Additional views from Doc and Big Al on Rye Patch Gold
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Clark, not yet since I believe I’ll be able to get it down around $.10. I do plan on purchasing some in the future since the odds of this company getting into financial problems before the next run up in the gold price is about nil since they have about 15 more quarters of royalty payments.
10 cents eh? You are a sharp cookie Doc. Its funny when we sometimes hear people talking about opportunity in the beaten down mining sector in general terms. You would almost think its a no-lose situation but in the case of Rye Patch (just a sample stock) the difference from today’s beaten down lows of 12 cents to your target at 10 means a 20 percent decline. That is if it ever gets back to the 2008 low point. Anyway, I will keep my eyes on it and just follow along since I don’t know anything about this one other than what you guys have reported but it sounds interesting.
On the other hand there are cases where catching the technical low are not necessary. For example TCK, a stock I love, recently had a run up of 70% in a brief 10 day period at the end of August before falling back. I will be a buyer again anytime it posts a 4 handle which could come in the next week or so. That is without regard to the possibility it could again see the 4.44 again. Catching precise bottoms is fun but not always necessary and sometimes in the process you miss a bounce altogether when your attention gets pulled away by other action in the market.
A Listener; purchase TCK at about 1-2.
Are you being serious or just playing around? You really think it has that far to fall? I will go back for a closer look because I have never felt that negative on the stock.
I get the humour though. A stock that was selling for almost 62 bucks just over four years ago that might be had for as little as a dollar this fall would be a sixty bagger if it ever returned to its highs again.
How nuts is that?
Bird,
Don’t think Richard’s kidding when he wrote $1-2 for TCK.
NOW the future might prove him wrong… but I don’t think he was kidding.
My 2cts.
LPG
A LISTENER,
You might want to check Doc’s comments regarding TCK & FCX from the 10/06/15 & 10/12/15 shows. He was calling for TCK to hit $1-2.00 and FCX to hit <$5.00. Hope this helps.
All The Best,
JIM
I looked at the charts and cannot see its price falling that low. I use a different technical method than Doc though so we have differences. One thing is that I don’t feel the stock will fall LOWER that what was seen at the depths of the credit crisis. It will cost me if I am wrong but lets just wait and see.
Hello Bird,
Hope all’s well.
A few things re: RPM and price levels, fwiw.
1) From 12 to 10cts = a little less than 20% decline 😉 Closer to a 15% decline than a 20% actually… but teasing.
2) Irrespective of the above, what we need to acknowledge is that 10cts = “just” 4 down ticks away from 12cts.
What I’m trying to say is that at current levels, every tick down = 0.5cts, hence a 4-5% move for the shares.
To me, that’s the “difference” w. say…. a $10 stock moving to $8.35… In that case, that represents the same magnitude in expected decline (c. 16.65%), but to move from $10 to 8.35, the stock needs to make 165 downticks…
My 2cts.
Best to you,
LPG
And all the best to you too LPG.
PS: Let me assure you I am not the math whiz on this site. It’s all napkin calculations with no napkin involved. I think its called winging it as you go. But it gets me through a post without having to use a calculator!
It’s all good Bird.
The funny thing is that
I knew that 2/12=0.166666…, not 0.2 🙂
But
I had to count ON MY FINGERs (like kids do) how many down ticks there are to go from 12cts to 10 cts. lol…. Wasn’t sure if there would be 4 or 5 !
Best and have a good one today,
LPG
Hope everyone had a good WE,
Richard, thank you for relaying my questions: much appreciated.
*****
PRELIMINARY DISCLOSURE,
I used to own RPM shares but don’t own it currently. As Richard mentioned, I’ve looked at the name again over the WE – w. him.
*****
I guess my question on the share repurchase program really comes down to this:
IFFFF RPM believes it has a superior project in hand w. compelling IRR (Internal Rate of Return) which will ultimately reflects expectations of a sizable ROI (Return On Investment), why doesn’t it allocate EVERY single dollar that it has in the bank to this future project (or allocate it to additional drilling on its property) ?
Let’s look at the situation of the share price for a second:
the company started purchasing shares toward the end of H1… and the stock ramped up toward 20cts.
