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I do not see how RMM could get a P/E ratio of 10. 4 at best.
Smart… an event of default has occurred and this means under their agreement they are entitled to act as you have outlined. However, in practise, a lender it is often more likely to reserve rights under the agreement to put RMM on Notice and work with them towards a beneficial position for both. Selling the asset right now, in a distressed position is not going to benefit either max. It’s important to note, the capital element is what has been missed, so restructuring over a longer term, or accepting reduction through dilution is also probably on the table. However; we are all simply guessing… we still have no update on costs, production levels or anything apart from how good the BOD claim the resource is.
Naturally, I’m not positive about having as share suspended and heavily underwater… but we are where we are… still think outcome is not nailed on as some suggest.
Just wanted to weigh in on one point. Someone mentioned that on event of default everything passes over to the lender. This is not true.
Firstly, there is a difference between an event of default and the lender calling in the loan under their rights detailed in the loan. In effect, due to the default they would be able to demand repayment, enforcing their security to the amount of the capital amount of the loan, accrued interest & associated costs. The issue here, I would imagine a large portion of their security would come from the value of the Ming Mine based on its reserves. I do not anticipate there is sufficient realisable assets to repay the debt.
The fact they have not done so is likely due to them realising having an operating mining company is potentially more valuable to them at this moment than trying to achieve a fire sale of a distressed asset or because discussions are positive towards a solution. I anticipate them coming to an one year interest only extension, I see the forward selling / hedging of copper being part of their negotiations to sure up cashflow and I anticipate they too are waiting for the full cost cutting measures, financial reports and strategy to assess their lending position before deciding to extend the loan or foreclose.
There is no passing of control to the lender, they are not miner, they simply are able to demand funds under their agreement… the issue for the investor if this is not repaid out of readily realisable assets which do not impact operations (which let’s be honest…. This is unlikely) they will take this chunk out of the mine (which they can’t) or RMM will have to raise from another lender or equity.
Absolute cluster**** of an RNS. Very poor from BoD.
Regardless of my lessened opinion on the BoD, market reaction is to completely oversell. I doubled my holding before close. Q3 Production figures show us on track to hit guidance, Costs will be $3.20 all in and the financing will approx £5m and we will bounce back to 16 in no time.
Longer term, investment case is still there. Very disappointed in the actions of BoD and their abysmal communication and would consider coming out at break even if this doesn’t improve.
Less than ideal
GGG - Depressed share price is due to:
1) Falling Copper price
Due to:
- Macro Economic slowdown from countries battling inflation. Consensus is now backing a recession in most major economies.
- Fears over China currently property market / Covid-19 policy / banking sector.
- Fears over imminent European energy crisis.
Each of these likely to impact economic / manufacturing outputs. Demand for copper would be expected to refute. How much is down to speculation? I personally believe quite a bit, but it’s not exactly the most bullish short term macro pictures for a commodity which follows growth closely.
2) Ramblers costs
- completely unknown apart from light touches in interviews or AGMs where speculation can try to get a best guess of where we are.
- completely new mining plan and production process.
- historically higher costing producer.
- mining is energy / fuel intensive industry, two costs that have risen considerably.
- Potential wage inflation given current levels of inflation in Canada
The combination of the two has created uncertainty over the current performance of RMM, specifically around profitability and short term outlook for profitability. If company isn’t making a profit (or less profit) generally investors generally will reconsider their valuations. In addition with RMM track record, dilution concerns worsen this sentiment.
What the fall is not down to:
-K2 Selling
- Number of Parking attendants employed at the Ming Mine
- Underlying Resource
- Market Manipulation
- Quarterly Reporting
From my experience the “Secret Group” (which ironically has had an invite link publicly posted many times on this board….) mainly consists of varied discussions about the macro copper market and Ramblers Operations held in a considered and respectful way due to the complete inability to host a similar conversation on here.
- 97% Recovery
- Tonnes of Ore stored for milling
- Improving grades
- 1400 hit in April (all problems with cone crusher must have been resolved)
- Guidance remains suggesting BoD expected these grades.
I’m getting some beers ready for May - Let’s see what this mill can do!
