RE:RE:RE:the stock price is stupidly undervalued I second that it is all about CAPEX and assuring economic demand for your product, that is why this management is so smart and making the right decisions : they choosed to focus on high value silica products rather than HPQ products, this serves two purproses : 1- low capex requirements, no need for expensive processing equipment, its a straightforward crushing, sorting and washing flow sheet, max they could add a low cost simple flotation circuit. 2- targeting larger easy to entry markets, which makes it far easier to find customers (vs small HPQ duopoly market controlled by Unimin and the Quartz Corporation).
There are also many other benefits for this focus : easy permitting (they could start as a quarry for first stage, and environment friendly operations would help accelerating permitting, no acid leaching or other chemicals needed to produce HPQ), fast to market (building a processing plant takes a lot of time VS simple crushing/flotation circuits), low risk of operations (ramping up prodouction is a technical nightmare for every indusrtrial mineral that requires extensive processing techniques like lithium, HPQ, high purity graphite...etc), silica feedstock is as simple as a mining opration could ever be.
Finally, all those elements mentioned above will assure the company getting financed (low capex, low risk, fast to market operation). As I said the main risk remaining after anzaplan results confirming commercial products of the deposit is IMO finding customers, if they find customers and they sign some sort of a partnership deal/off-take agreement, the project will be completely derisked and they will decide to go to production.
Floridas2000 wrote: OrientEspresso wrote: True wisdom is knowing what you don’t know. All the points you made are absolutely correct. RRS is a very cheap silica play, maybe the cheapest on the TSX. But the most important unknown, is how expensive the capital will be to realize that value. This is a function of both the quality of the rocks and the external financing environment. There is no evidence that the market is underpricing these risks. The rocks look great (although I am not a geologist). But the financing environment is daunting. It will be years before the project is close to production, and in the meantime, shareholders will be diluted. Central banks will raise interest rates as well, so the discount rate on the project will be higher. Some are concerned about a potential economic collapse, which could put the company into bankruptcy. How are you comfortable with these risks?
You make some interesting points - have you reviewed their financials to determine how solid RRS is financially. My sense is they're very good compared to others in the silica space with a fairly low capex compared to peers. We will not know for sure until the FS is complete at the end of they year so speculation is pointless.
Financial environment is pretty bad but a company or two will make it to production for the simple fact demand will push it there. If a company is wondering where they will secure their source feed from they will invest or go without. I noticed quite a few mining companies were making some bold promises before PDAC. However after PDAC they disappeared. No news because they have no money to make news happen. If you look at lithium most of those companies will never even come close to production. Graphite took. Even some rare earths. It's a risk but current management has experience going into production and connection to investors so I like their chances.