high component of heavy rare earth elements, page-8

Hi guys,

I have not been actively posting on HotCopper for awhile, but thought I should post on this forum as it has been dominated by a lot of nervousness/ misconceptions. Tawny has been the most level-headed poster on this stock and we need to thank Tawny for his/her input (regardless of whether he/she still owns ORM).

Now that ORM have come up with some initial results, I believe we can at least restart constructive comments from scratch.

On the surface, grades from the early drill results are nothing spectacular and will not set the world on fire. However, it's a good start as they have intersected some shallow rare earths. Some of their better HREE intercepts are comparable to PEK's HREE air core drilling (Note HREE and not TREE). Very early days for ORM. Given they were trading on a market cap. of circa. A$16 million 2 days ago, I doubt anyone was expecting them to come up with any rare earths in their initial drilling.

Do note that all the drilling done have been at relatively shallow depths and the field season only lasted a bit over a week. Given the market was giving up on receiving any REE results, investors started to price ORM as if NO REEs would show in their drill results. However, we now know there is something there (albeit small at this stage). In my books, something is better than nothing.

Rock chip samples 500m further from their target area warrants follow up DEEPER drilling in the whole area. Now, in order to answer the question of where the share price is headed for ORM, I tried to find a company in a similar position...... the closet comparable peer I could come up with is NTU. I know most of you know this, but judging from the level of input on this forum, I still have to spell it out: MARKET CAPITALISATION IS WHAT YOU LOOK AT. JUST LOOKING AT SHARE PRICEs ALONE IS MISLEADING!!!!

I have drafted a table below for your perusal:



Just to give you a bit of background on NTU. They have tenements around the WA/NT border too. They have yet to drill test any targets and they only have rock chip samples to date (and their rock chip samples are no better than ORM's rock chip samples). NTU has a market cap. of nearly $60 million, whilst ORM, having drill tested and found REEs, is only on a market cap. of $20 million. This is quite a decent comparison as both companies are focusing their efforts on their REE projects, with other prospects being put on the backburner. ORM will have some gold drill results due in the next month from their Newmont JV. However, no one is expecting anything from that. Therefore, we are comparing apples to apples (as close as it gets in real life).

ORM has had some selling of late from Taylor Collison & Foster clients. Given they did the placement, I am only ASSUMING that some of their sophisticated investors are liquidating part of their placement shares. This will probably not last too long given the significant turnover yesterday (23-12-2010). One differentiating factor is ORM does not have as liquid a market as NTU, so $50,000 worth of trades can either punch it up strongly or down strongly. Most of the stock in ORM is held by their top 20 shareholders.

So, based on the table above, you be the judge as to whether the market cap. of ORM (~A$20 million) is too low or the market cap. of NTU (~A$60 million) is too high. I personally believe it is a case of both. I can only tell you the facts and show comparisons...... market forces will dictate price levels.

Have a great festive season and please stay safe.

Happy investing.