Reassuring mineral resource update, even if just reminding us why we got a good run in December! Although very slightly after when it was promised… reassuring they are sticking to timeline. All eyes on the April Figures.
COPL Board cannot be trusted, I didn’t head the warning when I invested and regret it. Sold holding for a very small profit but no intention of buying back in. I3E Management to me have been transparent and forward.
The issue is their vaccine isn’t effective against the new variants (or at least not as effective as others). But I have no doubt they will not be able to keep a 0 covid approach for much longer.
Obviously if you value at 7x, use more aggressive costs you can get quickly up to £200-240m Mcap. But I think 4.5x is realistic given the current uncertainty and the lack of trust in BOD. Also not including WB.
RMM project turnover of $70m:
http://www.rns-pdf.londonstockexchange.com/rns/5859A_1-2022-2-3.pdf
This is at $4.30, so have been getting a better price but production is behind due to delays. So let’s say $65m. But going forward if they hit 1350 @ 2% @ today’s spot = $87.5m.
Costs unknown. No latest estimate since large changes to mine. However, I have been using c$45m as a best guess once development ends.
So either $25m profit or $32.5m. Add back in $2-3m for gold: $27m - $35.5m. PE should be at a premium as safe jurisdiction (up to 7?) but noting history and uncertainty, using 4.5….. $121m - $ 160m. (£97m - £128m market cap) share price: £0.60 - £0.79.
No allowance for exploration upside, costs are assumed high perhaps and P/E ratio could easy go up to 7x.
I think they heard you.
Agreed with Loggy. The gold assays will be positive, but unless the are stupidly good I can’t see this being the catalyst (although would no doubt improve sentiment). The only thing that can get this rolling now is strong production figures (end of April ?! May?), confirming the mill is back online to full production and the copper resource update report more likely to start. Although Feels like I have seen saying the next months figured since November!!
I am looking forward to the resource update.
Long time follower of PM, They asked on their discord for recommendations for Share Talks. AfriTin was suggested and they did it. As for Alfa’s comments.
https://www.sgs.com/~/media/Global/Documents/Flyers%20and%20Leaflets/SGS-MIN-WA109-Hard-Rock-Lithium-Processing-EN-11.pdf
Petalite can’t be used in Batteries. Spodumene can. Prices they gave are at forward looking market prices rather than todays. Lithium isn’t as rare as we think, there is no shortage of lithium and every miner is after it. Oversupply will come in c5 years roughly when ATM comes online.
Overall, I think they gave a fair analysis. I am a holder of ATM, I think its fairly priced for its current tin production but agree that no “hope” value for lithium / tantalum is priced in yet, which considering they have yet to get these online… I can understand in todays market.
How’s the Rambler shirt moon?
Lots of assumptions: No expansion, grades remain the same as in jan / feb and price movement in gold is minimal. If we get to 1350 tpd, we would expect 165oz of gold a month and 1980oz per year. Assuming 1800 $ per OZ
After sandstorm: $2.67m of revenue to RMM.
After elemental: $2.15m of revenue to RMM.
Elemental income Expected to increase to $2.56m once we have cleared the 1000 oz (10 years with no expansion) and then further to $2.85m after next 5000 oz. the amount left on sandstorm was so long, we were essentially dropping 25% for ever.
Obviously, changes to output, grades and price affect this. But once we have done 10,000 oz of gold, we are in a better place with Elemental. Total cost $6.1m of income over 10+ years vs $4m of cash now.
Even at January disappointing covid disrupted, single stope mining output levels of 355 tonnes. The difference is an $10,650,000 extra turnover a year. RMM projected another $8.45m increase from blended grades, $22.6m from additional production and $13.7m total from better prices.
RMMs C1 costs meant we were making $0.42 per lb. We now have multiple stopes, higher blended rates, and selling at a rate and should be making a cool $1.46 per lb.
Hopefully they back up today with strong news flow, no corporate shenanigans and strong production results. The Jam has always been tomorrow, but tomorrow has never felt so close.
I am looking forward to the end of living RNS to RNS. I believe it is coming so topped up today.