Opinions
Rick Rule
Red Eagle Mining
R-T
COMMENT
Sep 28, 2016
Stock price when the opinion was issued
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Building a gold mine in Colombia. There has been a lot of move into gold mining stocks this year, and this is one that kind of flies under the radar. There is no analysts’ coverage yet. They are just finishing up the build of the mine, and hope to be pouring their gold later on this year. There is lots of upside from both an exploration standpoint and a re-rating once they get to the production stage. Trading fairly cheap here. Electricity is fairly cheap, which should keep their mining costs down. Also, the Colombian peso is very cheap.
(Market Call Minute.) We should see them ramp up and start production fairly shortly. It is at the point now where the street is going to start to re-evaluate based on cash flow starting in the 1st part of 2017. It still looks super cheap when you look at where they are projecting they are going to be producing.
Just commissioning a mine in Columbia that should be producing soon. It is a re-rating story; currently only at 2 or 3 times 2018 earnings because investors have not bought into the story. You will get a rising multiple and some upside form rising gold prices. Risk will come down in the near term. (Analysts’ target: $1.31).
There is no analyst following it. They finished the mine and there should have been a re-rating of the stock. They had problems underground with cave-ins. They had to stop mining and raise money to change the way they mined. He is watching it to see if he should get in again. It should be able to bounce back at least somewhat.
Fairly high quality people and well known in the industry. His hesitation is that it is a very small mine, because if something goes wrong, they often don’t have the staying power to survive.