Vikas Ranjan comments: http://www.theaureport.com/pub/na/14716
VR: At the top of the list is Rye Patch Gold Corp. (RPM:TSX.V; RPMGF:OTCQX), a Nevada junior. It has been in the news frequently over a legal case that is going on with Coeur d'Alene Mines Corp. (CDM:TSX; CDE:NYSE) and a subsidiary, over the Rochester claims. Coeur failed to pay its annual fees for these claims on time and the land became open for staking, which Rye Patch did. Now Coeur is claiming that it went back and overstaked those and that it was just an oversight and it still has legal right to them, which Rye Patch is obviously disputing. If Rye Patch wins this case, we believe that it will have access to huge resource and reserves on those claims. But, that's just one piece of opportunity for Rye Patch.
Rye Patch has several other opportunities, including a big land package on the Cortez Trend in Nevada. It has a 100%-owned project called Garden Gate Pass on Cortez and also a big land package and joint venture with Barrick Gold Corp. (ABX:TSX; ABX:NYSE) and McEwen Mining Inc. (MUX:NYSE; MUX:TSX) called the Patty project that it's exploring as well. It has more advanced projects on the Oreana Trend called Wilco and Lincoln Hill with total resources of close to 3.2 million ounces (Moz) in the NI 43-101 category. Most of that is in the Measured and Indicated category, defined mainly in two open pits on Wilco and one on Lincoln Hill. Defined resources within a constrained pit are very significant for a junior company. We really like that play and think it's undervalued. If the legal case goes in its favor, that will be a significant catalyst for the stock and a bonus to everything else it has going for it.
TGR: Where is the stock now and where are you expecting that might go?
VR: Rye Patch is trading in the $0.45–0.50/share range. Our model price is close to $1.50/share. Depending upon drill results, Cortez and the legal case, the opportunity to go back up to its high level of $0.85–0.90/share is not that farfetched. The stock could double in the next couple of quarters if those things work out.
TGR: The legal case still shouldn't have that big an impact on the overall long-term valuation.
VR: Our valuation is actually based on the other projects. We think that this is a stock that should be north of a dollar in price. You're right that regardless of the legal case's outcome, I think it's undervalued.
