Rambler Metals & Mining Share Discussion Threads

[cfro] 22/3/2012 08:43

Results were as to be expected imo.

Gold processed was 4022 ozs, thats pretty good.

And this from George O....

"the next few quarters will be significant....."

[snowydays] 22/3/2012 08:37

Redhill,
I am disappointed that there was no update about how the gold production is going. It would have been nice to read how many ounces have been produced to date. I was initially disappointed with the $1m loss for the quarter, but looking closer that may just be an accounting anomality.

"Revenues realized during the testing and
commissioning of the Ming Mine are credited to Mineral Property
until commercial production is achieved. "

So am I right in thinking that this can be interpreted along the lines of:

"We really made a profit in the period, but for tax and accounting purposes we are recording the income from gold sales as a negative expenditure rather than as income. As such we are recording a loss for accounting purposes which does not reflect what happened in the real world."

[redhill] 22/3/2012 08:01

snowydays

??????????????

[snowydays] 22/3/2012 07:55

Hmm, disappointing results and no update on how the gold production is going and when copper concentrate production might begin.

Back below 30p today?

[cfro] 21/3/2012 18:12

Sorry guys, poor english on my part. Detrimental 'too lose' was very obviously NOT the right word to use!

What i meant to say was that it seems to me that Tinma are back in the market for more shares. This should push the shares up. Anyway, this is not about what i think, lets let the results do the talking........

[chipperfrd] 21/3/2012 16:10

I was a bit confused by that as well!

[bobsnbits] 21/3/2012 15:47

"If Tinama are buying....which i guess they are....then it will have a detrimental effect on the share price "

sorry I don't understand how buying will have a detrimental effect on the share price ..?

[cfro] 21/3/2012 14:46

If Tinama are buying....which i guess they are....then it will have a detrimental effect on the share price

Re-rating looks to be on here now, especially if they get the copper concetrate pro up and running in the next couple of months.

Im guessing the Gold production is going well too. ;-)

[snowydays] 21/3/2012 12:58

Results should be out either tomorrow or Friday. Hopefully we will get an update on the gold production and some idea of when the long awaited start of copper concentrate production will be.

[redhill] 21/3/2012 11:09

I get the impression that tinmma are mopping up the sales at this level.

[mr.oz] 17/3/2012 13:43

excellet posts , chip. thanks

[chipperfrd] 17/3/2012 12:02

Elban

There is no easy way to answer your post.

We will all have had different experiences and made both good and bad decisions the longer we play this game.

Given the realistic time scales to bring a mine into production from first discovery we need to have been able to remain solvent and invested for around 10 years in order to see some of the successful stocks through to fruition if we had spotted the potential at the earliest stage.

For me, MML has been outstanding.
CEY has achieved far more than I was originally expecting back in 2002 but is now suffering from external issues which it has no control over.
RRS has been notable.
DGO, TLW have been great consistent performers in the oil space.

Along the way various stocks have performed to plan and then suffered from a whole range of issues - some internal and some inflicted upon them.
OXS, AQP and GFM are examples in my own case (none of which I have held for some years now).

The list of others is too long to detail but AR. MANA, CNE, BUR, ANTO, AGQ, BLT are examples (sometimes mixed!) of performance to plan. I could also mention DME but as it has yet to reach production it cannot really be assessed with regard to the point being made in your post, ie CF v CAPEX. And SHG must also fall into that category along with RMM (although as far as I am concerned it has kept in line with my expectations so far). I would also include WTI which is also at the beginning of a growth phase.

Others have as yet failed to perform, HMB, ENK, VGM, AYM are examples in my own case.

Some (ACU, EUM, GIP, SRB) have proved to be poor decisions, but only VDM actually went to the wall!!

I cannot generalise about the entire market for resource stocks, but of those I have decided to invest in, the majority have, at least in part, pretty much worked to plan. But sometimes the story does change and we have to adapt, re-assess and sometimes exit.
Chip

[elban] 16/3/2012 23:15

chipperfrd,

As always your calculations give a meaningful representation of what numbers we should expect if management hit their costs and production forecasts in the timescales stated.

However, what percentage of management actually achieve what they say they will do when they say they will do it?

My guess is that 90% don't even come remotely close.

This is not a problem when judging relative merits of who to invest in - because they are all fantasists.

But, it is a problem if attempting to match cashflow with capex.

[chipperfrd] 16/3/2012 13:05

I might add that I am unworried by the CAPEX requirements for this project having held Discovery over a period when it needed to raise $250m for it's Boseto project.

Over the period of my holding it has rewarded me with a 7-fold increase in it's share price - and it has not had the benefit of early cash flows as is the case here at Rambler with the extraction of their current massive sulphides.

So all in all I am a pretty 'happy bunny' with this latest development.
Chip

[chipperfrd] 16/3/2012 12:35

snowydays

I am taking 'year 1' as being the FY to 31/07/2013.

Having now split the two mill operations and made various other adjustments I now estimate that the CAPEX shortfall will be c. $15m in year 1 and CF will be close to break-even over years 2 & 3.

However, that is using metal prices flat at current spot prices and does not allow additional contingency for working capital, so my guess is that, assuming they proceed i.a.w. the PEA, they will make an arrangement (via off-take or debt) to cover an additional $20-25m or so.