This ramp was highlighted in RPM’s June Corporate presentation…
Now the shares are back to 12cts as I type.
So my comment is: big deal…. ==> back to square one price wise.
I guess I would PERSONALLY prefer RPM to do a buy-back of shares IN THE EVENT that it generates Free-Cash-Flow and that it basically has its Capex requirements covered…
But that’s not the case: the only source of cash for RPM currently is the royalty stream – a great plus – while the building of its mine is not even started.
So the sequence I would envisage to make me happy as a potential shareholder again is:
Keep cash during current exploration phase –> allocate every dollar to future mine development and additional drillings –> make sure the expected mine meets the IRR it is supposed to get via strong cost control ==> THEEEEN do a buy-back IN CASE there is surplus cash.
It is my personal opinion that IF the mine is built and the expected IRR is met, then Mr. Market will take care of the share price.
Until then, keeping the cash tight and allocating it to the business would be something I’d prefer to see – I’m a simple mind.
FINALLY:
IF RPM is doing its buy-back in order to diminish the cash pile and the share float so that a potential take-over is more difficult… THEN I understand. 🙂
But it’s just not what is stated by RPM as being the rational for doing the buy-back in the first place. 😉
Thank you again Richard for raising the issue, and GL to all investing/trading.
LPG
I will have this conversation with Bill.
Thanks lpg
Thank you Big Al. Appreciated.
Best as always,
LPG
LPG – I’ve been following Rye Patch for a while now, am a current shareholder, and have to say this:
Rye Patch is one of the handful of exploration companies I am watching where I agree with almost every decision they’ve made (including buying back their own shares).
1) When the royalty stream kicked in from a job well done, they’ve purchased adjacent lands to maximize their land position around past producing mines. I’m a huge fan of looking for Silver and Gold where there already is a great track record of their being PMs, and past producing mines are even better.
2) They are funding their operations with the Royalty stream
3) They are funding explorations and drill results with the royalty stream
4) They are moving towards permitting and mine construction in a logical process using the Royalty Stream.
5) Yes, they are buying back stock with up to 10% of the NSR. As a current shareholder, I’m thrilled they are doing this to reduce the number of shares that are outstanding. When metal prices do recover, and when the marketplace finally does real due diligence again, people will realize what a gravy train they have going, and just how many things management has done spot on. If there are too many shares outstanding then some may not want to play ball.
I think you are a very wise man LPG (and you know I think you are the bomb), but I disagree with your thesis that they should spend every dollar on only exploration and mine development. I like they are tightening up the share structure, as some investment firms won’t invest if there are too many shares outstanding (regardless of the value). The number of shares also affect the market cap. Lastly, the marketplace is NOT rewarding exploration success like they have in the past. A company may get a 2-3 day blip if they hit a few great drill results, but then investors flake out. This is why I would not only pour on the gas on exclusively exploration. I like that they are magnifying the financial picture in tandem with the with the growth.
If you go look at old Rye Patch updates on this blog when they were in a disagreement with Coeur (who I also invest in periodically), I was one of the few people on this site convinced they’d win the legal debate, because Coeur messed up bad, and Rye Patch was well within their legal rights to stake those claims. At the time, I was acquiring a small position with the hopes that the law and common sense would prevail, and they came out on top.
I was impressed that when Coeur made a low-ball offer to buy them, that Bill and the team held their ground and didn’t sell out. Bill has always been very straight-forward and deals in the real…..not pie in the sky.
It just boggles my mind how low this stock is trading in comparison with some of the zombie peers in the exploration industry that are broke, with no exploration going on, no way to raise money, and yet still pick up bids from investors that are going to likely lose money on those zombies. Rye Patch is a “REAL” company, with real assets that are being worked on and developed, and all the work is being funded by the royalty stream ATM.
This stock will be a multi-bagger and when the marketplace wakes up to what they have achieved and to their financial situation. I could even see Coeur buying them out down the road, but at a far higher multiple than the offer they made last year.
Just my 2 cents, and as I’ve been saying for 2 years, I am really glad to be a shareholder, and will continue to add to my position on the dips.
