Red Rock Resources: Driven by Jupiter!

After quite an eventful week in terms of price action, we saw Red Rock Resources  close on Friday at 1.9 –2.15 with heavy trading volumes (13.3m) throughout the day.

This was driven in the main by a strong performance by Jupter Mines overnight in Australia. It certainly seems that the Tshipi Kalahari manganese story has struck the right cord with the market.

No need to remind readers that Red Rock hold 93 million shares in Jupiter mines, which puts Red Rock on a mere AU$931k (or £558k in our own devalued currency) per point.

So last weeks rise in the value of Jupiter Mines shares of 6.5c has added around £3.6m to the value of Red Rock's holding.

It remains to be seen how far Jupiter will run, or indeed if the current price can be sustained. But as stated in our previous post, this means the company can now look to sell down some of its £16.5m holding (at current price) with impunity.

This is just one of the scenarios Andrew Bell pointed to in his video interview with us last month (to view click here). He also suggested that he would not wish to sell down the entire stake in Jupiter, preferring to leave more than a little skin in the Pallinghurst game.

But where Andrew did hang his hat was in his prediction that the moment even a small proportion of the Jupiter holding is sold, it will unlock the current discount to NAV and people will start to see Red Rock in a different light (23 minutes into the video)!

Last week also saw the resumption in trading in Resource Star and if Jupiter’s performance was stellar, Resource Star’s could not have been in starker contrast. 18 months of suspension had clearly taken its toll on some investors as the share price fell around 35% before recovering slightly and stabilising on Friday. The value of Red Rocks 13.4m share holding fell by around £450k accordingly. However we expect events to be news driven here in the short term and as Andrew Bell suggests in the interview, there are deals in the pipleine, so we will have to wait  and see how the market responds!

As mentioned in our previous update, we are looking to rework our value proposition on Red Rock to take into account all events to date. However it is clear that much of the action is still unfolding, so its a bit of a moving target right now.

We therefore felt we would do this more justice by first waiting for the company’s half yearly report, which is expected to be released by the end of the month.

Aside from the financials where we expect the balance sheet to show a significant uplift in valuation of assets, we will also be looking to see what the Chairman's statement will reveal.

This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed in this weblog are those of the author and should not be construed as being made on behalf of any featured Company.

Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.

All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.

The author owns shares in Red Rock Resources plc.

Copyright © miningmaven 2010

Red Rock Resources: Our Finest Hour!

For the Company's management and shareholders, Monday the 1st of March 2010 will be remembered as the day a new chapter opened in its development cycle.  To borrow from one of Winston Churchill's most famous war time speeches,  this marks "the end of the beginning" for Red Rock Resources.

The big news (click here to see) came from Jupiter Mines, (ASX:JMS) the Australian miner in which Red Rock are currently 25% shareholder, announcing their intention to acquire a 49.9% stake in the Tshipi Kalahari Manganese project in South Africa, from Pallinghurst Resources (JSE: PGL) and their high profile co-investors.

This deal represents an effective corporate restructuring for Pallinghurst, who, together with their investment partners will  end up with around 85% of Jupiters equity. The share-based transaction will be worth approximately A$245m, which will transform Jupiters with exciting opportunities in iron ore and  manganese in both Australia and South Africa.

To view the deal presentation click here

After the transaction, Red Rocks stake in Jupiter will be reduced to around 6% of the enlarged entity. However this will also leave Red Rock holding the largest independent stake outside of Pallinghurst and their co-investors.  

So why does this deal mark such a seminal event for Red Rock?

Up till now, the successes of the Company's agressive growth strategy have been largely overshadowed by the ongoing need for funding by way of equity placements. But all that changed on Monday.

This deal now opens up an early exit route for Red Rock as its joint venture in Jupiter with Pallinghurst is now completed; thus allowing the company to sell down some of its £15m stake (which, by the way is greater than its entire market cap  - currently worth over 2.5p per Red Rock share), without impacting on Jupiters market value.

So with a new route to significant non-dilutive funding available, we expect that long awaited re-rating may shortly be on its way. 

Here is an interview Pallinghurst Chairman Brian Gilbertson gave to Bloomberg TV Asia yesterday. One has to admire his patience, given the Anchor's obvious lack of knowledge of both the company's activities and the sector in general. Why she would feel the need to question him on the Rio Tinto Chinese spy allogations is beyond credulity! Mr Gilbertson is obviously a gentleman!

