RHM - Richmond Mining

[JimBob]

There was a good report released by Veritas Securities recently which gives a good overview of the Buena Vista project:

http://www.richmondmining.com/wp-content/uploads/Veritas-Securities-Research_29-July-2010.pdf

Note: They have only signed an option agreement to acquire the project and have to pay a total of US$8.2 million to acquire the project.

The PFS from Richmond is due out soon which should give a better indication of the numbers, but the Veritas report gives a good overview. The benefits over similar Australian projects are a low capital cost - it is only 40km from the main railway line to San Francisco which connects to four different ports. It is also on private land under patented mining claims allowing a faster track to first production.

The Veritas Report suggests a minimum 2MTpa of 65% Fe concentrate is achievable and have a valuation of $2.40. Veritas estimate mining costs of $50/Tonne, so there is a potential for $50-$100/tonne profit in the future depending on Iron ore Price. With the current market cap around $13 million, the potential for $100-$200million profit per annum gives room for good returns for shareholders imo.

They also have tenements 75km south west of Sandfire's DeGrussa Copper/Gold discovery where they have completed initial drilling which wasnt overly successful, but did demonstrate elevated gold levels in one area which is being revisited next quarter. Finally, they are drilling for Nickel at their Loonganna project this quarter. Drilling to date has confirmed the geology but hasnt found any Nickel targets.

 

[JimBob]

Some of the initial economic analysis for the Buena Vista Iron Ore project in Nevada have been released with the quarterly report.

Cost per tonne is estimated at less than $50/t
Capital Start up costs are estimated at less than $50 million.

They are looking at a base operation of around 1.5Mt per year and at this stage they are looking at commencing production around the middle of 2012. They are still waiting on some updated costings from logistical providers before releasing an updated economic analysis this quarter.

These figures stack up pretty well compared to similar projects in Australia. The low start up cost and existing rail and port infrastructure means they can get underway a lot quicker. This quarter they are also looking at providing an updated resource estimate, focusing mainly on the West Pit area, which will be where mining will start. Veritas have estimated an initial mining reserve of 7.1MT at 55%Fe and 40Mt at 35%Fe so hoping for figures around this.

Current market cap $12.3 million so there is still great upside potential in this company in the next year or two if they can make it to the production stage.

 

[JimBob]

Richmond Mining has had a good run over the past few weeks, the price was being held down due to selling to fund the conversion of options which happened at the end of December. In the past few weeks, the price has gone from the low 30's to close at 47c on above average volume.

Shares on Issue: 57,846,286
Market Cap: $27 million with approximately $5-6million in cash - estimate based on previous cashflow report and recent funds from option conversion.

Some announcements are pending - the resource estimate for the West Pit where initial mining will take place, as well as some geotechnical reporting and final metallurgy reports. Their Iron Ore project already has the majority of the infrastructure is place with a choice of 4 ports and about 40km from the main railway to San Francisco. All going well, mine construction is set to commence in the second half of this year with production in the second half of 2012.

 

[JimBob]

A trading halt over the weekend followed by a fizzle announcement that negotiations were still continuing instead of being finalised as expected. The announcement was a proposed framework for an investment in Richmond Mining and the development of the Buena Vista Iron ore project. The feasibility study is due by the end of this month but may be nearly completed judging by the negotiations that are taking place.

An increase in volume in the past few days suggests that perhaps some of the news has leaked.

 

[JimBob]

A great run for RHM over the last month with the share price going from a low of 36c to a high of 49c yesterday (all time high 50c). The feasibility study for the Buena Vista Iron ore project is due out any day now and looks like the price has risen on the back of that.

 

[JimBob]

The great run for RHM continues with the share price just breaking through 60c.

News should be imminent regarding the feasibility study and possibly a JV or funding agreement.

 

[craigj]

The great run for RHM continues with the share price just breaking through 60c.

News should be imminent regarding the feasibility study and possibly a JV or funding agreement.

thought i better reply jimbob

this stock is so undervalued and what a breakout from the 50c

this level should now act as support

been in this stock at 13c over a year ago

 

[JimBob]

Richmond Mining have completed their feasibility work for the Iron Ore project in Nevada, USA and subsequently exercised their option to acquire the project.
http://www.asx.com.au/asxpdf/20110509/pdf/41yjw3v2gc78vn.pdf

The capex and mining costs have blown out a bit from their initial estimates but $161 million is about a factor of ten less than most projects being planned in WA. Initial production rate of 1.75MT at 66-69%Fe with a mining cost of around $66/t. Production still penciled in to commence in the 4th quarter of 2012. Next hurdle is securing funding and an off-take agreement. No Chinese partner or major shareholders at the moment which is rare for an iron ore company.

 

[JimBob]

Great announcement for RHM today with a JV arrangement with Hebie Iron and Steel Group from China. HBIS are to help source debt funding of the $161 million project capex with an initial injection of funds to help fund plant equipment. Subject to securing the project finance, HBIS will be issued shares and options to take them to a 19.9% stake in the company. 80% of the iron ore output will be taken by HBIS and they have priority over the other 20%.

Very positive for RHM just two weeks after completing the DFS, share price up 30% to 51c on the annoucement but still short of the 67c high set a few weeks ago. Market cap still only $22 million which seems very low for a emerging iron ore company with a completed DFS and funding arrangement in place.

 

[JimBob]

An updated report from Veritas Securities has been released for RHM:
http://www.richmondmining.com/wp-content/uploads/11.06.08-Veritas-Research-Report-on-RHM.pdf

following the completion of the DFS and the funding agreement with Hebei Steel and Iron. They value the company at $2.81 per share with a short term price target of $1.41 - compared to current price of around 50c. Definitely worth a read and there looks to be significant upside over the next year as Richmond progresses towards production.

 

[mr. jeff]

thanks for keeping the info coming.
Looking very interesting. Could be stealing a few glances from anyone that was once a fan of the potential of SDL. Will be exciting to watch this unfold.
I wonder how the register looks...

 

[JimBob]

It has been a long time since some positive news for Richmond Mining but some came out today in the form of financing.

Richmond is looking to fund the $161M Capex of their Iron Ore Project in Nevada, USA and have had indicitave finance offers of up to $180M. They are looking at appoint a prominent international bank as Lead Arranger of finance.

In response, the share price is up nearly 30% currently with a big spike in volume. If they can arrange finance, magnetite concentrate is scheduled to be available for shipping within 9-12 months and there should be good upside to the current share price if they can achieve this with under 100 million shares on offer.

 

[System]

Richmond Mining Limited (RHM) is now known as Nevada Iron Ltd. (NVI).

Discussion of this company continues in the NVI thread: https://www.aussiestockforums.com/forums/showthread.php?t=24542