Rambler delivers on Ming

Nearly seven years after Rambler Metals & Mining (RAB-V, RMM-L) took control of the past-producing Ming copper-gold mine on Newfoundland and Labrador’s Baie Verte Peninsula, the company has poured its first gold doré bar and shipped it for further refining.

Following the start of underground mining and milling operations on Nov. 28, Rambler has been processing ore from Ming at an average throughput rate of about 525 tonnes per day with the help of its Nugget Pond mill approximately 40 km away. It bought the mill two years ago from Crew Gold, and has since adapted it to process both base metal sulphides and gold from Ming. After reaching commercial production, Rambler plans to produce an average of 7.7 million lbs. copper, 11,600 oz. gold and 42,600 oz. silver each year over an initial six-year mine life.

“Having the Ming mine in production is a significant milestone for the company, while we will see first revenues from our gold sales in early 2012,” Rambler’s president and CEO, George Ogilvie, stated in a press release about the first gold pour. “These revenues should allow the company to strengthen its treasury position over the coming months.”

With the mine now up and running, Rambler can start to pay back its lenders on the road to profitability. The company currently has about $3.4 million in its treasury and has just been approved to draw down the final $5-million tranche of a $10-million loan from Sprott Resource Lending Partnership. The loan bears interest at 9.25% per year compounded monthly until maturity in early 2013, and includes the issuance of up to 2.75 million bonus shares.

Rambler also received $20 million from Sandstorm Gold (SSL-V, SNDXF-Q) under a March 2010 agreement. In return, Sandstorm is entitled to 25% of the first 175,000 oz. of gold produced from Ming and 12% of all gold production thereafter.

In all, Ming cost Rambler about $30 million to put back into production. (The mine last operated in the 1980s, with a brief two-year stint in the mid-1990s). An August 2010 feasibility study projects total revenue of $210 million from the mine, with pre-tax operating cash flow of $71 million. Revenue from the mine based on trailing historical metals prices is projected to be $167.52 per tonne while cash costs from operation are forecast at $110.89 per tonne. Capital payback is expected to take 1.5 years.

Rambler also has plans to spend about $1.4 million on drilling over the next two years to increase the mine life through exploration and infill drilling, extending the known high-grade orebodies along plunge. Drill results released on Dec. 15 showed mineralization at the gold-rich 1806 zone extends further up and down plunge than previously modeled, including intersections of 26.2 metres of 8.88 grams gold per tonne and 32.3 metres of 6.84 grams gold per tonne.

Rambler’s mine plan involves first mining and processing ore from the 1806 zone (which boasts an average head grade of 4.10 grams gold per tonne) before moving on to more copper-rich ore from the Lower Footwall area. Construction of the copper concentrator at the Nugget Pond mill has just been completed, with the plant ready for first ore testing shortly. Following further testing and refinement, Rambler will then switch over to ore from its higher-base-metal grade 1807 zone, which has a NI 43-101-compliant resource of 432,000 tonnes averaging 3.86% copper, 1.75 grams gold and 7.19 grams silver.

The company has 124.4 million shares outstanding and last traded at 42¢ on Dec.15. It has a 52-week range of 35¢-85¢.