Replies to post #31606 on Value Microcaps Junior Miners

[JohnCM]

What's going on here?

[dr_airtime]

Happy New Year - here are a few more ideas inluding RMX.TO

...putting this author on my SA idea generator list as he focuses his article on what companies are trading at on an EV/EBITDA basis. I like knowing if a company is cheap as a test for if I bother to look into it. As per usual you always have to double check back-of-envelope valuations though. see below.

http://seekingalpha.com/article/2778505-top-10-gold-stocks-for-2015

http://seekingalpha.com/article/2783235-top-10-gold-stocks-for-2015-part-ii

Rubicon (RMX.TO/RBY) or Red Lake 2.0 (Goldcorp's company maker) should be on everyone's list. They have an after-tax NPV5% @ $1200 Gold, adjusted for current US/CAD F/X rate of $CAD 384M ($CAD 423M*[1.05/1.15]) (see slide 13 below) vs. current $CAD EV of 386M at start of production in H2-2015 (current MC of $CAD 415M less $CAD 154M cash at Nov 30th plus $125M of cash burn to production - see slide 14 below). The SA author was completely out to lunch on their analysis and screwed up on USD vs. CAD values and cash availability vs. cash burn. Basically trading at 1.0X after-tax NPV5% @ $1200 gold now but with huge NPV upside from grade and price-of-gold upside (see presentatioun below). I would argue they are trading at 1.0X NAV reflecting the fact they are one of the most rational buy-out candidates in the sector now.

http://www.rubiconminerals.com/files/H2%202014/December%202014/20141217-RMX-Corporate-Presentation_FINAL.pdf

Will also be taking a look at True Gold - TGM.TO again after stopping out of my original purchase in fall. Author's top pick above.

FWIW Richmont (RIC.TO/RIC) was the sector star of 2014 as this article mentioned but only Checkmate and I benefited as you had to basically "buy within 5 minutes of open and ask questions later" after their twin - August 5th press releases.

Here's to a better 2015 than 2014!