In regards to the share buybacks not raising the share price substantially, I don’t believe the effect will be noticed on a mining exploration company in real time, when we have the bottom of over a 4 year bear market in PMs in place. The magnification of the share price will be when institutional investors come back into this space, and when this equity has a tighter share structure. This isn’t like when a large blue chip company or tech company buys back ridiculous amounts of their own shares back to spike their prices (and yet those companies are putting next to nothing into growing their companies). Rye Patch is only investing “up to 10%” of the NSR not 90%, so that seems like a reasonable and recurring/methodical approach.
In 2016 and 2017 when the good times return to the PMs and eventually the exploration companies, they’ll be sitting on a better financial picture. I also think you hit the nail on the head about reducing the float so that a buyback is more difficult = more upside for investors with a position before such a talk is ever underway. There will be more pop to a buyout if they haven’t diluted the snot of shareholder like 99% of other exploration companies have done that got taken over.
Again, I like the approach to allocating some for operations, some for exploration, some for land grabs, some for permitting/mine development, and a small portion in stock buy-backs. Last point, mine development is a long process, and it is the permitting, environmental studies, feasibility studies, etc…. that take so long. In the interim, they are cleaning up the shares as they make progress. My opinion is that they have a very holistic approach and they still are doing a great deal of exploration if you read their last few years of press releases, so they’re absolutely growing reserves while they shrink the float. Brilliant!
Thanks Shad. Great posts. I appreciate a third opinion here. How far are they from the permit stage to build a mine? Is the outlook a couple years or five? Do you think the company is still worth holding once the royalty stream expires?
Bird,
Here’s the link to RPM’s latest presentation – from September, so quite up-to-date.
http://www.ryepatchgold.com/_resources/RPM_Presentation_September_2015.pdf
Slide 16 highlights the expected time frame for Lincoln Hill, where I believe you’ll see most answers to your timing related question marks. The slide is quite detailed and useful.
2019 is when production’s supposed to kick-in, at the time where the royalty stream is expected to expire.
Best to you,
LPG
Thank you very much LPG. I do appreciate the link.
Glad to share another opinion, as a shareholder. My average cost basis is around $.12, so it if falls to $.10, I’ll just average down.
As for the permitting, as LPG noted from their slide presentation, it is still years off. That was my point about tightening up the share structure with a small portion of the Net Smelter Royalty (they are only using up to 10% and have been doing less than that thus far). The are not going to have revenues or free cash flow from that mine for years, so tiding up the float to make a potential takeover more attractive, is a wise strategy in my opinion (and obviously in their opinion).
Cheers!
Hello Shad,
Hope all’s well.
I hear your point, but I think we 1) both have a different opinion vis-a-vis the potential efficiency of the buy-back under its current form and 2) maybe something is overlooked.
OPINION ON THE BUY-BACK:
Here’s the thing about the repurchase program:
From the July 9. 2015 announcement:
http://ryepatchgold.com/news/2015/index.php?&content_id=253
QUOTE:
“As announced on April 29, 2015, Rye Patch may, by allocating up to a maximum of 10% of its quarterly royalty income, commence making purchases of up to a maximum of 7,300,000 common shares, which represents approximately 5% of the Company’s 146,446,746 issued and outstanding common shares as at May 1, 2015.”
===> IMHO, buying back 5% of the share capital ain’t gonna move the needle too much on the long term.
If the idea is to tighten the share structure/reduce the float, then I suspect a larger buy-back is necessary. JUST MY OPINION. And I understand that we can have a different view on this.
RPM needs $30mn to build Lincoln Hill project. The buy-back might cost them about $0.5-0.7mn (assuming they buy the shares at 10-12cts). Why not keeping the cash for the project or future drilling ? (and yes, I understand they are receiving $1mn/quarter from the royalty so this will help building Lincoln Hill mine in due time)
WHAT MIGHT HAVE BEEN OVERLOOKED:
Now here’s something that goes exactly against reducing the number of shares and I feel is therefore a bit “inconsistent” in terms of what is being done to the capital structure:
Here’s from the August 28, 2015 press release:
http://ryepatchgold.com/news/2015/index.php?&content_id=256
QUOTE:
“Vancouver, British Columbia, August 28, 2015 – Rye Patch Gold Corp (TSX.V: RPM; OTCQX: RPMGF; FWB: 5TN) (the “Company” or “Rye Patch”) announces that the Company has granted stock options to its directors, officers, employees and consultants to purchase up to an aggregate of 1,000,000 common shares of the Company. The stock options are exercisable for a term of ten years at an exercise price of $0.16 per common share. Vesting will occur over a period of two years, with an initial 25% of the stock options vesting on the sixth month immediately after the date of grant, followed by an additional 25% of the stock options every six months thereafter until fully vested.”
