About what I feared with the Edna May purchase and mentioned in...

About what I feared with the Edna May purchase and mentioned in other threads and I am back to a hold on RMS now as I think they have sunk any chance of improved cash flow or returns to investors that the market was looking for. This is at a time when almost all other profitable goldies are pushing dividends.

Although as a holder of EVN I am very happy with the deal they got for the mine including $40M cold hard cash. Considering the mine lost us cash last year it will make a nice bonus for EVN shareholders with a short term view. We have been waiting 18 months for the EM turnaround. I don't think the deal is a complete rip off, EVN drove a hard bargain in a seller's market but I think that their assessment from their annual report would be fair, even if it is painting things in the best light. Not many post on the EVN forums but those there are delighted!

Edna May from the EVN's last annual report presentation ...
90,000 - 100,000koz @ $1,100 – 1,150 cash cost and 1,250 – 1,300 AISC (those seem very low based on last 2 years though)
Capital spending 2.5 – 5 sustaining and 10 – 15 major.
Edna may was their only mine that was cash flow negative after all capital spending last year.

Hopefully This year it will make some cash for RMS this year as the underground kicks in and the capital spending is less. Also the annual report mentions the last few months had shown significant improvement so hope that will continue. If it performs then roughly say $400 margain x 100koz best case $40M less capital costs and integration etc. so maybe $20M left best case, but I think the AISC will be higher for RMS given some extra corporate and integration costs, and I think their capital burn will be higher if they want to increase the LOM as they say. This is if things go ok. Depending on development decisions best case scenario is 2 -3 years without further cash payment until that that $100 royalty on production kicks in.

Back to a hold, maybe a sell, waiting to see which way the market takes this and RMS is around a long term support technically.