RNO

[ScottishTrader]

Has anyone had a look at RNO?  Looks quite appealing with a forward P/E of less that 7, and they recently reported solid earnings on the back of higher nickel prices.  Here's their recent earnings report and business summary:

Rio Narcea Reports Continued Stronger Earnings and Cash Flow for the Second Quarter 2006
http://biz.yahoo.com/iw/060810/0152965.html

Business Summary
Rio Narcea Gold Mines, Ltd. engages in the acquisition, exploration, development, and operation of base and precious metals properties in Spain, Portugal, and Mauritania. The company's property portfolio includes El Valle and Carles Gold Mines, which are located in Belmonte de Miranda, Spain; Tasiast gold project located in Mauritania, West Africa; and Salave Gold Project located in northern Spain. It also holds interests in Corcoesto project located near the coast of Galicia in northwest Spain; and Aguablanca nickel sulfide deposit located in the province of Badajoz, in the municipality of Monesterio. In addition, the company has interests in Godan deposit located 2.5 kilometers northwest of the Carles mine; La Brueva deposit located 3 kilometers south of the Carles mine; and Karet and Ahmeyim-Tijirit projects located in Mauritani. Rio Narcea Gold Mines was incorporated in 1994 and is based in Cayes-Llanera, Spain.


Technically RNO has just broken out of an H&S formation and re-tested support at 2.10.  Resistance is sitting at 2.40 and the H&S target puts 2.90 into play.  A move above 2.68 would put it into all-time high territory.  Volume is building but not extraordinary on this one.  Still looks like it could be a potential gold-mine (excuse the pn) of a minerals play.  Have to research more later.

[njshiva]

looks like this is about to break out. nice volume.
got it at 2.24 today.

[njshiva]

this one is making new 52 wek highs with good volume.
applaude scottish trader.

[ScottishTrader]

no probs, glad you're making some moolah on it

I didn't play it in the end, as my silly scottish broker doesn't let me play some stocks grrr....  will have to get that fixed. Nothing more annoying than finding a nice paly that you can't play!!

But glad it worked out for you RNO still looks like its got legs! 

[njshiva]

out of this. decent profit, dont want to risk it with earnings release.
Thanks scottishTrader. applause again.

[ScottishTrader]

hey njshiva,

Glad that one worked out for you and you held through the retrace.  Applauds to you on making a nice profit!!



Good trading,

ST

[buddjas1]

Scottish, you still in this?

I think this has multi-bagger potential.  I will make a full analysis tonight.

[buddjas1]

Rio Narcea Gold Mines Ltd. (RNO)
Summary - Rio Narcea Gold Mines, Ltd. is a growing Canadian mineral resource company with operations, development projects and exploration activities in Spain, Mauritania and Portugal.  The Company currently produces nickel and copper at its Aguablanca mine in southern Spain.   Construction of its new Tasiast gold project in Mauritania, West Africa, is underway, with production expected in 2007.  The Company recently acquired a strategic shareholding in Chariot Resources Limited, which provides exposure to the significant potential of the Marcona Copper Project in southern Peru.

http://www.sec.gov/Archives/edgar/data/1098506/000117571007000037/rngaddtlinfoonchariotshareho.htm

RNO's growth into a legitimate precious metal producer has been recognized.  On March 20, 2006, the Amex Gold Miners Index (Symbol: GDM) added RNO.  Then, on December 13, 2006, the S&P/TSX Global Gold Index added RNO. 

http://www.sec.gov/Archives/edgar/data/1098506/000117571006000325/index.htm

Financial Information -
                    3Q06       2Q06      1Q06      4Q05      3Q05     2Q05      1Q05     4Q05(a)
Revenues   59,087    53,288    47,401    34,131   30,070   32,269    9,030    16,026
Net income 15,612    5,623       2,906   (12,367)  (9,050)   (5,379)  (15,329) (31,366)
EPS diluted   0.10      0.03          0.02     (0.08)      (0.06)    (0.03)     (0.10)     (0.21)

(a) Includes a write-down of $28.4 million in respect of El Valle and Carlés mines.
http://www.sec.gov/Archives/edgar/data/1098506/000117571006000314/rng3q2006reportfinal.htm

The third quarter was worse that it should have been because of a "temporary" decline in concentrate grade produced.

Shares outstanding- As of Nov. 7, 2006 - 163,866,179, but 194,847,422 if all options and warrants were exercised.

http://www.sec.gov/Archives/edgar/data/1098506/000117571006000314/rng3q2006reportfinal.htm

Future Expenses -
RNO plans to spend $8.1 million in 2007 to explore its existing gold and nickel properties

Future Growth -
RNO closed a gold mine in northern Spain at the end of 2006.  The closure will have to be accounted for in extrapolating revenue into the future, but the impact would be lessened by the commencment of production of the West Africa gold mine, which has over 1,000,000 proven and probable ounces of gold. 

http://www.sec.gov/Archives/edgar/data/1098506/000117571006000320/explorationprfinal.htm/
http://www.sec.gov/Archives/edgar/data/1098506/000117571006000314/rng3q2006reportfinal.htm

RNO has also taken a 17% interest in a junior copper producer, which has over 5 million pounds of indicated and inferred copper.

http://www.sec.gov/Archives/edgar/data/1098506/000117571006000314/rng3q2006reportfinal.htm

Analysts-
UBS started with a BUY on March 2, 2007, and a $4.75 price target.
Desjardins upgraded from hold to buy on Feb. 27, 2002, and raised the target from $3.55 to $5.20.

Prognosis-

This is an exciting nickel play.  Over 60% of RNO's revenue is Nickel sales.  Look at the chart of Nickel below.  Because of the increase in the price of nickel, RNO's Q1-Q3 revenue could be 50-75% higher than Q306, which is already pretty good.  That growth permits at least a 20 PE multiple.  Average (gold) industry PE is over 40.  Extrapolating the 0.10 EPS for Q306 into the future, RNO should be at least $8.0.  I like the future growth prospects, as well, from the Copper interest in Peru. RNO is at least a two-bagger, right now, and a multiple bagger over time.

[buddjas1]

Thank you long white candle.

Earnings Wed. after closing bell.

[ScottishTrader]

man that look good!!! crazy!  But also dangerous for an entry... i'll keep an eye on it today...

[buddjas1]

I am holding through earnings.  I plan to hold through the end of the year to let RNO's earnings reflect the crazy increase in the price of Nickel.

[buddjas1]

http://biz.yahoo.com/iw/070328/0232262.html

Rio Narcea Reports Record Year-End 2006 Results-Net Income of $70.7 Million, Up $112.9 Million Over 2005

$0.29 for Q406 vs. ($0.08) for Q405

Recent earnings do not include the crazy increase in nickel prices over last couple months.  RNO is 60% nickel.

[ScottishTrader]

hey buddjas,

I picked some up this afternoon as an earnings play - numbers look pretty good, and nice to see it above $4 AH.  Should be good tomorrow 

[buddjas1]

RNO is rolling!   

Check out the increasing volume.  Up to $4.41 in pre-market on 41,000 shares (atypical pre-market volume for RNO).

[ScottishTrader]

i know.  Ugh.  I had weak hands on this one after earnings produced that black candle.  Sold for a breakeven, which was silly.  Looks good though, and we know RNO are making loads of money.  Lots of very exciting mining plays at the moment.  I just have to watch this darn weak hands of mine!!!