There are some concerns about reserves and longevity. Mine life on currently available reserves is roughly 5 years. If you extrapolate that in a ridiculously oversimplified way to $0 capital worth in five years time, you lose $1 off the capital value of the share each year, which more than offsets the earnings per share.
The company has recently increased its exploration activities to prove up and develop new resources to offset depletion in the current mine, but they kind of dropped the ball a bit over the last couple of years.
My view is that it's fine as a long term investment, but the PE ratio is discounted to reflect the risk of reduced output or profitability over the next few years.
RRL Price at posting:
$5.08 Sentiment: Hold Disclosure: Held
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