   

Monday also saw the company's Uranium development vehicle Resource Star finally resume trading after 18 months off the market.  Resumption of trading has seen the share price fall by around 25% from the 20c level. Taken in isolation this would be disappointing, but we view the relisting as more of a technical event and expect corporate developments and deals, (as referred to in Andrew Bells previous interview with miningmaven tv here) to be the drivers for value, in short order.

It is little over 6 weeks since we updated our value proposition on Red Rock (click here to see) yet Mondays developments have left it in need of a thorough makeover.

Over the next day or so, we will be putting together an updated value proposition which will take into consideration all the events that have happened in the interim, and we will be looking at where things could go from here. Exciting times ahead!

This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed in this weblog are those of the author and should not be construed as being made on behalf of any featured Company.

Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.

All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.

The author owns shares in Red Rock plc.

Copyright © miningmaven 2009

Ariana Resources: A piece of Turkey in the heart of Mayfair!

The Chesterfield Hotel in Mayfair was the setting for Ariana Resources (LON:AAU) latest investor presentation last Wednesday evening.

Hosted by Proactive Investors, Ariana shared the billing with Western Potash (TSX.V:WPX) who have a “solution” mining project in Regina Canada and Resource Generation (ASX:RES), who are developing a coal mine in South Africa.

Having attended a few of these Proactive events, one knows their success is always dependent on the calibre of company/management presenting and the mood of the room on the night!

This time round the event was very well supported with a lively mix of finance professionals and private investors. To compliment the event, Proactive's Wendy Durham even produced a new in-depth research note on Ariana which is well worth a read (click here to view).

Ariana's MD, Kerim Sener presented the company’s investment case to a receptive audience, though it was clear from the post event conversations that most had not previously heard about the company.

That being the case, with just 30 minutes of stage time, the big challenge was to concisely introduce the company whilst doing justice to all aspects the investment case.

Not as easy as it may seem. Ariana has some very significant irons in the fire; not least of which being the pending Proccea JV on the Red Rabbit project (click here for latest update), so there was always a danger that, depending on how the delivery went, the proverbial cake could have been obscured by a rather oversized cherry!

But with the support of a well-crafted presentation (click here to view ) Kerim managed to talk people through the Ariana story, doing justice to all aspects and giving additional detail as and when required.

So what did we learn?

With the presentation geared towards the uninitiated, the natural starting point was the country itself; Turkey being an economic powerhouse in the region with a thriving gold  market, mining friendly legislation, situated on the highly prospective Tethyan Metallogenic Belt...and so on.

All good stuff (click here to view our value proposition on Ariana) and it also served as a good refresher for existing investors. We also noted that good progress is being made with the EGU JV and Ariana’s own ongoing exploration work is all very much on track.

But what about the Proccea JV?

Kerim elaborated on certain details here making a point of commenting on how pleased they were with the results of the project scoping study (estimating a project cash cost of between US$350 and $400 per ounce), the good cooperation with Proccea and the rate of progress.

But one of the more intriguing nuggets we gleaned was that under the terms of the JV agreement, as Ariana continues to prove up more ground within in the Red Rabbit project area, the Company has the right, but not the obligation, to sell the resource into the JV for 3x the exploration cost.

This was a really interesting detail as it gives some background to the principles by which the two parties have agreed to divide the spoils.

In order to prolong the life of the mine, Ariana needs to continue exploration work to expand the resource within the Red Rabbit project area.

But with ongoing exploration work at Ariana’s cost, a formula was needed to provide the Company with an appropriate financial incentive to prove up more ounces for the benefit of the JV.

With this solution, when selling resources into the JV, Ariana will recover all of its exploration costs, plus a reasonable premium on top. And since there is no obligation, only the right, to sell additional resource into the JV, the company would also be free to consider any outside interests, thereby maximising its potential returns. Very reasonable!

With the presentation over the networking began. Ariana had pulled in a full team for the evening, including all the main board directors, as well as their broker from Alexander David Securities. They were certainly in demand as between them they worked the room, collecting and handing out business cards and talking Turkey!

