RE:Chess Match?
Great post GeneFrenkle. I know several rock doctors and I have yet to consult with them on this one because I find most geologists a lot of times don't give good advice on junior stocks, LOL!!! Most big copper discoveries that I am familiar with have been bought out by larger producers for around $500 million plus or minus a couple hundred million and that is usually anywhere from 40% to 100% ownership. This is different in that Reservoir ends up with only 25%. That being said this discovery appears to be world class and is a rare discovery due to the very large area of high grade so this deposit is exceptional in that regard. The porphry appears to be large but as of yet we still don't know how big but I suspect Freeport already knows its huge. I feel that Freeport really wants this deposit and I think they will pay close to $500 million (for RMC's 25%) for it but that is just my opinion based on my experience of past takeovers and not any precise calculations. Its all to do with economics of scale and this deposit is huge and big producers like Freeport need big deposits. If a buyout did take place they would take out the entire company IMHO.
There is a chess match going on now and RMC does have some options. One of which would be to bring in another big major copper producer such as First Quantum and make a deal on the 100% properties nearby and start an aggressive exploration campaign. RMC only has about 15 million in cash and although that sounds like a lot its not when drilling for this type of deposit. Bringing in another major would make things really interesting and you could potentially end up with two majors in a bidding war for RMC. Another route would be for RMC do to a financing at $5 for say $25 million dollars (5 million shares at $5) giving them $35 million in total to get really aggressive in finding another copper deposit on their 100% ground thereby putting pressure on Freeport to make a decision sooner rather than later about taking them out. Things should get interesting over the coming months and I suspect it will be very positive for RMC shareholders. GLTA!!!