Rambler Metals ready to Rollhttps://www.proactiveinvestors.co.uk/companies/news/45798/rambler-metals-ready-to-roll-with-its-perfect-hedge-of-copper-and-gold-45798.html
Rambler Metals and Mining (LON:RMM, CVE:RAB) is now starting to fire on all cylinders but still has many options up its sleeve to secure its future.
This is what emerges very strongly when speaking to George Ogilvie, chief executive of the Newfoundland and Labrador based gold and copper producer.
Such options not only build on the solid foundation Rambler has already established, but also de-risk its development in the future.
The firm's newsflow has been strong in recent weeks - a recent statement showed a further leap towards the firm's goal of commercial copper production from its flagship Ming mine at Ming's Bight on the Baie Verte Peninsula.
The firm sold its first lot of 600 tonnes copper concentrate, having fired up its new copper concentrator in May.
Ogilvie told investors this was a "milestone" moment, adding that Rambler hoped to reach the all-important 'commercial production' during the second half of this year, aiming to ship the first 5,000 tonnes of copper concentrate before year-end.
Under the firm's definition, 'commercial production' is two continuous months where both the mine and the mill (at Nugget Pond) are running at 85 per cent capacity.
Indeed, Ogilvie, who described the copper commissioning process so far as "smooth", said this month's (July) performance to date had been so strong that the it would no doubt count as a qualifying month towards 'commercial production’.
Ogilvie believes this will be the moment where the firm's shares will re-rate; a view echoed by City broker Seymour Pierce analyst Matthew McDonald in his most recent note.
Somewhat confusingly, before the copper circuit was started up at Ming, it was gold that Rambler had been focused on at its hydrometallurgical plant.
This operation has been mothballed for the time being but is available to come back into service “at a moment’s notice”.
And Rambler's results for the three months to April showed just how successful this brief burst of gold production was.
The company poured and shipped 8,013 ounces of the yellow metal from the 1806 zone of the Rambler deposit, and made revenues of C$14.2 million. Over five months Rambler produced 14,918 oz gold.
Indeed, just because the gold plant is now mothballed, this doesn't mean gold has left the Rambler equation. In fact it offers a huge potential boon, explains Ogilvie.
The concentrate, which is now being produced from the copper circuit, currently contains somewhere between 5 and 6 grams per tonne of the precious yellow metal.
This will further increase to between 12 and 15 grams per tonne with the increased blending of higher grade massive sulphide ore from the 1807 zone over the coming weeks and months.
"Some of the gold under that process is currently going out to tailings, but we have the ability to take the tailings and re-route it across to the gold hydrometallurgical plant and try and recover the free gold before it goes into the tailings plant, which would allow us to continue to pour a small dore bar," says Ogilvie.
The current gold recovery through the concentrator is just north of 70 per cent but with a re-processing of tailings this could further increase to 80 to 85 per cent.
Fascinatingly, this approach was not even considered in the firm's feasibility study or its internal studies, he revealed, and could therefore provide an additional revenue stream.
"One of the key messages we are trying to get out about Rambler is that the company, in its Ming mine asset, has a perfect hedge," Ogilvie added.
"We are a copper and gold mine producing copper and gold in concentrate, but if the gold price went to US$2,000 or US$2,500 tomorrow, then we could shut down the copper concentrator circuit and go and mine this 1806 zone as a stand-alone gold zone and start producing gold dore bars again."
Rambler, it is clear, is a firm, which always has one eye on the future.
It has a fully funded mine plan for Ming of six years, but the company's mining activities and impact on the region may go much further - potentially 20 years or more.
Those first six years are based on a mineable reserve of around 1.5 million tonnes of ore at 1.62 per cent copper, 2.40 g/t gold and 10.90 g/t silver.
But now the company is assessing the possibility of mining the lower footwall zone (LFZ), part of the deposit of a bulk tonnage operation. Here, there is around 21 million tonnes of material, with a modest 1.5 per cent copper and very little gold.
A preliminary economic assessment (PEA) conducted earlier this year, showed that around 3,500 tonnes would need to be mined a day to achieve beneficial economics.
The study also put the capital expenditure required on the project at around $231 million, including a significant expansion to the mining fleet.
This is one of the reasons behind news earlier this year that Rambler had brought in Chinese investor Tinma International, as a stakeholder, Ogilvie tells Proactive – just prior to publication Tinma increased its stake to nearly 16 per cent from 11.6 per cent.
If the firm were to go down this route and exploit the lower footwall zone, Ogilvie said that there would be a case to build a processing facility at the actual mine site rather than truck it to the mill at Nugget Pond, some 40km away from the Ming mine to reduce operational costs.
However, these studies into the economics of the LFZ are continuing, says Ogilvie, before there is any commitment to a bankable feasibility study proper - probably in the middle of next year.
Extending the operation for potentially another two decades would have big repercussions for Rambler and the Baie Verte region, not least as it would mean a boost to the company's workforce to around 300 from 130 now, says the chief executive.
Currently, the investment tends to focus on the east of the province, where there is a larger oil and gas presence, whereas Rambler is in a more rural area, he explains.
Rambler's development is a "very good news story both for the region and the provincial government," says Ogilvie.
So there has been much for investors to digest in recent months and newsflow is set to continue for the rest of the year, with the potential declaration of commercial production and more detail on the potential way forward with the LFZ.
Also in store, is a NI43 101 resource estimate from partner company Maritime Resources (CVE:MAE), in which Rambler has a 17 per cent stake, on Maritime's Orion gold deposit in the Green Bay area in Newfoundland.
"It's not our intention to sit on our laurels here. Our strategy is to grow this company to a market cap of C$500 mln over the next five years (current C$75mln)," Ogilvie concluded.