RNS/EMR Arbitrage.

Figures from the RNS presentation suggests an arbitrage opportunity.

1. After EMR has funded the Okvau definitive feasibility study(DFS) and the exploration programme (total cost of approx. A$14m), both EMR and RNS will have approx. $4m each in free cash.
2. EMR has a market cap. of $58.8m (at current price of 4.5c) and RNS has a market cap. of $29.3m (at current price of 5.1c).
3. Based on points 1 & 2, EMR has an enterprise value of $54.8m and RNS has an enterprise value of $25.3m
4. At the completion of the DFS, EMR’s share of the Okvau resource will be 561k ozs of gold(51%) and RNS’s share will be 539k ozs(49%).
5. Based on points 3 & 4, EMR is valued at A$98/resource oz and RNS a$47/resource oz.
6. Based on point 5 and with EMR at 4.5c/share, RNS should be trading at 10.6c/share.
7. A high quality exploration programme has just started which has the capacity of adding substantially to the resource base. Initial results should be available in approx. 6 weeks.
8. The existing resource base is very good quality and deserves a higher valuation/oz than is currently the case.