Rambler Metals & Mining Share Discussion Threads

[snowydays] 05/7/2012 12:33

"Seymour Pierce Equity Eesearch said it had updated its estimates for Rambler Metals and Mining (LON:RMM) Nugget Pond project while reiterating its 'buy' recommendation.

Estimated grades of copper entering the mill were adjusted down marginally to 3.5 per cent from 4.1 per cent during 2013, after the broker spoke to management.

The broker gives a target price of 62 pence."



I am disappointed with Rambler for not updating us on the progress of the concentrator commissioning. Whilst it is not the job of company management to hold the hands of nervous shareholders this is an important period in the company evolution. We are entitled to regular updates.

Rambler probably want to drag out the commissioning as long as possible so that revenues can be offset against expenses rather than going through the profit and loss for tax purposes, but it would still be nice to hear how much is being produced.

[jgraggaber] 05/7/2012 08:51

Dear Chip,
Thanks for taking the time to answer my query. It's always a pleasure to read your high quality factual posts!

[chipperfrd] 04/7/2012 11:44

Hi jgraggaber,

Current Cu market price is c. $7,750/t. Current economic backdrop is weak. Inventories are low in historic terms. Supply is expected to increase in 2013.

So there are conflicting factors at play. I therefore assume Cu will remain approximately flat over the next 18 months. And, for that matter, in the absence of any other clear bullish/bearish indications for the metal, I am assuming a flat price at current levels over the longer term as well.

However, we also have to consider the financial plight of the developed economies and the probability of further monetary inflation. Further expansion of the US$ through Q/E (or by less direct means) will tend to inflate commodities in $ terms. If this trend does continue (and there is little sign of any shift away from inflationary stimulus) then Cu would likely rise but so also would costs!

In terms of RMM and it's copper production: like all miners it comes down to costs/t against payable revenue/t minus all ongoing capital outlays, taxation, D&A, exploration, et al.

They are initially mining and processing the high-grade deposit although it is still too early in this commissioning phase to know precisely what ROM grade is now being processed.

By my estimates, at commercial production, they should be running ROM grades of Cu, Au, Ag, worth $470-400/t at current prices. Against this OP costs will be running at c. $60/t - so plenty of margin to play with.

However, over the next few years their ROM grade will likely reduce to an estimated $245-170/t at current prices with average costs at c. $60/t (plus possible inflation @ CAGR 5% or so).

So the OP margin reduces after the first couple of years but should still provide healthy OP cashflow even if copper weakens from current level. So Expex, Capex, et al, should be well covered.

However, we then have the issue of mine life. The current operations are scheduled to run for 6 years only. If nothing changes then one would expect the market to apply a lower earnings multiple than for a much longer life mine. Alternatively RMM may through exploration expense increase the current area of mining operations to extend the LoM. There is also the issue of the potential LFZ expansion and the possibility of dual copper and gold operations running concurrently.

Obviously the case for the LFZ expansion must go through a full feasibility process which is likely to take a couple of years. But the outcome will largely determine the extent of future inward investment of cashflows and the longevity of their mining operations.

Either way, RMM would appear to have a number of options open to them during the next few years and clearly the direction of copper pricing (and gold) will impact their decisions.

In the meantime we have the strong probability of healthy cash flows and increasing market awareness of RMM progress into full production.
AIMHO of course.
Chip

[jgraggaber] 04/7/2012 10:29

I would be interested in Chip's view on mid term copper prices and its impact on the profitability of RMM.
If you look at long term charts prices are still high in relative terms.
There seems to be a significant downside potential looking at current, at least relative, weakness in the manufacturing sector all over the planet. I understand that copper prices held up compared to aluminium/nickel due to supply constraints. What is unlikely to change on the other hand is ongoing significant investment in infrastructure in a number of cash-rich countries with positive trade balance.
It is certainly hard to see where UK and European periphery growth can come from. We are drowning in debt. Tax freedom day has been pushed into July in a number of countries and yet plenty of ordinary people are calling for yet more state intervention. i.e. taking money out of our pockets, borrowing on top and spending a lot of it inefficiently, creating some pseudo-growth on borrowed money. Growth numbers overall appear misleading anyway as they are more about quantity than quality. Suffice to compare Germany, Switzerland, Austria, Scandinavia, Netherlands that persistently lag behind the US looking at GDP growth but have positive trade balance, excellent infrastructure etc. Travelling through the US (and UK) feels like going back 10+ years in relative terms looking at roads, power lines, state of housing stock.
I guess the subdued outlook on the world economy might persist for a long time. It would be sad to see RMM enter mine production in what might well prove to be a prolonged cycle of economic stagnation. I guess this is the reason for the current weakness of its share price. People may just want to see actual sustained profits prior to buying in.

[count chris] 03/7/2012 21:00

Chip - I agree now is the time to be brave!

[p3dr036] 03/7/2012 14:57

Unconscious humour I'm sure chip. But the words "hindsight" and "finding a bottom" do seem to go together somehow!!!

[chipperfrd] 03/7/2012 11:07

It is as unfortunate characteristic of the retail market in equities that, in general, people sell on lows and buy on highs. Consequently, 'value' opportunities tend to abound in a depressed market such as this.

Finding a bottom can only really be achieved in hindsight. As, when fear grips the market, there is no rational reasoning behind share trading. At least, that is what I think and over many such cycles I have tried to take advantage of such conditions.

But, by definition, I have often needed to accept being underwater for considerable periods as well!

It is only over the much longer term that one can really assess if ones judgement is correct or flawed.
Chip

[redhill] 03/7/2012 10:37

i think its the Market makers trying to acumulate stock ahead of the push forward when copper is produced.

