Commodity-TV

The whole world of commodities in one App!

Watch Management & Expert Interviews, Site-Visit-Videos, News Shows and receive top and up to date Mining Information on your mobile device worldwide!

Download our unique App for free!
Commodity-TV Play Store
Commodity-TV App Store
Commodity-TV

Social Media


Rye Patch - Macquarie Start Research with 12 month price target 0.65 CAD

Rye Patch - Macquarie Start Research with 12 month price target 0.65 CAD

Rye Patch Gold Corp.

New Nevada Gold Producer

 We are initiating coverage of Rye Patch Gold (RPM CN) with an Outperform recommendation and a C$0.65 target. Rye Patch is transforming from an explorer/royaltyco to a junior 70kozpaAu producer on the back of its July 2016 acquisition of the Florida Canyon mine (“FCM”) heap leach oxide gold asset, Nevada, USA. De-risked yet trading at an attractive Explorer Valuation

 Rapid path for a significant re-rating & strong gold price leverage. We think the FCM restart offers investors a key opportunity for high returns given the stock is trading at ~70% discount to junior producer peers. RPM trades at a 0.31x NAV (spot: 0.35x) & 1.7x 2017E CF (spot: 1.9x) despite Au production <3 months away (late 2016) & being located in the safe jurisdiction of Nevada. RPM has strong leverage to gold prices with ~C$0.10 NAVPS for every $100/ozAu.

 Low execution risk – Florida Canyon has a 26-year production history. FCM is a simple heap leach, open pit oxide gold mine that has steadily & quietly produced +2moz during 1986-2010 at a run-rate of ~80-180kozAupa. We see the mining restart, involving construction of a new leach pad, as relatively low technical risk. We model a low capex of $27m with commercial production in 1Q17 and a nine-year operating life producing ~70kozAupa at $889/oz AISC for an NPV of ~$140m & ~95% after tax IRR. Management will leverage the district upside  Consolidation of the Oreana gold-silver Trend = opportunity. RPM has consolidated a large 180sq km land position in the emerging Oreana Trend (+3mozAu & 110mozAg past production). We believe management’s extensive operating experience at Florida Canyon and senior mining company experience discovering and putting gold mines into production in Nevada will be key in assessing opportunities in the Oreana Trend including:

i) Lincoln Hill development could push RPM to +100kozpa – potential for an additional ~23kozAuEqpa for 6 years, we estimate a ~$31m NPV and ~45% after tax IRR;

ii) potential production from the Wilco deposit (0.8mozAuEq attributable), and;

iii) potential to document large sulphide deposits in the belt.

 Development assets are essentially ‘free upside’. Even with a Florida Canyononly valuation, RPM trades at 0.45x NAV, a ~60% discount to junior producer peers. This implies to us that the C$0.27 of other mineral assets’ NAV is ‘free upside’. We highlight there are also other opportunities we ascribe zero value to in our model such as the Florida Canyon sulphide potential. Catalyst-rich over the next 12 months  Key catalysts that could drive the RPM share price include:

 Florida Canyon – initial pre-commercial production (late 2016)

 Florida Canyon – full production & re-rating (1Q17)

 Near mine exploration/expansion oxide results (2017)  Sulphide exploration results (2H17)

Always up to date with the newsletter from SRC

Swiss Resource Capital AG will use the information you provide in this form to keep in touch with you and to provide you with updates and marketing information. To receive our news, you still have to give us permission to send you E-Mails below.

You can change your mind at any time by clicking on the Unsubscribe link, which you can find in the footer of every email you receive from us, or by contacting us at info@resource-capital.ch. We will treat your information with care and respect. For more information about our privacy practices, visit our website. By clicking below, you agree that we may process your information in accordance with these Terms.

We use Mailchimp as our marketing platform. By clicking below to subscribe, you acknowledge that your information will be transferred to Mailchimp for processing. Learn more about Mailchimp's privacy practices here.

* indicates required
PDAC 2019

Always up to date with the newsletter from SRC

Swiss Resource Capital AG will use the information you provide in this form to keep in touch with you and to provide you with updates and marketing information. To receive our news, you still have to give us permission to send you E-Mails below.

You can change your mind at any time by clicking on the Unsubscribe link, which you can find in the footer of every email you receive from us, or by contacting us at info@resource-capital.ch. We will treat your information with care and respect. For more information about our privacy practices, visit our website. By clicking below, you agree that we may process your information in accordance with these Terms.

We use Mailchimp as our marketing platform. By clicking below to subscribe, you acknowledge that your information will be transferred to Mailchimp for processing. Learn more about Mailchimp's privacy practices here.

* indicates required