Good pickup Moridin..
"The company is very much a 2019 story from a valuation perspective and perhaps some investors have lost sight of the company’s medium-term compelling fundamentals.
Canaccord is forecasting zinc production to increase from 11,200 tonnes in 2018 to 21,200 tonnes in 2019, and copper production is projected to increase more than three-fold.
Furthermore, this growth is expected to be sustained into fiscal 2020 with zinc production increasing to 26,800 tonnes.
The broker is forecasting a net profit of $39.5 million in fiscal 2019, representing earnings per share of 8 cents.
This sees the company trading on a forward PE multiple of less than four relative to Friday morning’s opening price of 30 cents."
Although nobody can accurately predict future earnings, the above covers three important points related to longterm investing in RVR and they all look very positive.
1: RVR are is very much a 2019 financial year onwards Company. This shortened finacial year covers the initial ramp up and learning curve ,we are seeing that in action as the recovery rates continue to improve and the issues that affected this quarter around production are being resolved..what is being learnt now will have payoffs further down the line...grades and production costs will vary quarter to quarter as they mine different sections and that will end up as a longterm average but improved recovery rates have a positive effect on all grades mined and the cost.
2: Earnings per share , now and going forward. They should increase as production increases but are connected to commodity prices and exchange rates so will always have some uncertainty.
3: PE ratios , they are directly related to earnings per share and are a very common method of valuing a share within a sector...there is a large amount of scope for the shareprice to improve if forward projections come remotely near reality.
As I mentioned in an earlier post , IMO at current prices there is little lasting downside and considerable scope for upside going forward...we are profitable, have no debt, increased production ahead and increased mine life ahead. It's largely up to the price of ZINC from now on out...all the above comes with no guarantee but a very reasonable likelihood, which as a longterm investor is all you can ask for...
Cheers Whisky