[billy_liar] 03/7/2012 10:10

LOL - so you think a £30K trade should add or subtract a few £M from a companies valuation? Give us a break.

[snowydays] 03/7/2012 10:06

There was a 100k sale worth £30k. Not that small.

[killing_time] 03/7/2012 09:10

Hi jgraggaber,

Have not seen any news across the British or Canadian boards. Canada was closed yesterday for Canada Day. Followed the trades yesterday and they were all quite small but most of them just happened to be sells, just one of those days.

[jgraggaber] 03/7/2012 08:47

The magnitude of the pull back is unexpected and worrying in view of the steady progress with mine development. I am wondering whether there is any significant news leak out there. Does anyone have any information on here? MagicMiner2 on iii is the guy near the site but does not post on here it seems.

[snowydays] 01/7/2012 15:55

Thanks KT. Sad to see them still droning on about the LFZ even at todays low copper prices.

I wish they would provide an update on the copper concentrator commissioning and current copper production, if any.

[killing_time] 01/7/2012 10:48

Tim Sanford speaks about Rambler at the 25th annual mining conference in Baie Verte.

[snowydays] 27/6/2012 09:10

Rambler do look very cheap, but just look at Mawson West in the list above. A prospective pe of just 0.6 for 2013, 0.7 for 2014 amd 0.8 for 2015.

Like Rambler, Mawson West is in production already, and has $100m in cash.

Some research here. Sorry for the o/t post but maybe it's of interest.

[snowydays] 27/6/2012 07:33

Yes, not much with a prospective PE below 2. A list of small cap base metal miners below.

It would be nice to have an update from the company about how the copper concentrator commissioning is going. Perhaps the general meeting tomorrow will provide us with a statement.

[cfro] 26/6/2012 22:26

I actually bought quite a few more today. George O is doing everything right and more besides. The cheapest miner on the market by a long chalk imo.

[robhammers] 23/6/2012 17:18

They are basing their decisions on the facts that its not their money on the hook. Everyone loves spending someone else's money.

[snowydays] 23/6/2012 14:32

No one disputes that Redhill. Alternatively it could bankrupt the company if copper prices turn out to be much lower.

Unfortunately I believe the company seem to be basing their decisions on the belief that copper prices can only go up in the long term. The reason I say that is because on the Rambler website, under the heading of "Rambler's Strategy" it repeats at length the reasons why base metals prices may rise (population growth, China industrialising etc. yawn, yawn) and then it states:

"Rambler's business development strategy will be guided by these views"

If Rambler are basing their business decisions on a belief that metal prices must increase, rather than being agnostic about future trends that could lead to a lack of caution when considering high cost projects such as the LFZ expansion.

[redhill] 23/6/2012 10:58

snowydays

What may not be a good idea now could well turn out to be an excellent idea in the future when copper prices are a lot higher.

[snowydays] 23/6/2012 10:19

Is there anyone here who still believes that the proposed expansion into mining the LFZ is a good idea?

[ned] 23/6/2012 08:44

George Ogilvie, president and chief executive said: "The company continues to make progress towards commercial copper production, having already trucked its first shipment of concentrate to the port facility......

I pressume the word shipment should have been truckload otherwise first payment would have been announced by now,(and the timescale was too short to have achieved a ship full?).

Anyhow the promise of prompt payment gives hope for some news this week?

If we don't get any maybe someone on good terms with the poster on iii who lives near the mine could ask him to go and look in the tent and see how we're doing!

ned

[snowydays] 21/6/2012 14:55

"Copper production began in May, with the first shipment now trucked to port, though revenues of C$14.2 million (£8.9 mln) in the three months to April stemmed from the production and sale of gold from Ming, which is a copper-gold deposit.

Ocean says that from an operational perspective, Rambler presents little risk now that the copper circuit is approaching commercial commissioning.

The company also intends to further de-risk its financial position through paying down its short-term loans quickly.

"At this time Rambler presents a low-risk investment option to high grade copper production, and so offers good exposure to any rebound in copper prices."

"Recovery and throughput rates are above expectations for this point in the plant's commissioning and we are particularly impressed with the grade of the copper concentrate which has exceeded 30% copper at certain points.

As a high quality product (clean, high grade and with gold credits) Rambler's concentrate brand should be in high demand as a prime blending material for larger copper concentrators."



That is an interesting suggestion - that Rambler's concentrate might be used as a blending material for other concentrators. I had assumed that it was only possible to make an estimate of the grade of the concentrate, but that the final copper/gold figures would not be known until the pure metals were recovered at the smelter.

Presumably if there is a demand for high grade concentrate for blending then such concentrates attract a premium price, which perhaps explains how Transamine are able to pay us a 90% advance when the concentrate is delivered to the Goodyear's Cove store, even though it may be months before it is smelted.

[p3dr036] 18/6/2012 10:10

snowydays

Having shares in a nominee account should not prevent you from attending company meetings.

Your nominee account provider should give you a letter confirming that you are a shareholder, if you request one. This will give you access to the meeting. Alternatively if you are already in contact with the company, if you advise your contact that you wish to attend the meeting, they will normally arrange this if they know you.

Hope this is of use
P3

[snowydays] 18/6/2012 08:48

"Subsequent to start-up on June 4, 1012 the Group began blending higher grade ore from the 1807 zone bringing the run of mine head grade to 1.7 % copper with 0.56 g/t gold. Head grade will continue to increase as more 1807 zone material is blended further displacing LFZ ores. First revenues from copper production are anticipated in June 2012."

That is reasonably good news.

Is anyone here going to the EGM? I would like to go but my shares are all in nominee accounts.