more breakdowns than a 3spd ea falcon-however

My relationship with RMS went all the way back to reading their prospectus on the short bus trip home from work. Shortly after listing I was bombarded with sell orders from another broker mainly in the options and was happy to absorb as many as clients could possibly take. Off the top of my head some were lucky to pick them up for around 2.6c/2.7c. Scary at the time like anything when you are buying at or near the bottom but it worked out nicely in the end.

As my interest grew in this story I got to know Joe Houldsworth quite well who was anything but your average Managing Director. I remember one day quite fondly after a broker presentation in my office (I was the only one there) he offered me a ride home in his white 4WD.

The stock continued to trade around 11c-12c and Wattle Dam was starting to throw some handy hints as to its potential. Black Cat and Hilditch were also projects of interest and I remember stressing over whether or not they would look at a small operation with only 25,000oz at Black Cat.

RMS then won the now infamous "Dog On The Tuckerbox" award for the worst IPO in 2002/2003. Rather than take this is a sell signal I treated it exactly like I will with my planned Justin Beiber poster that will take pride and place in my new office. Going from a massive open plan arena to a small office I think I need something stronger than a coffee to stir me up. JB is the boy for the job.

Instead of a line of coke, I sourced a decent amount of stock and in June 2004 tax loss selling we were buying everything that was thrown at us at 6.1c as we tried to sand bag it at 6c. I think from memory I may have ended up with 12-15% of the whole shotting match. Some tax loss selling periods are absolute fizzers but when a stock is getting hammered for no reason it becomes addictive and can even spread to other stocks.

As results flowed and Wattle Dam looked more likely RMS became the 30c-40c stock I hoped it would. Around Valentines Day 2007 I went out to AGR Matthey near the Perth international airport with the intention of buying a piece of Wattle Dam for my partner. I ended up with two in the end, and even though if I had purchased stock instead (700% increase) it wouldn't have made me any happier.

After a well earnt trip through Europe I came back to work in May 2007 to a Trading Halt. Then 48m @ 152 g/t from Wattle Dam was released, and here I was still jetlagged and struggling to work the phone system. To me this was the most exciting month of my career, here I was with a large chunk of a company that from the June 2004 lows was about to reward some with 50x their money.

May 2007 left the Nasdaq bubble for dead, even though during the dizzy heights I may have been doing up to 120 orders per day.
(Please note that RMS issued a 1/2 bonus option, another option, a capital return, a dividend, and a nice windfall for the ATO)

My record was smashed and for those curious I wrote $147,000 that month. My cut came in at 47.5% before tax and from the results I would call that a pretty decent win/win. Sure I earnt my old police salary in 18 trading days but it just felt like doing my job although it felt like a butchered dance track on speed.

Those that didn't sell into the major rally were then in for a nasty shock as the cut resource at Wattle Dam from memory came in at only 80,000oz. RMS had simply taken the cautious approach, whilst the market was expecting another bonanza. You need to be not only careful but realistic when it comes to resources as not everyone will surprise to the upside and in fact a fair amount will do nothing except cause angst for shareholders.

The GFC resulted in me starting to use strange comments such as "Junior gold stocks could become the next banks", and "Instead of buying blue chips why don't we simply keep on buying IGR and RMS".

Now let's hitch a ride with Marty McFly or watch an episode of Hey Hey Its Saturday. I remember sitting at the Box Deli in Perth with an expert in the gold sector trying to understand why Dominion (DOM) was 28c (capped around $30m), had a plant and some ridiculous amount in tax losses (may have been up to $100m or more?). Unfortunately the register was as tight as the Kardashian sisters and the thought of any M@A quickly evaporated.

I did however write DOM up and had a decent crack at it. What I then started to sense was that RMS was a little similar and once they moved into underground the fun would begin. Sure DOM found plenty of toll roads and eventually ran to $6.79, but regardless of their effort RMS still gave me that feeling. So much so I suggested to my AA that we write up a comparison and show the extent of the price corrections that would affect both stocks. If anything it would allay clients fears and become a document in which we could encourage them to at least hold for the medium-term.

DOM on some days looked as though their mine had collapsed or a major downgrade was coming. If you were running 45% stop losses you still would have paid brokerage on numerous occassions. It looked like Susan Boyle pre waxing, you wouldn't have bought it with someone elses money through guilt.

I should also add that I floated MML (with another broker) and experienced some even scarier moments and a Les Boyd/Barry Hall style suspension. I would tell one client it was a 50c-60c stock, then a $1.00 to $1.50 play, perhaps a $2-$3 company when Co-O lifts then you get the rest. The last call I made was $6-$7 and eventually we got there. Now I have no authority so I don't call him.

Anyway RMS has shown signs of becoming just like the other stocks I mentioned here albeit like anything with a fair amount of risk. Analysts wouldn't touch them till they showed mine life, now they have Mt Magnet, a rapidly growing cash balance, no debt and a fantastic MD who has done nothing except under state and over-deliver.

Having one of the worlds most astute gold funds doesn't hurt either. I guess every gold bug that heads to Toronto would dream of a meeting with Eric and it would certainly be my Oprah moment. During the year I went to PDAC it was a fresh 20 below so perhaps an idea to go during the warmer months.

As with DOM, MML and even down to IGR price action often means nothing. I know this may sound strange but the market isn't always wikileaks, and in fact it doesn't take much to overcome your fear and understand why the stock is correcting. It isn't cappers or insiders and in fact I have seen many resource funds forced to dump due to rebalancing or simply taking a profit they helped create.

I was often lucky enough to become aware of this selling and benefit from it. The short-term market movements are just a reflection of everyones agenda shoved into a pot and out comes a guava snow egg for all I know.

What could eventually make RMS an even stronger company could be the event that everyone is fearing. The day when selling the USD and buying gold becomes as outwide as going to a Nickelback concert.

Cheers

Budfox