The next event will be the Minesite presentation on 16th March (for details click here)


To subscribe to Ariana Resources company updates, click here

Previous Miningmaven articles on Ariana Resources

3 January 2010 Ariana Resources: Buy me a Gold Mine in Turkey!

30 January 2010 Ariana Resources: Going for Gold in "Turnkey" Turkey

10 February 2010 Ariana Resources: Lets get this show on the road!

18 February 2010 Ariana Resources: Limbering up for the Main Event!!

To view the latest 2010 presentation from Ariana , click here


This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed in this weblog are those of the author and should not be construed as being made on behalf of any featured Company.

Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.

All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.

The author owns shares in Ariana Resources Plc.

Copyright © miningmaven 2009

Red Rock Resources – A Value Investor’s View

As readers will know, Mining Maven’s approach is always from a value investors perspective. Identifying and following opportunities where value is not fully reflected in the current share price.

We usually start with the balance sheet, where very often we find value cosseted in complex project portfolios. But the real opportunities rest in identifying current, not historic value; and this often also requires thorough analysis and careful investor assessment of the Company's up to date plans and prospects.

So, we were rather pleased to note the latest Edison research update on Red Rock Resources (AIM: RRR), which also demonstrates the value which, as yet, the market does not reflect.

In this case, the Edison Investment Research Report (click here to view) indicates that the Company's market cap could be undervalued by up to a bewildering 89%!

The report analyses Red Rock Resources in depth and provides various valuation scenarios, which we recommend readers review for themselves in detail. But their top end scenario indicates a share price in excess of 16 pence reflecting net assets (on the assumptions given) of £93million. Given the current market cap of aorund £9.6m, thats some uplift!

Of course, we don’t anticipate the share price will miraculously leap to 16 pence overnight, however, the pathway to that level has been mapped out within the Edison report and it is clear that as Red Rock continues to crystallise value from various elements of its portfolio, the value of the company could move up accordingly, giving reason for the share price to follow.

Currently valued at 1.625p per share, Red Rock is significantly short of even Edison’s Worst Case, scenario, so if you are after value, Red Rock certainly deserves consideration. Investors may recall that the FT were wise to the undervaluation back in December 09 (click here to read the article).

We don’t have a crystal ball, and to our knowledge neither does Executive Chairman Andrew Bell,; but in the recent Mining Maven TV interview (click here to view), he states Management's target is for the share price to achieve double figures. An aspiration one would expect from company management. Based on with the latest Edison report, perhaps that aspirations could soon be realised.

Other Miningmaven articles & features on Red Rock Resources:

8 February 2010 - Red Rock Resources: Andrew Bell going for gold in Kenya!

3 February 2010 - Red Rock Resources: New funding options??

19 January 2010- Red Rock Resources (UPDATE) - What have Red Rock Resources ever done for us??

15 January 2010 - Red Rock Resources: Growing those Gold Ounces....

This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed in this weblog are those of the author and should not be construed as being made on behalf of any featured Company.

Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.

All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.

Copyright © miningmaven 2009

www.cash4idiots.com

Well it looks like cynicism is now well and truly permeating through the "cash in your gold" business, which sprung up fast on the heels of the global financial meltdown in 2008.

Complaints and reports of predatory practices are rife and it certainly didn’t take long for the shine to fade. So its no surprise that in January the OFT announced that it would be carrying out an investigation (to read click here ) into the business.

Whilst we await the outcome with interest, the findings are unlikely to surprise anyone.

Of course gold has always performed well as a safety net and a store of value when all around us is falling apart. But since 2008, the gold spot price has remained robust and is now close to its record high; so in order to make a margin in this business you need to be able to buy cheaply - enter Joe Public!

And the cash in your gold merchants now stand accused of praying on public desperation and taking advantage of their lack of knowledge of the true worth of their gold possessions.

But as the economy slowly returns to some degree of normalcy, it looks like the public's need to sell their gold to raise quick cash may also be on the wane. If so, then we could soon start to hear more of about  public purchases of gold for savings and investment purposes - which is a growing trend, but one, it would seem, in which the media are not particularly interested - yet. 

Here is an clip from a recent Miningmaven interview with Andrew Bell, chairman of Red Rock Resources who are exploring for gold in Kenya. Worth listening to what he has to say about where the price of gold is heading.

To see our recent Value Proposition on Red Rock Resources, click here

Cartoon in the header by:
http://www.dotgif-comic.com/

 

This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed in this weblog are those of the author and should not be construed as being made on behalf of any featured Company.

Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.

All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.

Copyright © miningmaven 2009