RNO - Cl001 Table Pounding Post
Posted by: cl001
In reply to: None Date:8/19/2006 11:58:24 PM
Post #of 53656
RNO: I am table pounding!
I suggest anyone with cash at hand(folks like MSGI, Len and SSK?) to take a close look at RNO before it runs away!
1. RNO is a nickel play: It produced 3.6 M lb of nickel in Q2 at cost of $2.57(USD). RNO just had the second crusher, the production will increase significantly. "the new secondary crusher, commissioning of which commenced in July 2006...". The company is guiding 17 M pounds of nickel this year, which means 5 M lb/quarter in H2. I am trying to be very conservative here. I only give RNO 4 M lb/quarter. Here are the numbers using Friday's nickel price and I believe Nickel price is going much higher due large short position and tight inventory:
4,000,000*(14.4-2.57)= 47 M USD/quarter cash flow. RNO has 194,622,422 shares full diluted, including 22 M warrants at $5 CAD expiring 2008. 24.2c/Quarter (USD). With copper price stablizing, this number will likely be the actual earning due to loss carry forward. At Friday's close RNO is trading at 2.3 forward cashflow! If RNO can hit the guidance, at 5M lb nickel/quarter, it is trading at 1.9 times cashflow! Note: Aguablanca is opened in 2005 with open pit mine life estimated at 10.5 years.
2. RNO Is gold Play:
Tasiast Mine in Africa is schedule to open in 2007, 105 K oz of gold at cost $240/oz. At gold price of $600/oz, it should bring 34M additional cash flow to the company. The mine life is at least 10 years.
Salave gold
Most investors already wrote off Salave gold. RNO is still in court trying to overturn the Asturias government's decision. However, even RNO fails in court, it probably can receive some compensation.
In the event that the decision of the Government of Asturias is maintained, the independent legal advisors of the Company believe Rio Narcea should succeed in obtaining significant monetary compensation.
El Valle and Carles gold:
RNO plan to close El Valle and Carles gold operations by the end of the year. It produces gold at ~500/oz after switching to underground. However, read the fine line,
In reaching this decision, the Company was significantly influenced by the decision of the Regional Authorities of Asturias, not to approve the "change of land use" required to develop the Salave gold project located some 70 km west of the El Valle....
RNO is closing El Valle and Carles to protect the Asturias government! If Salave is resolved, RNO will likely to keep it open. In addition, the cost to produce gold will likely to drop if RNO put resources behind it.
In short, RNO has many opportunities to become a much bigger gold player. Gold companies are mostly trading at PE of 10, 20 and 30. if any of these measurements applies to RNO, RNO stock price is likely to explode.
In conclusion, I believe RNO is a screaming buy at the current price. I have been looking for the next EZM that is undiscovered and traded in the US for a while and finally I found one! For those who bought EZM with me at low 1s, RNO is for you. For those who didn't buy EZM and only watch EZMoney running away, don't miss the run of RNO again!