But clearly these are early days and the Technical Report will provide a better understanding.
Chip

ps. my earlier rough estimate was based on the metal price inputs as used in the PEA and before I had separated the two milling operations at different grades, et al.

[snowydays] 16/3/2012 12:04

Chipper, may I respectfully suggest that you appear to have confused two completely different things, i.e. the company financial year ending on July 31st and year 1 of the project, which I think probably means something like "The first 12 months after we make the decision to mine the LFZ and start expansion."

If we take "year 1" to mean the financial year ending July 31st then clearly there can only be at most 2 months of CAPEX and there will not be the $30m shortfall you suggest.

If we take "year 1" to mean the first 12 months of the expansion programme, then hopefully copper concentrate production will be in full swing producing 12 month cashflow at least equal to CAPEX. In addition I hope that there will be a small cashpile from the current gold production which will help to cober initial expenditure.

I cannot see a $30m shortfall in the first year.

[fangorn2] 16/3/2012 11:42

Viz your "As the sensitivities table shows, this will, not surprisingly be a significant play on the forward price of copper" Chip just came across this news arricle....



Following Jefferies' first annual copper summit yesterday, the US investment bank said that the key takeaway is that global copper supply growth is likely to fall short of expectations and lead to higher-than-expected prices.

[chipperfrd] 16/3/2012 10:53

This PEA is quite a game changer!

It has been on the cards for quite a while but it is good to finally have a plan that encompasses the entire Ming resources.

My initial model looks way too simplistic as I believe it will now make sense to model the LoM operations with the two distinct and separate Mills (Nugget Pond & the new Mill at Ming) - so I am setting about doing just that. However, the NI43-101 technical report will be worth waiting for as it should provide the definitive mine plan estimates which will be a great help.

The CAPEX requirements look pretty straightforward:
Year
1 - $44.36m
2 - $44.36m
3 - $44.36m
4 - $29.36m
5 - $29.36m
6 - $29.36m
7 - $0.7m (until end of LoM)

My initial numbers suggest that year 2 onwards can be met by operational cash flow but with a shortfall in year 1 of c. $30m. I cannot really see such an amount being a problem to raise through off-take, forward sales, bank debt, et al, given actual production from the 1806 zone already and the massive sulphides following shortly.

As the sensitivities table shows, this will, not surprisingly be a significant play on the forward price of copper with potentially $4/lb copper adding $200m+ to the pre-tax NPV.

So I guess it will boil down to personal views on the direction of copper prices over the next few years (or conversely how well the USD performs in real terms). I know what camp I am in, so I feel pretty happy to see the Rambler landscape transformed into a serious bulk mining operation within 4 years.
Chip

[killing_time] 16/3/2012 08:20

Hi all, on the subject of funding,

Emed just raised $175 million for their mine start from Goldman Sachs, the deal being that Goldman give them the money then over the next seven years Emed repay them in copper. This is why i belive we brought Tinma in so with their contacts in China a similar arrangement will be agreed with no major dilution of shares.
Just my opinion, KT.

[snowydays] 15/3/2012 21:43

It seems we all missed this section when looking at the CAPEX.

"The capital requirement for the mine over the first six years is estimated to be $172M; mill $45M over the first three years and tailings $14M over the life of mine giving a total requirement of $231M excluding contingency and sustaining capital. Production, mine development and construction activities have been identified for the entire 20 years of operation and have been linked through schedules based on current performance parameters."

So that $231m does not all have to be found before the expansion in years 4. The $14m attributed to tailings is over the life of the mine, not an initial cost. The $172m capital requirements for the mine may only be about $29m a year over 6 years. The $45m cost of the new mill will need to be found in the first three years.

That actually suggests that the $231m could be funded probably from cash flow.

year 1 $45m
year 2 $45m
year 3 $45m
year 4 $30m
year 5 $30m
year 6 $30m

Plus tailings CAPEX over the remaining mine life = £231m.

One of the worst things about todays announcement is that it probably means we can kiss goodbye to any hopes of a dividend for the next few years.

[pimsim] 15/3/2012 19:12

Hopefully, they can make this more attractive in the next 12 months or so - it looks a bit 'touch and go' at the moment.

The NPV makes no allowance for taxes and they have only used a 5% discount rate on a 20yr cash flow. That might be considered a 'bit conservative' when CAPEX is potentially 3 times current market cap. At least the mineral pricing looks reasonable and of course country risk is minimal.

3 years cash flow should help close the gap on CAPEX requirements however any funding over $150m will still be a big ask and personally I would prefer to see a cash rich partner come in at some point in the next 12 months.

[myst1] 15/3/2012 18:46

Cfro,

Good point re Tinma going back into the market for more shares as from tomorrow.

I can't see them waiting too long for them to get the stake they want. They will want to get them as cheap as possible, they must know how undervalued this is.

I sense things are now starting to fall into place. A pivitol point in the co's life and hopefully the start of the rerating!

[cfro] 15/3/2012 18:22

Yes, very good news.

Snowydays, your post above: i think you do have a good point. It could be possible that we might not need to be too diluted if CAPEX requirements can be bought down a tad plus we have strong cashflow from the forthcoming Copper production.

Anyway thats all a long way off for now but just shows what serious ambitions Harry Dobson does have with RMM. This is no tinpot outfit IMVHO!!

The tie-up with Tinma was all part of the 'masterplan'. Just as an aside, not to be forgotten that Tinma an go back into the market to purchase shares as from tommorrow.