==> If RPM wants a lower share count, why do they create more stock options for directors, officers, employees ?
Summary:
On one hand, RPM is buying back shares w. the company’s (every shareholder’s) money…and canceling them. So management’s stake in the company goes up (as well as every other shareholder).
BUT on another hand, the company still issues options to management/employees/directors which will – if executed –
a) increase the # of shares,
b) increase the stake of management in the company
but c) dilute every other shareholder.
In both cases, I note that management’s stake in the company goes up.
But not necessarily the stake of every other shareholder’s.
–> “Strange”, isn’t it ??? 😉 😉 😉
Again, nothing against the buy-back per se. But
a) it just doesn’t really makes sense to me at this stage (I would prefer capital to be allocated to drilling/building Lincoln Hill’s mine when permitting is ready),
b) I think it is too small to move the needle on the float,
and c) it is totally inconsistent w. issuing options on the other hand.
My 2cts.
LPG
Hello Shad,
Hope all’s well.
I hear your point, but I think we 1) both have a different opinion vis-a-vis the potential efficiency of the buy-back under its current form and 2) maybe something is overlooked.
OPINION ON THE BUY-BACK:
Here’s the thing about the repurchase program:
From the July 9. 2015 announcement:
QUOTE:
“As announced on April 29, 2015, Rye Patch may, by allocating up to a maximum of 10% of its quarterly royalty income, commence making purchases of up to a maximum of 7,300,000 common shares, which represents approximately 5% of the Company’s 146,446,746 issued and outstanding common shares as at May 1, 2015.”
===> IMHO, buying back 5% of the share capital ain’t gonna move the needle too much on the long term.
If the idea is to tighten the share structure/reduce the float, then I suspect a larger buy-back is necessary. JUST MY OPINION. And I understand that we can have a different view on this.
RPM needs $30mn to build Lincoln Hill project. The buy-back might cost them about $0.5-0.7mn (assuming they buy the shares at 10-12cts). Why not keeping the cash for the project or future drilling ? (and yes, I understand they are receiving $1mn/quarter from the royalty so this will help building Lincoln Hill mine in due time)
WHAT MIGHT HAVE BEEN OVERLOOKED:
Now here’s something that goes exactly against reducing the number of shares and I feel is therefore a bit “inconsistent” in terms of what is being done to the capital structure:
Here’s from the August 28, 2015 press release:
http://ryepatchgold.com/news/2015/index.php?&content_id=256
QUOTE:
“Vancouver, British Columbia, August 28, 2015 – Rye Patch Gold Corp (TSX.V: RPM; OTCQX: RPMGF; FWB: 5TN) (the “Company” or “Rye Patch”) announces that the Company has granted stock options to its directors, officers, employees and consultants to purchase up to an aggregate of 1,000,000 common shares of the Company. The stock options are exercisable for a term of ten years at an exercise price of $0.16 per common share. Vesting will occur over a period of two years, with an initial 25% of the stock options vesting on the sixth month immediately after the date of grant, followed by an additional 25% of the stock options every six months thereafter until fully vested.”
==> If RPM wants a lower share count, why do they create more stock options for directors, officers, employees ?
SUMMARY:
On one hand, RPM is buying back shares w. the company’s (every shareholder’s) money…and canceling them. So management’s stake in the company goes up (as well as every other shareholder).
BUT on another hand, the company still issues options to management/employees/directors which will – if executed –
a) increase the # of shares,
b) increase the stake of management in the company
but c) dilute every other shareholder.
In both cases, I note that management’s stake in the company goes up.
But not necessarily the stake of every other shareholder’s.
