Rambler Metals and Mining
(AIM: RMM) (TSX.V:RAB)
George Ogilvie, CEO
Rambler Metals and Mining plc (“Rambler”) was established to invest in the base metal sector in politically stable jurisdictions. Its principal project is the Rambler copper-gold property, located on the Baie Verte Peninsula of Newfoundland and Labrador, Canada. Rambler acquired the property from Altius Minerals Corporation in exchange for ordinary shares during 2005.
The Rambler property contains the former producing Ming and Ming West copper-gold mines. The Ming Mine last operated in 1982 and the Ming West Mine in 1996. Mining of the Ming Mine ceased when workings reached a neighbouring property boundary. Rambler Metals and Mines acquired the property after it had been successfully consolidated.
WSR: Good day from Wall Street. This is Juan Costello, Senior Analyst with The Wall Street Reporter and joining us today is George Ogilvie, CEO and President of Rambler Metals & Mining. The company trades on the TSX Venture and the ticker symbol is RAB and on AIM, ticker symbol is RMM. Rambler Metals & Mining carries out development and exploration on their Rambler property located in New Foundland as well as Labrador’s Baie Verte Peninsula. Thanks for joining us today George.
George Ogilvie: It’s a pleasure Juan, thank you.
WSR: Start off by talking to us about the acquisition of Nugget Pond gold facility from Crew Gold.
George Ogilvie: The Nugget Pond gold facility sits about 40 kilometers from Rambler’s main project, which is the Ming Mine, which is a former producing copper-gold mine. The acquisition of the mill was an extremely good deal for Rambler. First of all, we purchased the mill for $3.5 million Canadian only and yet today it has a replacement cost of close of $40 million Canadian and what that does for Rambler is it significantly reduces the Capex requirement to bring the Ming Mine back into production, it also gets us a clear path to production. One of the things about that now is it is currently operating, has a labor force of 24 employees, and has a permitted and operating tailings facility, which of course significantly reduces the risk of gaining permitting to bring the mine into production.
WSR: You also recently released your year-end financial results for year ending July 31, 2009. What were some of those highlights as well as give us an update on Ming Mine?
George Ogilvie: I think one of the key significant developments with Rambler in our financials was that we just recently completed a private placement for 5.5 million pounds, which is about $8 million. So, that means now the company is well funded for the next year and of course completing the private placement we believe endorses the project. That private placement that we completed as well amounted to about 30% of the overall project financing that’s going to be required to bring the Ming Mine into production and of course that allowed us to purchase the Nugget Pond Mill facility.
WSR: Just for some of our listeners that are just now following the Rambler story, what were some of the highlights of the updated NI 43-101 on Ming, I know it was done early in the year?
George Ogilvie: Yes, we issued a second National Instrument 43-101 in April of 2009. We focused then purely on the massive sulfide, which is the high-grade deposits that we have within the Ming deposit and we did that deliberately in order to minimize the time to production, to minimize the capital requirements, and also to provide us with a low cash cost per pound so that the mine could be profitable. Even if we saw copper prices going down to let’s say $1 a pound, the Ming Mine would still show profitability at those type of prices. So, the 43-101 we issued basically showed that we had 3.5 million tons of ore in the ground at an average grade of 2.2% copper and about 1.4 grams per ton gold, which today is about 4% copper equivalent and is quite high grade for an underground deposit. That gave us about 80,000 tons of contained copper metal, 161,000 ounces of gold, and just over 900,000 ounces of silver is in the resource as well; all which can be mined over a ten-year time frame.
WSR: Talk about some of the market trends in ore, copper and gold, and how well positioned Rambler Metals and Mining is to capitalize on it.
George Ogilvie: First of all with respect to copper, as we all know copper is one of the main building blocks which we require when economies grow and I think the copper price has been hanging in at the high levels that it’s been at of late because of all the demand that’s being coming out of China. Now some of that demand may be beginning to wane, but I think the copper price is staying high at the moment because of some of the inflationary pressures we are seeing on the weakening US dollar and as we know all commodities are sold in US dollars so I think that’s what’s driving the price at the moment. But with respect to the overall market, principally copper demand has really come out of North America, Europe, and Japan in the past and at the moment those economies are just beginning to come out of a recession.
