Hellyeah do you realize that you could buy 26.5 shares of your...

Hellyeah do you realize that you could buy 26.5 shares of your favorite FML for just 1 RMS share. RMS is capped at 98my where as FML is capped at 25my.
A quick comparison suggests that one is either overcapitalized or undercapitalized. FML has forecast a production of 54,000 ozes this financial year and in the last quarter produced at a cash cost of $537, has a resource base of 1.8my ozes of which 550,000 jorc compliant ozes are contained within the developed ug infrastructure hosting the Perserverance/Tindals ore bodies. RMS has jorc compliant resources of 83,200 ozes and is currently processing 36,[email protected]/t low grade from the cutback and will not reach the base for high grade till December and will finish in January, before they develop the underground scheduled for mid 2009. I could not find tonnage and grades they expect for the open pit, but I did find reference to pictures and terms like kilos per tonne etc.
Wattle Dam appears to me to be a reincarnation of another deposit, Blue Funnel owned by Golden Deeps NL that raised similar expectations in the late 80’s with extraordinary high grades hosted within ultramafic rocks. Like Wattle Dam they mined the oxide and treated it at the Burbanks Plant with similar results with a significant overcall on the grade. They could not put the ug together even when they developed a portal and tried to strike drive it, as they could not successfully follow the ore. It remains dormant to this day. Gold in Ultramafic host rocks have a history of problems particularly for underground as they are difficult and expensive to mine due to bad ground conditions and even with cable bolting and shot crete limit the type of mining that can be safely carried out, in particular narrow vein mining is very limited. In addition they present geological problems.
In order to produce an ore body model for mine design, you start with a geological model and normally that model is controlled by structures, lithologies, grade, etc. which are used to constrain the shape of the ore body which then can be used to develop tonnes and grade to allow mine design. The trouble with ultramafics is that they behave in a ductile fashion, similar to plasticene which when you pull it apart stretches, thins, folds before it shears apart. In general the mineralizing fluids generally are introduced after the deformation has occurred and in a ductile material there is very little space for the fluids to penetrate and precipitate the gold thus it is extremely hard to predict where the gold ends up because there are no well developed structures to channel the ore fluids. There are shears which channel the fluids however they are generally associated with very bad ground conditions and are difficult to mine without significantly diluting the ore grade.
RMS has to cart to Burbanks which is 77km and will cost between $11-12/t, The Burbanks plant is rated at 180,000t/year which means it will cost a minimum of $40/t to treat and if you assume a 90% recovery then just to break even at a strike price of Aus$1,100 you need a grade of 1.65g/t/Au and that takes no account of the mining costs. FML carts to Greenfields 7km a cost of $1.05, FMR have a contract to treat 480.000t/y at an estimated cost of $22/t and has reported a cash cost last quarter of $537 which will come down as they ramp up the stoping.
In summary RMS has high costs, high risk low resource base, and a high burn rate(6my last quarter). There are indeed some very impressive gold intersections but I perceive there will be a lot of pain to access them profitably. The cutback may generate enough capital to develop the UG but there are no figures I can find to factor in consequently I see that as further risk because access to capital will be very expensive and limited. FMR are producing at a projected profit of 2.5my/m which means they are self funding to bring on a pipeline of gold projects contained within trucking distance, the Three Mile plant is worth more than their capitalization. There is no doubt that cash is again king with grade as the queen and gold is the kingdom of the new post derivative landscape. Hellyeah can you tell me why RMS is worth 4X’s FML.