Rambler Metals & Mining Share Discussion Threads

[sporazene2] 23/2/2012 15:04

thanks Chip, what Cu and Au price have you assumed in that model?

[chipperfrd] 23/2/2012 14:09

Basically yes!

For the CY2013 year (assuming first full year of production of copper concentrate) I get c. 8,100t of copper recovered, plus c. 9.5koz Au and 31koz Ag (revenue for which would be in the form of credits back from the refined concentrate). I estimate total revenues from that processing at current pricing of c. $83m.

However, what I have not done is to estimate what the likely revenues would be (and the overall difference in costs) of sticking with pure hydromet processing of gold ores over a full year - but I am sure the company are well aware of which will be the most profitable way to operate and their actions will surely demonstrate their decision in the months ahead.
Chip

[sporazene2] 23/2/2012 13:56

OK so they are trucking ore to the Nugget Pond Mill and at the moment it is not set up to run gold and copper in paralell, so we would expect the annualised rate of 17k Au to come down once copper production starts, unless they upgrade the plant there to run copper gold in parallel?

[chipperfrd] 23/2/2012 13:39

sporazene2

It gets very technical, but basically the process for obtaining a copper concentrate via an additional flotation circuit at the Nugget Mill is optimised for copper recovery not gold recovery. Whereas the existing Hydromet circuit is optimised for gold-rich ore.

Ideally, there would be parallel circuits optimised for specific ore types but CAPEX considerations have required the Hydromet circuit to be adjusted and for a flotation circuit to be added in order to maximise returns from the large copper/gold resource at the Ming mine.

However, the gold-enriched 1806 zone looks to be proving better than RMM were initially expecting and they have also just announced their interesting tie-up with MAE and the almost certain processing of ore from the Orion deposit. So it does rather beg the question as to when they switch over to a flotation based circuit at Nugget Pond as they would be unlikely to process 1806 or Orion ore whilst optimised for copper flotation. They have already suggested they intend to switch the processing to take advantage of relative price differences between gold and copper - so I guess that is what will transpire.

An interesting conundrum indeed!
Chip

[sporazene2] 23/2/2012 12:45

chip help me out here, i am not as well research as i should be on RMM.

February's figures showed on an annualised basis(assuming same throughput, recovery and grade) RMM is producing ~17K gold; now when they start producing copper in fiscal Q3 does this point to gold production reducing. So will the same equipment be used for Cu and Au prodution?

thanks

[killing_time] 23/2/2012 10:21

Hi chip,

I was thinking the same thing about delaying the switch-over after the latest RNS. It makes sense when gold is close at hand and in good quantities and the price of gold is staying strong plus the time you would lose if you switched to copper then decided to switch back again. My view is they will probably announce the building of a second mill soon and this will solve the problem of switching back and fourth and also give us the option of milling other companies ore.

[chipperfrd] 23/2/2012 09:15

newtona2

Broker forecasts tend to be VERY conservative regarding forward metal prices so, in general, you do normally see dips in forward EPS. We have to make our own judgements regarding the probability of such discounted forward estimates actually coming to pass.

Regarding your earlier post about the valuation gap for Rambler: I actually look around for these sorts of anomalies and find them far more common than one might think. If they did not exist then investing would be far less interesting and profitable.
Chip

[chipperfrd] 23/2/2012 09:04

gardenboy,

My estimates from last Summer are now looking out of date and I need to shift the 3-year forward view out to 2014 - so I do need to amend the post which you have kindly linked in the header.

I really need to add something in for the current gold production from the 1806 area but I just don't feel that I have enough hard data to make any sort of estimation of it's contribution to EPS. Clearly, they are doing pretty well from this early gold production and it would appear that it is shaping up to be somewhat better and longer-lived than originally thought. Perhaps they will delay the switch-over at Nugget Pond to make more of the opportunity from 1806 before focussing on the copper concentrate production from Ming.

I will let you know when I have amended the original estimates.
Chip

[newtona2] 23/2/2012 08:16

Big dip in forecast going forward, not the kind of constant growth the market would be looking for? I assume this is due to the gold being depleted and future years Rambler becoming a baser metals company?

That being the case I'd be interested in seeing forecasts for further out - anything around showing that?

