#RGM an investment opportunity?

Regency Mines in January  completed its acquisition of a 20% shareholding in Carbon Minerals Corporation (“CMC”).

This acquisition is significant as CMC own the Rosa coal mine in the United States and is going to provide near term revenue.

This has the potential to be a major revenue stream for RGM with significant coal outputs.

The  last brokers note from Dowgate (see here) doesn’t mention the Rosa mine, as deal hadn’t happened at that time and gave a share price target without this asset of 31.8p.

The last but one presentation from Regency (see here) makes a small reference to the Rosa mine with this graphic.img_1249

This asset is under the radar for many potential investors when in fact it is a major revenue stream.

The following figures are from Share Talk (Steve’s Shares – see here).

The figures for production of coal at 2000 tonnes per day and at $100 margin per tonne (30% lower that current coal values) are $200,000 per day and RGM has a 20% deal in place. So changing into GBP that equates to around £32500 profit to RGM per day.

Assuming production around 200 days per year that is £7.5M plus per year income for RGM.

This table is from the latest presentation on the Regency website giving their thoughts of the potential revenue.

img_1290

When the current market cap of RGM is c£2m it makes you wonder when the market will realise this stock is undervalued.

These figures are based on the Rosa mine alone. RGM have significant other assets as indicated in their presentation, such as an oil asset in Horsehill.

What will an updated brokers note from Dowgate state when it’s issued and includes the Rosa revenue?

RGM have also stated that they have received additional enquiries for their coal output since Trump elected president of the United States.

RGM share price is looking likely to re-rate in the very near future.

I have over the last few weeks built a position paying circa 0.4p a share and like many, will now hold tight awaiting any share price uplift.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s