Apologies for long post and starting thread earlier than expected.
What an interesting day we had !!!
Good fun with some pain & no gain. Understand many have sold their holdings for good to protect the capital and at the same time some found it as good opportunity to take position to try their luck in this junior. And we had seen some big buy orders going through, which were not from small investor/traders like us.
Not trying to up-ramp, but in my opinion today’s panic sell was triggered by high expectations from first set of drilling results + delay in Scoping study along with past few mistakes from management. Though results were not as excellent as trenching but they ain’t that bad that could justify sell off down to 18%.
Let’s look as analyze some facts:
1.Announcement title: LOBO Project exploration UPDATE (i.e just an UPDATE not a final outcome & hope we all understand, correctly).
2.To date 311.4 metres of drilling for total of 8 holes have been completed. IMO, being in first stage results of [email protected] g/t Au, 5.8g/t Ag,0.07%Cu is not a bad one. Also, if you look at the table from today’s Announcement, we are still waiting for the result for 3 holes out of 8 holes (i.e. LB93-14, LB94-14, LB95-14, with length of 3.35m, TBA & 1.5m) and can be out any time by tomorrow or in next few days.
3.To date; we have only received results from 5 drill holes out of 20 holes (1000m) planned for phase 1 (Please ref to presentation of 12th Feb). Drilling ongoing for remaining 12 holes (690m) and results could be released in coming weeks/months.
4.Please ref to Presentation of 12th Feb: Phase 2 of Drilling (Contingent on phase 1 results) is planned to drill further 30 holes for 2100m that will cost us $0.6m. Technically, if we combine phase 1 & 2 drilling programs, today we have only received results from 5 holes (211.75m) out of 50 holes(3100m) in total (for phase 1+2), which is hardly 10% of drilling scheduled for 2014.
5.We all knew any average drill results will smash down the SP in short term and hence it was wise decision by board to raise as much as possible during SPP to ensure we are fully funded for 50 holes and development study.
6.If you look at presentation of 12th February, the development study (from Scoping to Pre-Feasibility) will cost us $0.50M. Hence, rushing for scoping study now and then keep paying more money to third party consultants will not be a wise decision. Also; as I always emphasis, scoping study is very important in mining sector and company should never run to throw out scoping study if they can extend and prove low cost-higher grade resources once drilling results are on table. I have seen similar delays few times from junior to major explorer where scoping/feasibility study was delayed only to increase the resources in order to win the confidence of investors.
7.From 25th Feb announcement : “The Trench 20 result indicates a link between the Japanese Tunnel lode and the Trench 7 lode, a strike length of approximately 70m, the same strike length as the South West Breccia Mineral Resource. Drilling is currently being planned to systematically test the entire zone from Japanese Tunnel to Trench 7, at sufficient depth to avoid alluvial channels, with the objective of defining gold Mineral Resource.” I am eagerly waiting to see the final results of this drilling.
8.Please ref to current announcement: Red Mountain Managing Director Mr Jon Dugdale said “These results are very preliminary in a much larger drilling program. We are now fully funded to complete a significant body of exploration in this area, which will allow us to complete the systematic testing of all high-grade lode targets identified to date.”
Hence, current announcement can only be consider as first update on ongoing large drilling program and so far we have only received preliminary results.
IMO, announcement was simplified as much as possible so that non-technical investor/trader like me can understand well.
Not saying, there isn’t any risk investing in RMX, but we are still waiting results for over 90% of drilling program scheduled for 2014. And looking previous trenching results & current drill results; I hope we will be lucky enough to hit the mother lode sooner or later. However, my interpretation and understanding could be different than the others who sold out today or in past few days and they could be right as well. Only time will tell us the truth.
Please note, aforementioned is just my understanding and opinions derived from presentation and current announcement. Please do not take it as buy/sell signal. Please DYOR when you put your hard earned money to any stock.
Please feel free to correct any mistake. Much appreciated :).
Have a great week !!!!
Cheers JS
RMX Price at posting:
1.8¢ Sentiment: LT Buy Disclosure: Held
(20min delay)