I know a lot about Roca.
First off, their ore grades are probably the highest in the world for a pure Moly mine (yes, their is Golden Phoenix, but that's a joke of a company as they don't know how much ore they have). Most large Mo mines have average grades around 0.06% Mo.
Roca's lowest grade is 0.12% Mo or twice the average. However, they have substantial amounts (5-10 years of reserves) of much higher grade Mo (as high as 1.17% - enough for two years mining at the very highest grades). That higher grade ore is 20x higher grade than the average mine. And their next reserve grade is 10x higher than average. So the ore body isn't in doubt, nor is their l0+ years of mine life. Their ore body is also open at depth and they think there may be huge potential below. They will drill that out this summer.
As for production, they will produce about 3MM lbs in '07. All in cash costs are about $5/lb, although they think they are being conservative and may be closer to $4/lb.
At current prices, these are the numbers to use:
3MM lbs production
Selling price = 90% of spot prices (currently US$28//b) = $25.20 = C$29.70 (1.18 Cdn)
C$29.70 less $5 lbs "all in" cash costs = C$24.70 cash flow
C$24.70 x 3MM lbs = C$74MM in cash flow in '07
Current os share count = ~70MM. Thus Roca will cf about C$1/sh.
For a company trading at $1.60, that is incredibly cheap for an imminent producer.
If you assume a typical 5x cf multiple that implies a $5 '07 share target price.
Roca remains a strong, strong buy.
AI
