valuation

Hi All,
Thought I would share this as recently a thread started here about What is RNG worth? Hopefully this will help kick off the discussion for the New Year.

While reading this everyone please remember, DYOR this is just my opinion based upon some of my analysis.

What is RNG worth? Well, today it is worth what the market says it is as evidenced by the current market price. What is RNG GOING to be worth??? Ahhh, now that is a much more interesting question, and unfortunately a much more difficult to answer as well.

The future valuation of any company is as much an art as a science and there have been many books written about both the art and science of valuation. The reason it is so hard is simply that there are so many variables, each with its own range of possibility and it own range for error that by the time you combine it all you will have a range of price that is so broad that it is at best a rough idea, as opposed to a definitive number. As with anything it ultimately comes down to what is someone willing to pay for it, and even if we have pretty good comparisons for the moment, we still dont have a crystal ball to tell us what these will look like at some point in the future.
With all of this being said and understood we still try to create targets but must always remain mindful of the weaknesses and limitations of our methodology.

So, here goes with my evaluation of the potential for RNG.
Based upon the 40,000oz per year production/517,000oz reserve/$1200oz gold/$600-700 pr oz production costs. I tried to look at some comparable companies out there to get an idea of what the market cap of the company will be once it has fully made the transition from being a junior explorer to a junior producer. It must be understood that this is a HUGE step, as most junior explorers NEVER make the transition to operating company; as such there is usually a considerable difference in valuation that goes along with it. Based on this, I come up with a number of between about $0.125 and $0.195 which I would expect RNG to realize over the coming months as they truly become an operating company.

Please note that this number does NOT take into account any value allowed for any of the following issues that might make RNG exceptional;

-Potential upgrades for the resource (which we are starting to see already)
-Potential upgrades of production volume
-Potential for any of the other prospects that the company already has (it actually appears that they have some other very nice sites as well, time will tell)
-Recognition that this team has an EXCEPTIONAL track record of creating mining companies and appears to be on track to repeat past successes.
-Recognition that the mgmt team has gone into production in record time with very little upfront cost (if we were waiting for them to build a plant that would be 2-3 years and a huge dilution to the shareholders as they raised the money to do it.

Of course, there are all of the usual potential risks that exist for any speculative company like this so I will not go into those at this time unless you would like me to review them with you.

So, that is my evaluation for the moment, of course subject to change as new information reveals itself. As stated I currently see a range of .125- .195. Personally I favor the upper end of the range because of the other items I listed that the company has going for it at this time.

I also feel that with time, I think that there will be multiple considerable upgrades to both the reserves and to the production volume, as this happens, of course the value of the company will increase each time commensurately with the increases.

Bottom Line is this, the bunch running the show with RNG are the same bunch that took OZL from a penny stock junior explorer trading under $0.10 and from those humble beginnings created one of the largest mining concerns in AUS and took the stock to a high of over $4.00. All of my research tells me that they have decided to do the exact same thing with RNG and they are well on their way to doing so.

Yes, I am well aware of what happened to OZL and how the stock collapsed and the company was forced to do a deal with the Chinese selling most of the companies operating assets. I was burned in this myself an lost a considerable amount of money when they crashed. But I will give them credit for what they did even in those hard times they toughed it out did what they had to do and the shareholders still have something and something to build upon, unlike so many companies that just went into receivership to blow out the shareholders and creditors but leave the mgmt in place. So I will give them credit where it is due for making the best out o a bad situation. And none of that takes away from where they built it up to; they certainly did an exceptional job of building a company. They got caught up in the GFC at a time when they were leveraged to complete the new mine and when the music stopped they couldnt find a seat. Certainly not an experience unique to OZL, even the big boys like RIO and BHP had to sell some crown jewels. By all appearances I think they are well on their way to doing it again with RNG.

Hope it at least gives everyone some things to think about and discuss. Remember DYOR