to the future is evident in the Syama project, set to become the world's first fully automated underground mine. However, the key lies in their massive gold reserve, which the market hasn't fully recognized.

Resolute holds nearly 6 million ounces of gold in reserves, strategically located beneath their own mills. These aren't just numbers; they represent tangible wealth ready for extraction. As gold prices fluctuate, the intrinsic value of these reserves becomes increasingly significant.

Imagine a significant gold price upswing. Resolute's reserves, currently worth a fraction of their market capitalization ($740 million), could skyrocket in value. A conservative 20% gold price increase would see their reserves alone surpass their market cap, suggesting a substantial undervaluation. This is particularly intriguing considering their consistent profitability and dividend payouts even during this "investment phase."

Resolute's diversification strategy further strengthens their position. They're building a future mine portfolio through equity investments in companies like Orca, Loncor, Kilo, Manas, and Mako, spreading risk and positioning themselves to capitalize on new gold discoveries.

Their commitment to shareholder value shines through their dividend policy and their unique collaboration with The Perth Mint. The option for shareholders to receive dividends in gold showcases their confidence in the enduring value of this precious metal. This reinforces Resolute's core message: they're dedicated to delivering gold-backed value to investors.

Syama Gold Mine: Production Ramp-Up

The chart below depicts Resolute's projected gold production from their Syama mine over the next two fiscal years. As the mine ramps up to full capacity, production is expected to significantly increase, leading to higher revenue and potential for increased dividends.

A silent revolution is unfolding beneath Resolute's balance sheet. The remarkable value of their gold reserves, combined with their aggressive growth strategy and focus on shareholder value, presents a compelling opportunity for investors. As the gold market continues to evolve, Resolute's story might be on the verge of a dramatic shift, transforming from steady progress to explosive growth.

Hypothesis:

Resolute Mining's current market valuation significantly undervalues its substantial gold reserves. A significant increase in the price of gold, coupled with the company's aggressive growth strategy, could trigger a substantial revaluation in the near future.

Numbers:

Current market capitalization: $740 million

Gold reserves: Nearly 6 million ounces

Hypothetical gold price increase: 20%

Estimated value of reserves after price increase: Exceeding $740 million

"Fun Fact: Resolute Mining's Ravenswood Gold Mine in Australia, owned and operated for 25 years, is the site of one of the world's largest open pit gold mines. It has produced over 8 million ounces of gold, significantly contributing to Australia's gold mining industry."