Update: Robex Resources Is Progressing The Nampala Project On Schedule Despite Technical Issues

Aug.28.14 | About: Ressources Robex (RSRBF)

Summary

Robex Resources just announced that recent technical issues have not delayed the commencement of production at the company's Nampala Project in Mali.

This is in line with my June investment thesis that demonstrates the company's potential upside as it begins to generate cash-flow.

Investors have sold off the stock as a confluence of issues from a falling gold price to Ebola virus concerns have kept investors out of West African Gold Miners.

This presents significant opportunity for investors willing to take the risk of owning a gold miner in Mali.

*Note that OTC shares of Robex Resources (OTCPK:RSRBF) are highly illiquid. Investors are encouraged to buy the shares on the Toronto Venture Exchange under the ticker symbol (TSE.V: RBX).

Robex Resources just announced that the development of its Nampala Gold Project in Mali is on schedule to reach its full productive capacity despite problems with the elution circuit. The announcement points out that the company has been working to correct some errors in the elution circuit's assembly, but that this shouldn't delay production as the company's efforts over the past couple of weeks have been successful.

This error was unforeseen in my June article, in which I point out that the market is assigning very little value to this company's cash-flow as investors don't like companies with debt, nor do they want to invest in mining companies in Africa, with Mali being especially problematic considering the Northern Mali Conflict. The company has also faced some other issues such as a falling gold price and the Ebola virus, although this last point has not impacted the company directly.

As a result of all of these issues Robex shares have fallen from C$0.22/share to C$0.17/share. But the stock seems to have found support. Furthermore, despite the company's problems, very little has changed in the broader scheme of things, and this means that the recent share price weakness presents an opportunity. Robex has a producing mine that has low production costs while it pays no taxes for five years. Because it is in Mali investors have stayed away, which is why the shares are undervalued even using a 15% discount rate. Furthermore the Nampala Project has substantial resources outside the mine plan that could add significant value longer term. For those investors who don't mind the added risk of investing in Mali and who have access to Canadian markets this is a compelling stock to own.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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