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There was never any scenario in which Maritime tried to buy either Little Deer or the copper concentrator plant from Rambler. Sure, they sold the gold portion of the mill off to them to raise a bit of cash but that’s not the copper concentrator.
I mean if Maritime wanted to purchase the copper concentrator circuit off Rambler then sure, but otherwise LDs fate is inextricably tied to that of Rambler. Think of it as a “hub and spoke” mining mining and Nugget Pond is the hub that gives real value to the spokes (Ming and Little Deer).
I have my doubts TB has even personally reviewed an actual mine plan while at Rambler. The old guard in the mining industry that make up management at most companies these days are so out of date they don’t even know what they’re looking at when their engineers present them things.
In reality it only has value to Rambler since the deposit size and grades are likely not enough to justify the construction of a new mill. That means the ore has to be trucked to Nugget Pond for processing. I don't think any potential buyer would pay much for the deposit unless they were getting the whole package (Ming, Nugget Pond, Little Deer) and since Little Deer is further away and smaller than Ming I don't see it getting assigned much value at the end of the day... Certainly couldn't be sold for enough to really help Rambler get out of the current situation.
Buying the Teck mill is just one part of the cost... They would then have to strip it apart, relocate it, try and piece it back together, re-engineer everything for different metallurgy, find a new location for tailings, find enough power to run the thing, and on top of all that like you mentioned they would need to permit the thing. All told that alone is probably $15m+ worth of work... which is why they never went through with it in the first place (money issues aside).
Once they've spent the $15-20m building the mill, they need to upgrade the mine to try and get production up to feed it. Rehabbing and re-outfitting the historic shaft they have in place is probably $25-35m+. But the problem there is that the shaft bottoms out well above where they seem to be currently mining. Sinking a new one is likely not an option since the going rate in Canada to sink, outfit, and commission a shaft is something on the order of $75,000 PER METER. So a 1000m production shaft is going to set them back $75m.
Throw in buy something like $25m for new equipment, upgrading the ventilation system, upgrading the power distribution, etc etc etc and you're looking $75m as a bare bones base case before even throwing in covering the debts.
Also need to consider that Rambler's reserves are only something like 30% of their resource (7.4Mt of ore). At 3000tpd that's just shy of 7 years of mine life which isn't nearly enough to justify a massive capital outlay like that.
To get Rambler to anything near 3000tpd it’s going to cost a good bit more than $100m… They would effectively have to completely rebuild the mine and bring in a new mill + tailings facility for that.
Another challenge RMM will face here is whose radar is a mine this size even coming up on? For most copper miners, the Ming Mine isn’t even a drop in the bucket against their production forecasts. Even at full production (assume 10kt copper a year) this mine is effectively only equivalent to a gold operation doing 50koz per annum. In the grand scheme of things that is absolutely tiny.
I know the industry pretty well and I’m having a hard time finding a good fit for a buyer here. Maybe the best option is a restructure and spin out into a new entity with capital but even then you need some pretty serious backers.
The problem is that any company coming in is going to have to invest a significant amount of capital to make the mine profitable to a level that it will return anything on the original investment… The ore sorter is a bit of a pipe dream that seems to be a marketing tool for Rambler. On paper it looks great, but when you start getting into the details things sort of fall apart. Like what’s the impact to total copper recovery? Where is the rejected waste going to go? It also only impacts a very small part of the overall cost structure but it gets touted as this magic bullet that will make Rambler a profitable company.
At the end of the day Rambler needs to be able to move way more tonnes of rock than they do now. That means a bigger mill and updated material handling underground (shaft, additional ramps, etc.) which is going to come with a massive price tag to do properly. Any potential bidder is going to do their due diligence and factor this into the price which at the end of the day will likely just be enough to cover the debts at best.
What TB says is no different than every other mining company CEO says about their own companies… Welcome to the world of mining investing. They’re salesmen telling a story without being specific enough to have any real liability for what they say. Plus they can always hide behind the boiler plant forward looking/safe harbour statements that tell you nothing is certain.
