Value Microcaps Junior Miners

[dr_airtime]

Cork - Check out RIC.TO/RIC

1) First look at charts of Wesdome (WDO.TO) and Metanor (MTO.V). They are identical. These are both eastern Canadian underground gold producers that have less than <50,000 oz production/year. They both leaped out of sector bottom at same time. Leap virtually identical on both their charts. RIC has not leapt yet.

2) The third small underground gold producer in eastern Canada is Richmont (RIC). RIC has $26M in cash ($.67/share), has produced gold continuously for 20 years, even through the low gold prices of the 90's, so they are not going under at current $1360 gold. Richmont is small and always seems to produce maybe around 40k oz/year so has no economies of scale and therefore high cash costs.

3) All three of those gold miners above are just trades IMO becuase they will never get their cash costs and all-in-sustaining-cash-costs down to Aurizon-esque $600/$900 levels (Aurizon being a sold eastern Canadian underground gold miner) unless that can ramp production over 100k/year which is not going to happen. Simple trade on gold price rebound though for company with 20 year operating history.

3) Reason Richmont did not leap up like Wesdome is that they just closed a $50M facility with Macquaries to develop ramp to a high grade zone below their current Island Gold mine mining level (around 400m). If you read the PR below, this facility gets drawn down in stages and hedging is not mandatory, though if they hedge they can increase the repayment terms. They have until December to figure out if they want to hedge. They will draw $12.5M on this before September 30th, but they are not drawing the full $50M all at once so I think the non-movement compared to Wesdome and Metanor is unwarranted.

http://ir.richmont-mines.com/en/releasedetail.cfm?ReleaseID=786937

4) Have a small position from last week as a result of this analysis.

Good Luck!

Cash position of $.67/share at bottom of this PR

http://ir.richmont-mines.com/en/releasedetail.cfm?ReleaseID=782395