So, what that means to me is that towards the second half of 2010, I think when those economies are really well out of a recession and we’re seeing some real growth in the GDP numbers, that tells me that the demand for copper is going to go up in those principal drive areas that we’ve seen in the past. Historically what has driven the copper price has always been the supply chain. The supply chain’s copper has always been disrupted and I think that disrupted supply chain is going to be even more highlighted towards the back end of 2010 when the demand comes back and subsequently I think you’re going to see the copper price being at today’s levels or potentially higher than the levels we’re currently seeing.
As far as the gold is concerned with the weak US dollar, I think that is obviously driving the gold price and that there are still fears out there in the economy with respect to risk and the potential not to see any growth, I think we are going to see the gold price remaining relatively high certainly above $1,000 an ounce. Rambler as a company is well positioned to take advantage of both those commodities. The Ming Mine is a former copper-gold mine that has some substantial copper contained within the resource, but at the same time we carry a nice gold credit that if we see volatility in the marketplace and the gold price going higher, then Rambler can see some significant revenue coming in not just from the copper, but also from the gold revenue stream as well.
WSR: What are some of the things that makes the company unique from some of the other players in your sector?
George Ogilvie: I think the key things for me is that small junior companies when they are assessed by analysts and investors, usually they are assessed with a significant discount because there is always a risk and an inherent one that an explorer may not actually make it to production and in most cases, most explorers do not make it to production. I think Rambler is in a slightly different position in that we have a former producing mine that historically had very good grade, good metallurgy, and was profitable. We are also doing business I believe in the right part of the world, i.e. Newfoundland, Canada so from a political socioeconomic risk perspective, it’s a very low risk project.
We have a lot of the infrastructure already in place that mines require when they are in production; i.e. there is a paved road system, the national power grid system runs adjacent to the mine, we have access to fresh water, we have an operating mill that’s permitted with a tailings pond, we have the town of Baie Verte which is only 17 kilometers from the mine and that’s where we’ve withdrawn our labor pool from, we are in a mining-friendly environment, and we also have a working deepwater port that gets us year-around access and ability to access the Atlantic shipping lanes which can take the concentrate product over to Europe or potentially come around off the Saint Lawrence River and take the product up to the Horne Smelter in Northern Quebec.
We know as well that the project has minimal Capex compared to its peers to bring it to production and we’re about 12 months to 15 months away from commercial production. So, I believe because of all of those issues, this project has minimal risk and therefore sits apart from some of its peers, which are out there today.
WSR: Perhaps you can walk us through your background and experience as well as that of some of the key management team at Rambler.
George Ogilvie: My background is originally from Scotland, graduated with a Mining Engineer degree in 1989. Went to work for AngloGold down in South Africa in the deep level gold mines and the outcome and then the transoff, was down there with AngloGold for eight years and was looking to transfer out of South Africa and gold and get some experience in base metals in 1997. Fortunately, I was able to get a transfer from AngloGold to Anglo Base and made my way up to Hudson Bay Mining and Smelting in Leaf Rapids and then later Flin Flon and worked for Hud Bay for seven years.
So, in total after 15 years with one of the major natural resource companies, i.e. Anglo American, after 15 years I resigned my position and went to work for Dynatec in the Sudbury Basin where I was the Area Contracts Manager looking after contracts that we had with INCO at the time and Falconbridge and also I was part of the team whereby we had joint ventures with FNX, they are currently working in the Sudbury mining camp. In 2006, I was headhunted by Rambler Metals and Mining to come on board as their Chief Operating Officer and basically take the company from a grassroots explorer through to a mid-tier mining company over a five to ten year time frame and we are now currently three years into that plan.
We do have a very experienced management team on the ground in Baie Verte. Our General Manager has over 30 years of international mining experience and the last position he had was at the Tara Mine and Navan, which is the largest underground lead-zinc mine in Europe and he has also spent significant time with Procon as a contractor. Larry Pilgrim is also a professional geologist who works in and out of Newfoundland. He spent his entire career understanding the deposits in Newfoundland and knows those deposits very, very well and that’s where the company initially intends to grow out of Newfoundland and Labrador. So, we have key people on the ground who are capable and have delivered up until now in moving this project forward.