–> “Strange”, isn’t it ??? 😉 😉 😉
Again, nothing against the buy-back per se. But:
a) it just doesn’t really makes sense to me at this stage (I would prefer capital to be allocated to drilling/building Lincoln Hill’s mine when permitting is ready),
b) I think it is too small to move the needle on the float,
and
c) it is totally inconsistent w. issuing options on the other hand.
My 2cts.
LPG
I have to agree with LPG on RPM’s share buy-back. However, I’d have no problem with it if they only bought into very serious weakness. At this time, that means paying no more than .06 per share and preferably more like four cents.
A few RPG stats:
PE Ratio: 22.5
Price to Book Value: 1.525
Price to Sales Ratio: 3.161
Enterprise Value: $13 M
Market Cap: $18.2 M
Matthew, that Enterprise value was a concern to some at the MSY Conference……again…..all those share.
The way I see it is that the royalty money is for the shareholders.
Give it back to them as a special dividend
You got it right LPG……this will NOT tighten the share structure enough to notice. I remember Big Al thinking it was a big deal during an interview with Bill……..not so much IMHO.
I hear ya man, but that April 2015 press release was just for that quarter’s NSR and stock buyback. When Bill was on the show they mentioned doing the stock buybacks as a rhythmic thing each quarter up to 10% of the Net Smelter Royalty (which will fluctuate in value based on the value of the metals processed and the metals pricing).
I would agree that if it was a one time event that it would not move the need much, but if it was something they did quarter after quarter at these low prices, then it is mopping up the excess float to make the shares outstanding reduced over time (think years not a one time event).
Yes, you make a good point about management issuing shares to directors and key employees further diluting shareholders, but show me any mining company, or even traditional company that doesn’t do that. Almost every company issues shares to directors, officers, and key employees, so that is a standard approach to keep the management talent in-house, and not leaving to go to another mining company. That just seems like prudent business, as long as the shares issued are not too outlandish.
To each their own, but I don’t think saving 5-10% of the NSR in cash for mine build out that is still 4-5 years off is going to come anywhere close to what they will need to actually build the mine, so that won’t make at dent in that project. They’ll have to raise money for the mine anyway, or JV the project. Personally, I’d rather have a tighter share structure when that dilutive event arrives.
I agree Shad. I like the strategy even though I also have to side with LPG’s objections.
Rye Patch is a penny stock with Going Concern language in their financials which means that it is nothing more than a speculative play at this point with a very real possibility of being insolvent in the future. Given its current capitalization, there is no value what-so-ever in the equity of this company. That’s not to say that its stock won’t be worth something someday, but right now the equity is effectively worthless (other than its liquidation value) and it is nothing more than an option on potential future performance. This company is purely a speculative exploration play that is burning through approx. $2M+/- in cash per year even with the royalty stream in place. A company in this financial position and at this stage of its development should not be repurchasing shares but rather conserving cash where at all possible.
Per the company’s September 2015 presentation, the company claimed that it would ideally use 10% of its royalty revenue for repurchases each quarter. They argue that this would help to set a floor on the share price while constantly reducing the company’s shares outstanding. This however makes very little sense for a company that will need to raise additional capital within 24 months under its current burn rate. So why the share repurchase? Judging by their recent financials, management’s calculus is that they are likely preparing the company for additional capital raises in the immediate future. Management has taken recent steps to make the company appear in an improving financial position. They reported positive net income for the 6 months ending 6/30/15 which incidentally is a totally meaningless figure. This was only achieved however through better working capital management (a dramatic reduction in Management Fee expenses in Q1) as well as a sizable Currency Exchange Gain due to a weakening Canadian dollar. They are also attempting to signal to the market that it’s shares are currently underpriced by repurchasing shares, although it only required a tiny amount in order to convey this ($160K to repurchase 923K shares at $0.17 per share). Despite these steps, Rye Patch’s cash burn remains elevated which is consistent with a company of this nature.
So the only logical conclusion that you can draw is that the company is trying to elevate its share price so that they can raise additional equity at a better valuation. With prices of gold miners currently lagging, the company is likely wagering that a bounce back in miner stocks, improved financial reporting and implementing a floor on its stock price will help it raise capital in the future at a share price north of $0.17. If successful, then using less than 1% of available cash ($160K) is really a small price to pay.
