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This reminds me of what happened with weatherly international, ticker WTI, another copper miner that was listed on AIM.
It's worth reading the historical RNSs to see what could happen if a miner runs out of cash
At this rate they will be suspended soon
Vicioushippo
Regarding your point...
'Newgen cannot seize assets worth more than they are owed. If th asset is worth more than the debts, the shaeholders get the difference. Unless the loan is secured against the mine itself of course. Hopefully not...'
The terms of the loan were that 'The loan will be secured by first ranking security over all assets of the Company and its material subsidiaries;'
Does anyone know if the mine workers are carrying on as usual? If I thought the company I worked for was going bust I would down tools and march up to the bosses door.
Seriously where the actual f Uck are the management!!!!
Newgen cannot seize assets worth more than they are owed. If th asset is worth more than the debts, the shaeholders get the difference. Unless the loan is secured against the mine itself of course. Hopefully not...
Lucan.
Thanks and no problem.
My model was really just to get an idea of how the increased productivity may have reduced the c1 and c3 costs provided in the last financial statement, using available data.
I used last year's costs (as a guide but clearly not up to date info) plus the actual production for 2022 so far.
The important cost for me is the c3 cost to mine per lb of cu. This is a more inclusive cost metric but as I said it still doesn't include long term dev, capital expenditures, company debt payments etc
May be worth relooking at my post as they don't show cash positive.
To me what I determined from them are....
They show RMM will have lowered c1/c3 costs from last reported (subject to costs), but at the moment they are probably about selling the copper at around the price copper is. Give or take of course. So they are potentially 'operationally viable' in terms of copper mining, just about or close to it.
It also showed me the cost to mine per lb cu is likely to improve further if the ramp up in production continues and they hit guidance of 7000 tonnes cu (as per the numbers).
However this is just the cost to mine. It's encouraging but not inclusive of other spend at a company level.
So in short what I determined was they can be operationally viable to mine copper, and this will improve as they get economies of scale, but they are unlikely IMO to be profitable at company label with the added spends.
Of course with debt refinancing, even more cost initiatives etc this can be significantly improved.
I agree equity will likely be needed as part of this, potentially significant. The company need this to reduce debt costs tbh.
Atb
When you buy shares,however low the share price, and there's a risk of insolvency you risk losing 100% of your capital. That's the same loss whether you buy at 30p or 5p
Just wait going to happen be ready I am
This is a tricky question. There is no doubt that even with a huge dilution, RMM has the potential to be in £1+ terrirory.
The RNS has made investors question whether the company will survive at all. So the price is either "quite a lot higher" or 0p. It really depends if finances are dire or not. Simple as that.
However even worst case, unlike, say, a retail operation, we have a real asset that is valuable. With new mining techniques, the inevitable rise in copper prices over the next 10 years, efficiency gains, and Canada's status as a "friendly country", Ming Mine can be a very nice cash cow for 20+ years.
Worst case - find a buyer for the mine. A $billion working mine needing, say, $50m further investment, has to be worth something more than $50m. Assume Newgen and other debts/ costs come to $35m, $50m price would leave $15m = 9p a share.
Market cap of £11 million for a £1 Billion mine! I am guessing the vultures will be out with a low blow offer of 15p a share!
This is an absolute shambles for the shares to be this low! I honestly can't believe they have gone this low! Someone driving it down to get in an offer at a cheap price?
I was expecting this
They have assets worth money and a working mine
Surely they are some positives
The reason for the drop has already been given in an RNS. They need money to stay afloat and they have no idea how they are going to get it. I was surprised it didn't drop to this level on the day of the RNS stating this. If as seems increasingly likely they will have to go death spiral route selling at even 7p will look good business.
What price would you buy in at the current moment,and at what price do you think the possible placing be,many thanks
This is an AIM miner so....chances are it'll end in tears. They usually do! Always have an amazing prospect, prove they can't run it and then it gets sold to someone who can. Same old same old.
That not happen am visiting there anyway not fincail advise
Hope next RNS isn't 'suspension of trading on AIM pending clarification of financial position' but it is looking more likely
When ? Wait till sp to go 0.....
Said this a few months ago: "Copper is going to come off as we move deeper and deeper into a global recession. This could easily see teens again before long imo. Never ever think 'this is as low as it can go' with aim shares - cardinal sin."
Since then copper has dropped 20% and this is now 8.....
I got roundly derided because...that's what these boards do. Full of ignorant, emotional traders who don't know what they're doing who are effectively gambling.
Get out of this and stay out imo.
They must issue an RNS surely, it can't continue like this.
It’s happening it is best time ever
.
Thank you for your careful and interesting analysis. For me, the most worrying aspect of the RNS was the stated need for 'reduction of current operational accounts payable balances back to current terms'. This surely indicates that bills are currently not being paid when due; and that must surely mean that the mine is NOT cash flow positive at present, whatever your model may suggest. (It is also a recipe for disaster, as suppliers will not tolerate delayed payments indefinitely).
I can see no resolution of the difficulties here without a very substantial equity raise, at a discount to the current SP. Unfortunately that is a moving target, dropping day by day, and is likely to continue so until we have some clarity.
@moon - What has happened to the Mill?