Hi Lou,
I enjoy your company analysis in the Globe and Mail very much. I don't see that you have ever looked at Rambler Metal and Mining on the Venture Exchange. I bought this stock back in 2009 for a long-term investment with an average share price of 25 cents. I've had a good return since then, but am wondering if there is a further upside on the horizon. What do you think?
Thanks,
Daniel
Hey Daniel,
Thanks for the assignment and congratulations on finding yourself in the money on your investment. Rambler Metals and Mining PLC (RAB) owns 100 per cent of the Ming Copper-Gold Mine located in Baie, Newfoundland. Their stated objective is to become Atlantic Canada's leading mine operator and resource developer. The Ming mine last operated in 1982 and was brought back into production in 2012.
In fiscal year 2014 RAB produced 7,472 tonnes of copper, 6,921 ounces of gold and 52,539 ounces of silver. The 2015 forecast is for output of between 5,400 – 6,700 tonnes of copper, 5,6000– 6,600 ounces of gold, and 39,000-46,000 ounces of silver. Management plans to expand its organic growth opportunities and investigate mergers and acquisitions that fall in with their strategic plan.
The company has a 17.7 per cent minority interest in Maritime Resources Corp. and a 3.1 per cent minority interest in Marathon Gold Corp.
An inspection of the charts will help determine the opportunities for further increases to your capital.
The first thing I see on the three-year chart is that RAB is a thin and volatile trader. A research of the stock's price history confirms that it can go days without trading. The average daily volume over the last three months is 13,142 shares. What these factors indicate is that there are liquidity issues to consider when deciding to exit your position. Make note of the death cross that formed in June of 2014 and the overhead resistance along the 200-day moving average. There are no clear signals that we can expect a new uptrend forming at this time.
The six-month chart again demonstrates the choppy trading pattern that can leave you stranded on an exit and reduce your sale price or inflate your purchase price on making a buy decision.
RAB has a market capitalization of $66.32-million which puts it in the micro-cap aisle. It is also a thin and choppy trader which introduces liquidity issues that have to be managed on the way in and on the way out. Finally the price of copper, gold and silver have been under siege for some time. These issues in concert don't scream buy to the risk averse.
Make it a profitable day and happy capitalism!
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