Thank you Steve.
Best to you,
LPG
I disagree with them having to eminently raise money, except for when they actually start the build out of the mine (but that is still years off). If you have not listened to the interviews with Bill over the last few years on this site, then I recommend you go back and listen to the last 10-12 of the updates to hear Bills thoughts on being against dilution or the need to raise money in the near future. Answer is – they don’t need to with the NSR.
Also your line: “Given its current capitalization, there is no value what-so-ever in the equity of this company.” Negates the very value of the NSR, or all the proven resources they have drilled out at multiple properties. They have ounces in the ground that are absolutely worth something, so this isn’t a phony explorer, like most of them out there. Please do some homework on their resources, and land value before claiming they have no value.
Good luck to you in your investing.
Do you really wish for me to respond to this or have you already made up your mind?
Now I have some time to really answer.
I’m not asking that you take my word on anything, rather just look at their financial statements and footnotes. Despite receiving $3.3M in royalty payments in the first half of 2015, the company’s cash balance fell by more than $1.0M during the 6 month period. In 2014 the company received $4.2M in royalty payments yet their cash position fell by almost $2.5M. In 2013 (pre-royalty) the company’s cash position rose by $6.0M but only because the company recorded a gain of $10M from the proceeds of the disposal of a property. Without this gain, the company obviously had a cash burn of $4.0M for 2013. If the NSR eliminates their need to raise capital then it is not being reflected in their cash flow statements over the last few years.
In terms of your second comment, I agree that there is some value in their resources and land as well as the reoccurring royalty revenue streams. That is why I said “other than its liquidation value” in my first response. However if you look at the company currently as a going concern and not the liquidation value of its assets, it is a continual stream of negative cash flows and commitments and contingencies like operating leases, potential JV obligations, etc. The company is an exploration company and hasn’t started commercial production on its mines. Ounces in the ground are nice but it requires significant capital to develop and mine their mineral properties. Also, the reserves are unproven and are not commercially viable to date. If you don’t want to take my word for it, just look at the company’s own disclosures in their 6/15 release.
“Currently, Rye Patch Gold US Inc. does not have any proven or probable reserves on any of its properties. No assurance can be given that minerals will be discovered in sufficient quantities to justify commercial operations.”
“To date, the Company has not recorded any revenues from its operations nor has the Company commenced commercial production on any of its properties. The Company does not have the financial capability to develop its properties into mines or enter into commercial production on its own.”
Lastly, I never said that a capital raise was imminent but rather that the company would need to “raise additional capital within 24 months under its current burn rate”. The company could also be faced with a $2.0M payment to buy out Newmont’s interest in the Wilco Property JV which could also speed up that timetable. Now sure the company can take steps to delay raising additional capital if it were to engage in asset sales, take on equity JV partners, slow exploration activities, monetize the deferred excise tax receivables or even sell the royalty stream (which it discussed as an option). However, if they continue under their current cost structure, the company will need to do an additional capital raise sometime over the next few years.
I will forward this to Bill.
Whatever you want Al. I have no dog in the race and have no interest is these speculative names. I was simply trying to answer LPG’s question in my initial comment and really had no intention of taking it any further. Felt however that Excelsior’s comment needed a response. Moving on now
Thanks Steve. That was the best post on the company yet. Very informative.
That is a very good response Steve, and I really appreciate you sharing it. Thank you for taking the time to articulate the points you were making and to unpack the reasoning behind your views on what financial and operational options they have moving forward. Good point about their JV agreement with Newmont, and their option of bringing in other JV partners to assist and defray the costs some.
As for their resources in the ground I am going to post a link to their PEA below, as it will absolutely shed much more light on things than their standard legal disclosures you posted from a June press release.
