Rye Patch just raised $49.1 Million – Here’s whats next
Rye Patch is a company that is making waves in the resource sector. On May 25th the announced the acquisition of the Florida Canyon Mine – click here to listen to that interview. Now the Company just raised CDN$49.1 Million and are moving forward with production.
Bill Howald, President and CEO of Rye Patch joins us on the show to discuss the plans moving forward. We also clarify some of the finer details on the acquisition.
Click download link to listen on this device: Download Show
Feel free to contact Al or Cory with any further questions you have for Bill.
Glad I wasn’t tempted to take profits!
As a long-time shareholder, I have no complaints as long as option/warrant count is kept low.
Agreed. I’m a big fan of Rye Patch and have been a shareholder for years and I got more serious when they staked the land from Coeur, and posted regularly at that time that I felt Rye Patch would win that case…..and the did. As a result the Net Smelter Royalty has been a game changer for them, and allowed them to continue to operate, drill, permit, make land acquisitions, buy back shares, and now assistance with the acquisition of the new mine.
The share price has appreciated nicely by solid management decisions and I look forward to a bright future with Rye Patch.
Way to Mr. Bill Howald and team on a continued job well done!
The marketplace has still not properly valued Rye Patch, considering they have the Royalty stream coming in, have their financing completed for the foreseeable future, will be going into production, have made so many further advances on their Lincoln Hill and other exploration projects, and are also in the development stage for their second mine. That’s totally fine by me, as it gives me more time to keep accumulating over time before the marketplace finally get clued in….
Al:
Please keep us updated on the Reno trip. The Good Lord a willin, would enjoy the trip.
Sorry about the grammatical error and double posting…………………….
Donald Smith Value Fund will be a significant shareholder!
Saw that DSVF info.
That is good news.
Not so sure about the massive dilution though.
Seems a bit steep to me.
Matthew – what your thoughts on RPM
I wouldn’t call it massive dilution with Rye Patch, as you are getting real value for the shares issued, and they actually had bought some of their shares over the last year. Just compare the work Rye Patch has done over the last 2 years advancing their projects without diluting their shareholder – ie…. moving Lincoln Hill, Wilco, Garden Gate, and Patty forward, using the NSR.
In comparison, most Jr explorers have continued diluting the snot out of their shareholders just to pay carrying expenses and to pay salaries for worthless management teams, and as those companies have burned through millions of dollars, they haven’t even been advancing their projects.
I don’t have any problem with doing a financing like this, where there is some dilution, if it is for acquiring a permitted mine that can go into production, and giving them some breathing room without having to go back and do any financing for a while. Keep in mind, they’ll still have the money coming in from Coeur on the Net Smelter Royalty so it is unlikey there will much further dilution execept for the shares that may be issued to satisfy the $5 million once they go into commercial production.
Compared to what we’ve seen from 90% of companies in the Jr Mining space, Rye Patch has made much better management & timing decisions and is head and shoulders above the vast swath of Jr mining companies.
EX
Going from 144 million shares to 326 million shares is a massive dilution in my mind.
Not saying getting the funds and mine operating isn’t good. There are a lot shares that will be available and they were all bought at $.22.
Most fund managers would take that easy double currently sitting in the market.
I guess well see in 4 months after the holding period.
Good points Tony.. You are correct that the dilution is large, compared against their current share structure. My point was that it didn’t seem like a massive dilution considering some of the deals other miners are paying to acquire companies that have one mine company that has a permitted mine in place that can go right into production in under 6 months.
Considering the sudden increase in the assets of the company it seems fair, but as you say there may be a selling even after the holding period, that could pressure the share price. You never know though…if PMs were to make another leg higher, many may hang on for higher prices. With Rye Patch having this mine going into production to start generating revenue next year, and then coupled with NSR, then that should allow them the momentum needed to get the Lincoln Hill project developed and that would give them a second mine about 2 years out. To have 326 million shares with 2 mines and 3 other exploration targets, and a steady cashflow from the NSR seems like good value compared to many of their peers.
It will be interesting to follow their progress to see if they can keep to the timelines they’ve laid out.
Ex, the market cap is $58M and they just raised $49M. By definition that is huge dilution but you are right that what matters is the value they deliver in return.
Based on the price action, the market seems more than ok with what management is up to.
I stand corrected, when put in those terms. Yes, my point was that is not many shares to get a producing mine, compared to many of the dilutive events I’ve seen in other stocks just to keep the lights on, and in comparison to what other companies are paying in the marketplace for acquiring a fully permitted mine from another company in a takeover bid. The price per ounce of gold is very low.
Tony, I do not own RPM or follow it but the weekly chart is a picture of serious strength. If you’re taking profits and you’re bullish gold for immediate short term, you’ll probably get even higher prices.
However, it is very overbought so caution is advised. If you think gold will pullback significantly soon, then you should consider selling/delay buying.
Like so many others that have done extremely well this year, I do think that it can correct while staying at a high level over time rather than giving back most of its gains.
Thanks Matthew
If all goes to plan higher stakes leads to highest rewards.
This is a very true maxim Archdeacon (!) Andrew.
I really don’t think the stakes are unreasonable regarding the risk with Rye Patch. Think about it, they will have one mine going into production towards the end of this year and then commercial production in 2017, but they also are moving along Lincoln Hill into production as a second mine in about 2 years. In addition, they have the pipeline of other exploration targets, and a great mining-friendly jurisdiction where they are actually turning the drills and doing real work (how refreshing to see exploration work being done).
Really, I’m still surprised that the marketplace has not properly valued the incoming flow from the Net Smelter Royalty or the potential upside into the current share-price. One thing I haven’t heard discussed regarding Rye Patch is the upside potential in the NSR they receive quarterly from Coeur “IF” the metal prices keep going higher over the next few years.
It really depends on if an investor postulates that the PM prices still have room to rise from here over the next few years (I’m in the camp the PMs have quite a bit of upside from here in 2017 & 2018).
Let’s be conservative and figure that if Silver gets back up in the $18-$20 + area, then the amount of money that Rye Patch will bring in quarterly from this agreement will grow substantially and fund more growth. What would happen if Silver went to $30 then? (this upside potential has not been priced it, but when investors watch that NSR amount keep going up quarter after quarter, then I’d anticipate the share price to follow suit).
So Rye Patch is still traveling down the road to higher rewards, but not because the stakes are high, as much as the company is still very undervalued. The marketplace has not taken this increase in the metals prices to the NSR increase into the equation, or the fact that they will have the potential of 2 producing mines over the next 2 years as the metals prices are rising. If this was another “Development Stage” story being hyped by newsletter writers, this stock would be 2 or 3 times higher already. This seems like a perfect combination of factors for an upside surprise or a gradual and steady rise to me.
Cheers!
Thanks Ex.
I too have owned Rye Patch for some years and I’m very happy about whats happening. I’m sure there will be many hurdles to full production, but so far Rye Patch has shown some good management and adeptness at handling problems. I do worry that they have too ambitious of a time table. I hope everything goes great!
Thanks for all of yor comments,
Big Al
I wish I had bought Eye Patch instead of Midway Gold, Allied Nevada, and Royal Oak Mines.
Hindsight is 20/20 (even with an eye patch).
Hey Bonzo. An eye patch eh? Reminds me of Solzhenitsyn: Forget the past and lose an eye; dwell on the past and lose both eyes!! Forward and on! Best, A
Hi Andrew, I quit law school when I read that Solzhenitsyn said, “There is nothing more boring than a man with a career.”
I’ve have a lot of faith in Howald and staff for some time. Let the good times roll!