It’s the mining industry… everybody knows everybody. I don’t think there are any real nefarious actors here just some **** poor management flogging a tired project/mine year after year.
They could never sex the place up enough to get serious money to come in and do things properly. It’s a good orebody on paper, but the geometry is miserable, the infrastructure is aging and rambler has likely done themselves very few favours over the years trying to squeeze some value out of it. Brad Mills and Plinian/CE are some pretty serious losers here based on the amount of capital they’ve dumped in without seeing anything for it.
The finance department was only half the problem. The rest can be attributed to the constant over promising which in turn leads to garbage inputs to the cash flow models. For years, Rambler has promised higher grades, more tonnes, and more copper but have never hit, or even come close to guidance. It’s even more embarrassing when you know that companies set guidance below their actual internal plans to be “conservative”.
As much as I agree that the BoD and Toby are useless tits, I put a good bit of the blame for this situation on the “middle management” VPs like Pete Mercer and Tim Sanford… Both these guys have been around for years and are the ones feeding information back up to the BoD and Toby… Theyre all complicit but the rot runs deep with Rambler.
Since Rambler has the only processing infrastructure around and Little Deer isn’t really large enough to justify someone building a new mill it’s not worth much to anybody but Rambler. As it stands now it’s effectively a stranded asset.
Sounds like they’re out of fuel, propane, explosives, spare parts, and pretty much anything you need to run the mine effectively. Which means the suppliers got totally fed up and RMMs claims of “saving $1m per month” were probably just them putting lipstick on a pig.
I’d argue that TB has actually done a terrible job at technical delivery. Sure the mine “appeared” to be running better under his management but he clearly has been unable to reign in costs and get production up to the numbers he constantly sells to investors. They brought in contractors (Hancon) to try and increase development but ended up just burning cash to no meaningful long term gain. The production reports are all full of sunshine and rainbows with the actual issues being hidden between the lines.
I'm sure a good portion of that 15.5m is aged >90 days at this point... They're likely on a cash basis with all their suppliers (hence the milling downtime for parts, poor copper recovery (also parts and reagents), etc.). That 15.5m represents 3 months of REVENUE, not cash flow, at current production and metal prices which is a massive hurdle.
I highly doubt that they’ll manage to clear $15.5m in payables (amount at end of H1) by March… probably have barely put a dent in it.
Saying Rambler has assets worth a couple hundred million is simply the BS accounting that mining operations are allowed to use for calculating asset value. In its current state the going forward value of rambler operating the Ming Mine is negative… I.e. they can’t (and practically never have) made money.
I was referring to NewGen being the PE fund not Rambler… and giving out loans is well within the scope of most PE funds.
Also, a sale of the asset to an existing mining outfit is going to be a massive challenge. Rambler is currently operating what’s effectively the smallest base metal operation in Canada. At 8000tpa of produced copper this doesn’t even show up on the radar of anyone with enough cash to make a fair offer. A bigger company won’t likely want to take on the risk of financing a massive expansion on their own without a significantly larger mineral reserve to back it up.
Newgen could theoretically screw existing shareholders if that was their prerogative… Look at Canadian miner Harte Gold, Silver Lake (Aussie miner) bought their debt, let them default on it, got the asset for a song in a stalking horse sales process, and shareholders got absolutely nothing. They then turned around and recapitalized the now debt free asset.
Obviously Newgen has no interest in running the asset themselves but it smells a bit predatory in the way that they’ll give Rambler just enough rope to stumble along before one day deciding enough is enough and calling the debt. Lots of PE firms have used a similar model over the years to get distressed assets for pennies on the dollar.
Best I got? You literally pulled numbers out of thin air for costs and I used numbers from audited financials…
Rambler spent right around $35m in H1 on production and capital development so $17.5m a quarter or about $5.8m a month. Even if they are actually realizing the $1m a month savings they claim (which is unsustainable in the long run), that means the cash burn rate is right around $14.5-15m a quarter. Pretty much just shows that they’re treading water at the very best.