This is their actual PEA Technical Report: (but it is long 135 pages of information about just exactly what assets they have in the ground). If anyone will take the time to read through this PEA I think they’ll come to the conclusion that they do have real resources and real value in their properties. The question is whether they’ll be able to pull off unlocking this value and get their mine built.
http://ryepatchgold.com/_resources/pdf/lincoln_pea_20141006.pdf
Also, here is a link from the interview with Bill that Cory just did at the show and Bill discusses their Royalty payment and how the don’t spend more than they make.
http://www.kereport.com/2015/10/31/coverage-orleans-investment-conference-rye-patch-gold/
I have no desire to continue with this discussion after this because I’m not willing to spend anymore time looking at Rye Patch. I honestly never heard of the company before Monday and wasted 90 minutes of my time looking at their financials. However I do just want to clarify one thing for the record. I don’t have a “view” or “opinion” on Rye Patch. All I did was comment on “facts” based on the company’s reported historical performance. The only subjective thing that I did was to extrapolate a future cash position based on their historical burn rate. Could this change in the future….absolutely. However, until they do so, I’ll have to go with what the numbers tell me.
Additionally, I honestly have zero ability to evaluate the potential of their resources in the ground or the commercial viability of their mines. I’m an investor and not a geologist. But here’s the thing; no one else can reliably do so either because it requires making a whole lot of assumptions on factors that neither the market nor the company can control. That’s why it is a $0.14 stock and represents nothing more than an option on the company’s future potential.
I hope that the company is able to realize all the potential that you believe that it has and that all the stockholders become fabulously wealthy. I wouldn’t be surprised if it were a $40 stock in two years or if the company was insolvent and out of business. As I said before, I have no dog in the race so it won’t impact me either way. However, for anyone that claims to be a fundamental investor, there just isn’t enough information to make an informed decision one way or another. Once an investor is able to check their biases and opinions at the door and focus on the numbers, decisions become much less subjective and speculative.
I wish you nothing but the best of luck.
Fair enough. Thanks for your input & perspectives Steve and I wish you all the best as well.
RPM money isn’t being used effectively. IMO. They are going to end up doing a financing at 5 cents in the next 2-3 years instead of just saving the cash or investing in something that has more upside and value to shareholders like the dozens of highly prospective companies out there. Why wouldn’t they have invested in a company like v.fmg (highly prospective and extremely low production costs). RPM is on my watch list but will wait till it goes below .10 before I really take a close look.
Sorry Peter, I have to disagree.
SGT REPORT , has a follow up on Andrew Maguire…….this is concerning his credibility, which I think is a good one for all that are questioning the FED, vaulting banks, cabal, JPMorgan HSBC ..and the possible price of GOLD AND SILVER manipulation and smashing.
Agatha, just skip over , the above , your sleep is more important………..nighty nite.
Look at the left side of the screen, what natural market does this same nightly slump day in and day out? Nobody even arbitrage it? Yes, a lot of people do but they add together is weaker than the dominant force so they cannot make the move random. Sad thing is people are numb to it.
DITTO………..
I have watched this move for the last two years………..I have also, mentioned it several times, with comments with valid sources.
SGT REPORT…..has a great article by BIX WEIR,…… “Martin Armstrong both right and wrong”
great info. concerning his computer and the actual take, down. Some times the trade is the ENTIRE VOLUME OF GOLD PRODUCED IN THE ENTIRE YR. Even mentions Silver traded 32,000 tons in one hour.
Frank, most people are not good at math. If they are, they will know how statistically significant this kind of repeating pattern is. Once they calculate the probability, they will know there is no probability it is not forced. This kind of coincidence happens once in billion years. The other funny thing is silver get knocked down every day to the close.
Dragonite……….ditto you are spot on
Looks like London and NY……are working together today. They should get as much damage in as possible before they have to close the doors. Time is getting shorter each day as more and more wake up.
Looks like USD may be posting a minor H&S (see daily chart) while long bonds put in an outside reversal yesterday. Same story with DAX, Eurostoxx and US indices with the exception of the DOW. So that’s a curious assemblage of indicators telling us a directional change is coming very soon. Today or tomorrow I imagine.
Well, moments ago we hit my first downside target for gold at 1130 and now we wait to see if there is a bounce or the declines will continue. Personally I think more of a fall is in store however if gold were to bounce hard from here then Gary would have a big feather in his cap as that might well translate to a higher low on the daily chart. It is still early in the morning (5:45 am NY Time) so anything could happen yet but I will be pretty disappointed if gold takes the ride back up.
