本文发表在 rolia.net 枫下论坛Rockwell is primarily engaged in the exploration and development of diamond in South Africa. The most recent quarter (Q3/07, ended February 28, 2007) is the first quarter of revenues in the company’s history, reporting sales of $2.4M, representing one month of revenue from its recently acquired Holpan/Klilpdam and Wouterspan properties from Durnpike. The acquisition, which was closed January 31, 2007, has effectively transformed the company from an exploration stage company to a producing company, which the market has failed to price into the stock.
On an annualized basis, this is a $30M revenue company with further upside with another acquisition expected to close during the third quarter of calendar 2007. This pending acquisition, which is currently at due diligence stage, once completed, will provide the company with two advanced stage mines and three exploration projects adjacent to its existing Holpan/Klilpdan and Wouterspan properties, thereby providing operational synergies through economies of scale. The revenue upside with a controlled cost structure may well put the company on the track of profitability by the end of fiscal 2008 (May 31), if not sooner.
The company has recently undertaken to raise $60M by way of private placement (yet to close), providing capital for the new acquisition and expansion of the existing mines. While the equity financing is excessively dilutive to existing shareholders (115.4 units each consisting of one share and one warrant, about three times current share count), the market has taken it well as it is critical to take the company to the next stage. However, this share overhang may be what has depressed the stock price so far.
A risk factor to consider is price volatility in the diamond market, driven by a number of factors including higher energy prices and depressed discretionary spending in key markets such as the United States.
In summary, this is a story of mispricing opportunity created by market inefficiency. Investors can profit from such opportunities once the stock is eventually repriced reflecting fundamentals. A review of the company’s fundamentals points to significant upside and limited downside. A similar theme has played out very nicely with another TSXV-listed junior miner Brilliant Mining (BMC), an explorer-turned-producer through acquisitions in Australia.
The increased trading volume of RVI over the last coupe of months is a positive sign for the stock. My approximate price target is $1 within six months and $2 by the end of calendar 2008 (subject to further adjustment as fundamentals change over time). It closed today at $0.60.更多精彩文章及讨论，请光临枫下论坛 rolia.net