Thanks,

Tony

[saucepan] 22/2/2012 23:23

Newtona

Here are some fundamentals taken from ShareScope:



Furthermore, RMM is on a Rolling P/E 2 of just 2.77 and a Projected PEG of 0.02!

The huge undervaluation of RMM is absolutely manifest. The market will cotton on at some point. Perhaps that process has started today.

[gardenboy] 22/2/2012 21:02

Gold production exceeds projections; drilling finds new high grade potential

[newtona2] 22/2/2012 20:48

Conundrum, thanks.

It was actually that thread that got me looking at RMM in the first place, being one of the lowest ranked actual producers.

I bought a few £k today in one of my ISAs so here's hoping.

Tony

[gardenboy] 22/2/2012 20:41

chip,

If you have any updated figures I would be happy to put a fresh link in the header tia

[mr.oz] 22/2/2012 20:34

anyone with a link to up to date production cost, please?

[conundrum] 22/2/2012 20:28

newtona2,

It is probably out of date now, but see link in header which I have copied below, post 3027, for estimaated calculations done by Chip on one of his 2 excellent CHIP threads




This stock is not on the radar for most people, you can tell that by the number of posts. It has been busier lately than for a long time and there are still days with no posts.

I don't mind, quite like a quiet board, quality over quantity

[dukedosh] 22/2/2012 16:43

Tony, I fully understand your views. The market has missed this big time, pure and simple. The market cannot continue to overlook the unfolding success story here but until it does, patience is needed. Make sure your holding for when the re-rate comes.

[newtona2] 22/2/2012 15:57

Gardenboy, Chip, great thread, and even better gold comparison thread.

I'm a newbie to Rambler but medium term holder of GGG, STI and SHG so getting a feel for the different types of gold miners/explorers.

What I don't get is how come Rambler is so apparently unloved and lowly in price.

Am I missing some big risk, or is all the upside from production priced in and I'm not realising it?

Looking at news, recent pours, today's news update and the supposedly proven copper resources, how come RMM is not considerably higher?

I can see why STI and SHG are not materially higher as they are not producing anything yet. GGG is still a hope. But RMM are producing, have seemingly good grades, I assume can make money from their Milling facility even from others' ore....

They are not in SomewhereIstan, nor in the middle east, nor even Africa, but in Canada, surely the most stable country for mining in the world other than Aus.

So could someone tell me what I'm missing?

Are the resources not big enough to cover costs over time? When the obvious Gold runs out is the copper not profitable? Nor the Silver or the Zinc?

I'm not being funny, I genuinely don't understand the maths, and knowing that share price does not mean a share is undervalued, maybe I'm just missing the fact that there are a trillion warrants coming due next month which will dilute the shares by 10x ?

I'm looking to buy another miner or two and want to move to some actual producers, so anything you can do to alleviate my concern that this not in fact a free lunch would be much appreciated! A summary suggestion of other goldies to prioritise on would be great too!

Many thanks,

Tony

[javea] 22/2/2012 15:19

O/T Chip would appreciate your current view on aym after results-could you post on aym board-thks in advance

[chipperfrd] 22/2/2012 09:42

Nice!

That high grade Au ore is worth $15,665/t at current PoG. Certainly makes it well worth digging it out :-)

The 4.48% Cu ore is not too shabby either - worth $375/t at current spot price.
Chip

[dukedosh] 22/2/2012 08:55

Excellent update. Better than expected production, higher grades. This share price is well over due a re-rating and should be trading closer to 100p.

Proactive Investors snapshot article today:

Sticking with miners, Rambler Metals & Mining (LON:RMM) said its gold production reached 4,022 ounces in the January quarter, taking the total amount of gold that has so far been poured at its wholly owned Ming mine to 5,000 ounces.

Exploration diamond drilling in the 1806 zone has returned new visible gold intersection of 2.6 metres of 8.1 ounces per tonne of gold.

"We are pleased with the continuous improvements at the Ming Mine, both underground and at the milling facility," said vice president of Rambler Peter Mercer.

"We are also encouraged by the discovery of new visible gold near our current stoping level."

[saucepan] 22/2/2012 07:19

A very pleasing project update indeed. Hopefully, this will give the share price the boost it needs and deserves.

[javea] 21/2/2012 20:43

great info chip

[timberwolf3] 16/2/2012 12:53

Many thanks for sharing Chip.

[killing_time] 16/2/2012 11:00

Thanks chipperfrd.