That post was about my feelings (NOT technical!)
1130 gold is busted. We are on our way to Doc’s 1120 target….gee that didn’t take long.
1130 gold is busted. We are on our way to Doc’s 1120 target….gee that didn’t take long.
Gold is $10 lower than yesterday’s low yet GDX and GDXJ have not made new lows. This is what you want to see when looking for a low.
Gold is still in an impressive uptrend when priced in the miners but I do believe that a long term top is in progress.
FWIW, here’s Avi’s update on GDX – from a few days ago…
https://www.elliottwavetrader.net/marketupdate/GDX-Potential-Top-201510382186800.html
Best to all,
LPG
I went to the RPM luncheon last Friday at the MSY Conference. I did because Al is so big on the stock. Well, it was not easy. They did not show up the first two days of the conference & Cory was kind enough to use his smart phone to find out how I could get tickets to the lunch……..others did not have my contact & booked one of the other two free lunches that day. Thus they paid the Hilton plenty for a full house & it was only 2/3 full. Ya have to have a booth to work the crowd first and then pay for lunch if you think it’s worth it…..this stuff is not that hard. Other gold/silver company lunches were full.
OK, Bill & his staff were good and the presentation fine. They have a good reputation. I am not too fond of the share structure 150 million shares is a bit much IMHO. The buy back ends in May unless extended & will not make much of a dent in the total shares out including those options mentioned above.
As to Lincoln Hill, if the gold price ramps in the next couple of years they will be fine, others I talked too at the conference do not think the project is very robust at current prices below $1200 & think there are better ideas out there. Like some above, I will take another look at 10 cents
A few CRJ stats for comparison:
PE Ratio: 6.14
Price to Book Value: .959
Price to Sales Ratio: 1.341
Enterprise Value: $143 M
Market Cap: $140 M
Disclosure: I own CRJ and do not own RPG.
You know I love Claude Matthew, and we were promoting on this site a future winner back in 2012 ann 2013 (before their “turnaround”) and before Doc, Big Al, and Cory had the newsletter. So I agree it is a top in its class for sure.
Having said that, comparing an established producer for decades that built out its mines in a different price environment to an explorer in the trough of a 4+ year cyclical bear is like apples and oranges.
Also, a tighter share structure in Rye Patch would help all those numbers, and if it was only a one-time buy back, then I agree with you and LPG that it doesn’t move the needle enough to make a difference. If it is rhythmic quarterly buyback with 10% of the NSR, then over time it will mop up the excessive shares and improve those metrics. That’s what my point was.
Regardless, Claude is a proven winner and Rye Patch still has to prove it can make it to production, or partner/JV/merge with a larger company. I still like it as an explorer that I see as a takeover target in a few years and one that isn’t going broke over the next few years.
I believe they will both do fine, and both companies are still undervalued. Claude has moved very well in 2015 because it is a producer, has reduced it’s cash costs and has better revenues now. Rye Patch is an explorer, drilling out results, buying land, and yes a little tightening of the shares, but it is nowhere close to production. That’s why it is a difficult comparison between those two companies.
It would be better to compare Rye Patch to other explorers that swirling the toilet as we speak.
That’s true, Excelsior, CRJ is far from the best comparison. I chose it to highlight the fact that even it is much cheaper despite the fact that it is much less speculative.
Rockhaven Resources is probably a much better comparison and it trades at just .55x book (compared to 1.52x for Rye Patch). Deserved or undeserved, RPM is pricey compared to many of its peers right now.
Thanks for the heads up on Rockhave Resources. Yes, I’ve noticed Rye Patch didn’t pull back quite as hard as many explorers (possibly due to the royalty stream), so it comes across as more pricey in its peer group. It is quite possible that for the surviving explorers that they’ll have a larger percentage increase when things rebound as a result, and I should pepper in a little more funds into the quality explorers at these low prices.
Looking for ways or waiting for movement to raise more gunpowder reserves from other sectors I’m invested in at present.
Good thoughts and always appreciated Matthew.
Good point. That royalty alone could account for a lot of its premium in this cash-strapped environment.
Doc!
May I ask whether you’re an investor in Rye Patch or not?
Clark