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Revett Mining Company, Inc. (DE Message Board

  • i_am_lynne_too i_am_lynne_too Mar 14, 2014 4:45 PM Flag

    Thoughts on RVM stasis/disinterest

    The abject stasis in RVM continues to baffle me. I wonder if the market is pricing in a "victory" for MGN in being first to build, under the assumption that only one mine will be permitted in the area. This doesn't seem likely to me. The only other thing I can think of is that the market is pricing in more seismic "acts of God" that will preclude Troy from ever resuming full operations. This seems even less likely to me.

    Rock Creek doesn't even figure in my investing calculus at this point. Assuming no more seismic events, and with very modest assumptions about metals prices, RVM is currently crazily undervalued based on just the discounted future cash flow from Troy. It is truly a value stock, but with significant long-term optionality from Rock Creek.

    My target is $4 upon release of the first quarterly earnings following resumption of full production at Troy. Any positive updates about Rock Creek in the meantime represent upside from there.

    On another frustrating note, it looks like Hommel successfully reversed today's aggressive dump in MGN and forestalled its inevitable crash back to reality. It was down around 20% on the day and heading further on heavy volume. Jason's email came out at 2:30, the stock *immediately* reversed course, and it closed down just a few percent. Take a look at the daily chart -- pretty remarkable, though I still have trouble believing that this sort of thing is legal...

    Sentiment: Strong Buy

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    • MGN taking a big tumble today, under 80c now. With a market cap under $30M as of May 30, MGN will get thrown out of the Russell Micro Cap indexes. Forced selling by index funds

    • RVM is a worthless hole in the ground at Troy Mine until they sell what they process, which isn't happening and may not happen until 2015/2016, if at all. Why poor money down a sink hole. To get it cheaper?
      Not me. I want money now. I bought STBV & BAYP. Those are on sale at a discounts discount and believe it or not make more sense than RVM right now. Those two I can make money on perhps this week. RVM perhaps never and don't want my money ties up when I can put it to work for me.
      Screw RVM as it had its chance... if the rock pillars hadn't beenordered trimmed so thin, per Sr. Mgm't Shanahan, the roof may not have collapsed in the Troy Mine but I think that was the master plan perhaps as if compared to Ag prices Dec 2012, they go together.

    • there was an analysis of copper/silver prices and Troy Mine yields by an analyst. At these prices, it's not worth opening Troy. It had a negative NPV. That is the reason there is no interest

      • 3 Replies to dbtunr
      • By the way, what's your investment thesis for staying long RVM if you believe that Troy is worthless? It seems that all other boats in the market are floating at the moment, so why do you feel that it is worthwhile to stick around and endure the inaction in RVM?

      • By the way, what's your investment thesis for staying long RVM if you believe that Troy is worthless? It seems that all other boats in the market are floating at the moment, so why do you feel that it is worthwhile to stick around and endure the inaction in RVM?

        Sentiment: Strong Buy

      • Well if an analyst said so, then I guess it must be true -- especially if he/she said so on the internet... Seriously, when has a professional stock analyst ever produced anything of value? Studies confirm that you'd be better off throwing darts at a list of random stocks while blindfolded in a dark room.

        Anyway, I didn't say "at these prices". Markets discount the future rather than reflect the current situation, and my expectation based on supply considerations is that metals prices will be tending back toward 2011 levels within a year or so. Revett generated $22 million in cash flow in 2011. With the new development, they will have access to some higher-grade ore, so let's up their OCF to $25 million upon attainment of steady-state production. A conservative multiple for a company like this is 8X, which suggests an expected enterprise value of $200 million (not including any speculative value for Rock Creek). They have 35 million shares out, but let's say they issue another 15 million at around $1 to complete the redevelopment. $200 million / 50 million shares = $4.

        Even at current prices, Troy does not have a negative NPV. If that were the case, Troy would be on care and maintenance. Do you really think that Shanahan is clueless or that some prissy analyst has a better understanding of the situation?

        OK, let's say your analyst is right: Troy is worthless so they shut that POS down. They still have Rock Creek, which is very similar to Montanore geologically and perhaps more likely to be permitted. Today, Jason Hommel announced that MGN "could run... to $82/share in just a few years" -- even if silver prices do not increase. Therefore, even if your analyst is remarkably prescient and the Troy redevelopment proves to have been a complete waste of time and capital, we still may have the potential for 10,000% upside from here. Yup.

        Sentiment: Strong Buy

 
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