Not too good to be true...

Bob Moriarty
Archives
Apr 20, 2010

I did a piece on Rio Alto Mining (RIO) back in February. The central issue then was just how they financed their gold mine in Peru. They needed $30 million and had $5 million. It was my hope that they would do some sort of gold forward sale.

Today they announced a $25 million gold forward sale. Rio will be in production late this year. With no dilution. It doesn't get any better than that.

Go back and reread what I wrote in February. This is how a mining company should be run. The stock was $.44 then. It's $.86 as I write. It's going higher. These guys are going to have a 100,000-ounce a year gold mine for as close to nothing as you get.

They pay for equipment and a heap leach pad out of the $30 million. $25 million of that comes from the gold sale. They produce 250,000 ounces of gold over the next three years and repay about 13,000 ounces a year out of production. Then they pay Iamgold their $47.55 million out of cash flow. How sweet it is.