RIG- Shareholders seeking fair deal.5 Mar 2023 14:40
A basic on the present situation, from RIG:
"We, the Rambler Investors Group (RIG), have been following the recent developments surrounding Rambler Metals and Mining (RMM), a copper and gold mining company based in Newfoundland, Canada. It is our view that RMM is a unique company that requires a different approach to the usual CCAA process cases.
RMM's financial distress is due to balance sheet and working capital mismanagement, rather than the assets themselves or the operations not being economically viable. Rather than simply selling the business for the value of outstanding debts, we believe there is an opportunity to at least sell the business as a whole utilizing a proper marketed disposal process. This would allow for the settlement of all outstanding debts whilst offering a return to ordinary shareholders. RMM would make a very attractive acquisition target as it also has substantial deferred tax assets ($32m at the end of 1H22) that would be highly monetizable by a buyer covering most of the outstanding debt. There are several factors that support our view.
First, it can take a very long time to develop a fully functioning copper mine (up to 20 years), making existing mines like RMM's Ming mine a valuable asset. Second, the cost of building new copper mines has increased significantly (more than quadrupling since 2000), making the cost of developing new mines much higher than in the past. Third, Canada is a triple-A credit rated country with very clear rule of law, making it a stable and safe jurisdiction for mining operations (most future mining projects are in developing countries). Finally, RMM's copper resource is of high quality and grade (~1.8% grade of Ming mine is 3x the level of operating mines and 4x the level of projects under development), further increasing its value as a potential investment. In addition, there is also a second major copper asset RMM owns the Little Deer Complex, which could be further developed.
We believe that there are several options available to RMM that would benefit both the company and its stakeholders. These options include a sale of the company as a whole, an equity raise benefitting all shareholders, a convertible debt issue, or an operational turnaround strategy (helped by copper prices that are near all-time highs). Valuation approaches like net asset value, resource based, peer group comparison and multiples based like EV/EBITDA all support a much higher valuation than the current debt outstanding, making it clear that RMM is significantly undervalued.
Cont ..
Sign In
Follow the stocks