WSR: What are some of the specific milestones and goals that the management team hopes to accomplish over the course of the next 12 months?
George Ogilvie: The next key goal for ourselves is to complete the project financing. To bring this mine into production is going to require $28 million. In effect with the private placement of $8 million that we just completed, the equity component is now done and we are now working on the debt and/or gold loans/royalty component of the remaining $20 million requirement. That should be in place by the first quarter of 2010, which then allows Rambler to immediately move into a construction and pre-development program both at the mill and the mine. There is a six month to nine month window for the construction and pre-development, which therefore brings the mine into first production towards the back-end of 2010 with commercial production being declared in the second quarter of 2011.
WSR: As far as the way that the company works within the sector, are alliances and joint ventures an important part of your business model?
George Ogilvie: Yes, it is. The acquisition of the mill actually has provided Rambler with a real strategic opportunity. The mill is actually a gold mill, which we intend to expand by adding in copper flotation circuits under the grind mill to allow it to handle base metals, but we won’t be taking out the gold hydrometallurgical plant. So, suddenly now we have a mill which is capable of handling both free gold and base metal concentrates. What that has allowed Rambler to do is actually now start to look at farm-in agreements on other properties within 200 kilometer radius of the mill, which certainly if they came into production, the ore would have to be trucked up to the Nugget Pond Mill.
Indeed we just signed an agreement with a small company called Seaside Realty, who has the Big Bear gold property, which is about 20 kilometers from the Nugget Pond Mill. It has had historical drilling done on it and has had some really good intersections, some of them actually better than an ounce per ton of gold with grab samples being taken on surface of better than 8 grams. All Rambler has to do over a two-year period to earn 50% earn-in on that project is just basically provide its management time and technical expertise while all the drilling and the assaying cost will actually be covered off by the current owner of the property. So, I think that example shows Rambler’s strategy of how we are going to be able to grow the company externally away from the Ming Mine.
WSR: In terms of investors, do you think that right now the financial community understands the whole story and message and upside potential of the company?
George Ogilvie: To be honest with you I would say at this present moment probably not, not really in North America. The company initially listed on the AIM and at the moment that’s our primary market, typically where we’ve raised money. But we do recognize that with the mine being in Newfoundland in Canada, certainly that’s the market that has the most potential for growth for Rambler as we all know the North American commodity sector is ten times the size of London. So, we really haven’t pushed the marketing side of the business in North America. But now that we have a clear path to production, we certainly intend to do more marketing and promotional work in North America to increase the company’s exposure to that market and get the message out there that Rambler, the Ming Mine is certainly a very good investment and is going to show significant returns on investment for investors as we move forward.
WSR: Once again joining us today is George Ogilvie, CEO and President of Rambler Metals and Mining. The company trades on AIM, ticker symbol is RMM as well as on the TSX Venture, ticker symbol is RAB and is currently trading at slightly north of $0.49 a share. Before we conclude, just to kind of rehash everything, what are some of the key reasons why investors should consider Rambler Metals and Mining as a good long-term investment opportunity?
George Ogilvie: Just to recap. Certainly we know that explorers are valued differently in the marketplace because of the inherent risks of taking an exploration project to production. So, as explorers move to the production phase, those that can actually make that jump we know that there are going to be significant increases in the share price and I believe Rambler is well positioned and will actually make that jump to a mine producer over the next 12 months to 15 months. The principal reasons for that are because we have a historical mine with very good grades, non-metallurgy; we have the infrastructure in place to allow the mine to come into production; the company is well financed; we have a respected Board; and we have a good known proven management team, while we also have a National Instrument 43-101 resource which gives us a life of mine in excess of ten years with some very nice grades.
WSR: We certainly do look forward to continuing to track the company’s growth and report on your progress and I like to thank you for taking the time to join us today and to update our investors, George.
George Ogilvie: It was my pleasure Juan and thank you ever so much.