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Rambler shares continue to strengthen as Ming gold mine beats expectations

Rambler revealed yesterday that it has poured 9,714 ounces of gold to date

Investors continue to get behind dual-listed mine developer Rambler Metals & Mining (LON:RMM, CVE:RAB) as the Ming copper-gold mining operation continues to beat expectations.

Today on London's AIM market, Rambler is up 3p a share, almost 9 per cent, trading at 37.5p (60 Canadian cents) each. This followed a rise yesterday which coincided with an encouraging update.

The group is making good progress with the newly modified Nugget Pond processing facility performing above expectations. 

Rambler revealed yesterday that it has poured 9,714 ounces of gold to date, with an average ore throughput of 650 tonnes per day. This was achieved with around 90 per cent gold recoveries, which was better than expected. 

Soon the focus will switch to copper production.

“At current production rates the company estimates that the final ounces of its gold-rich 1806 Zone ore will be processed and poured to allow commissioning of the company's copper concentrator to begin sometime in the middle of May,” broker Seymour Pierce analyst Matthew McDonald said in a note to clients.

“Following a brief switchover period (we estimate 2-4 weeks) the copper concentrator will begin processing ~15,000 tonnes of low grade material (1-1.5% Cu) from the Lower Footwall as part of the commissioning and start-up process. 

“Once processes have been optimised Rambler will begin feeding high grade 1807 zone ore through the mill.”

While the production operation makes headway Rambler’s exploration efforts also look promising. Much of this activity is focused on the areas near the firm’s existing infrastructure.

The diamond drilling results reported today included intervals of 4.45 metres grading 49.69 grammes per tonne (g/t) gold and 29.8 metres at 39.8 g/t gold.

“With continued development drilling Rambler has confirmed continuation of the 1806 zone up and down plunge indicating potential for more undiscovered high grade gold zones in or near the massive sulphide lenses,” McDonald adds.

The Seymour Pierce analyst says the stock trades on a very low 2012 multiple (PE – price to earnings) of just 1.8x. And as such he believes it is overdue a re-rating.

Seymour Pierce has a ‘buy’ rating on the stock with a 62p a share target price.

The broker’s positive outlook is echoed by other City firms.

Yesterday’s update also drew positive comments from broker Ocean Equities, which expects the exploration success to continue from the 1806 and 1807 zones and the Lower Footwall zone.

“It has been known for some time that the earlier exploration efforts at Ming were production focused and did not get the full measure of the deposit,” said Ocean analyst Christopher Welch.

“Rambler now has a de-risked exploration programme ahead of it with a secure revenue source and so it can broaden the exploration effort.”

The analyst added that Rambler has a fully operational mine, which gives it the ability to quickly turn exploration success into mineable reserves and operating profit.

Speaking of profits, Welch estimates that Rambler’s costs are currently US$1,000 per ounce, giving it a good profit during the initial gold production phase.

Welch also noted that Rambler is inching closer to the start-up of the first copper production phase, calling it a major milestone for the company. Rambler’s base case scenario is for six years production as a small scale production, but Welch expects a transformation of the company to occur before the end of that period.

“The early indications are that the Lower Footwall Zone would be economically viable to develop from only a very high level investigation of the ore zone,” said Welch.

“Developing this zone would turn Rambler into a much larger copper producer and would likely allow the company to have a dedicated gold production circuit as well.”