50M$ fair market cap ! 10 Bagger from current levels !Hi guys,
With the new optimized yet still extremely conservative PEA, we may calculate what RRS fair value could be starting next year with full production rate and cash flow positive status. And that is considering only the silicon ridge project in its current basic conservative form (quarry operation, 200.000tpa mining, minimum processing just crushing Direct Shipping Ore operation). Keep in mind management has more ambitious plans in the future for more processing and higher value added production. But for now, they want to start production and cash flow as fast as possible with an extremely low easily fundable capex and simple project to execute (also a 200.000tpa quarry operation is easy and fast to permit).
Annual Earnings are expected to be : 4.1M$
At 12x Earnings fair value for an industrial mineral company, that is : 49.2M$ market cap fair value
RRS market cap is now 4M$, to finance the capex and start production, RRS may need to raise some 1-2million shares at 1$-2$ levels (1M$-2M$ equity raise, the remaining capex could be obtained through other means such as pre-sales and off-takes financing, contractors miners up-front services, quebec government grants, loans...etc), with this low expected dilution we are talking about 5M$-6M$ market cap at current 47cents price level. (with the old PEA and 13M$ capex, dilution would be much worse, at least a doubling of the float would be needed IMO, hich means at current 47cents price per share, doubling the float means we are already at 8M$-10M$ market cap which decreases gains for shareholders).
At 50M$ market cap, we are talking about a 10x bagger from current stock price levels !
I hope that clarified a bit what the new opimized PEA and extremely low capex means for the future valuation of RRS stock price. It means lower dilution, higher stock price fair value (a 10 bagger instead of just a 5 bagger from current levels).
The new PEA and extremely low capex not only would ensure the project will get easily and quickly funded, it also means very low dilution for shareholders, less risk and fast track to production for project exectution (Direct ore Shipping, no complex processing needed).
The new PEA is IMO the Best News that happened to RRS thus far in its plan to get into production ! Next catalysts : off-takes and permitting ! Go RRS (as developbc says) !
happy silica investment to all,