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Red Emperor Resources

RMP versus HRN

(ASX & AIM: RMP)
Informed Discussion. No ramping. No deramping.

RMP versus HRN

Post Tue Apr 24, 2012 6:13 pm

I'm currently invested in both companies by virtue of discovering RMP prior to HRN. Now I'm familiar with HRN and RMP, it surprises me HRN isn't getting much more attention. It's a relative arbitrage opportunity, a much greater upside in exchange for the same level of risk.

Is it just the ease of access that has so many more people interested in RMP instead of HRN, or am I missing something?

Regards,

Barc1234.
Barc1234
 
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Re: RMP versus HRN

Post Tue Apr 24, 2012 6:53 pm

Easy access to more liquid and less risk awerse market, Georgia, potentially off-shore.
niszczu
 
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Re: RMP versus HRN

Post Tue Apr 24, 2012 6:54 pm

Also in HRN IIs can't have any impact on corporate decisions as AOI has 51% of shares.

niszczu wrote:
> Easy access to more liquid and less risk awerse market, Georgia,
> potentially off-shore.
niszczu
 
Posts: 161
Joined: Mar 2012

Re: RMP versus HRN

Post Tue Apr 24, 2012 6:56 pm

Lack of liquidity, difficulty in getting the same level of information on L2 vs HRN, some brokers do not facilitate easy trading.

RMP is very easy to trade for any UK investor. You can put in into an ISA, SIPP, trading account. Buy in when you want and bail when you want.

Might be a simple case of what you know. RMP is also linked to RRL on Georgia and the potential offshore story. Both of which have not played out yet.

Remember PL has a habit of putting good news with bad so if, and it is a big if the Puntland story is not rosey 1st time round, it could get dressed with a good Georgia RNS and an offshore deal - if they wanted to protect share price, and as PL along with others hold large amounts in all companies that would make sense.

HRN is more binary and is also the AOI play. People who have followed the Lundin story will like what they see there and not wish to get involved with RMP.

It's quite a nice way of having multiple choices in varying degrees of exposure to the drills and assets.

I'm sure if we had HRN on AIM and a BB as vocal as this/iii/LSE then you would see a different pattern of events
unclefib
 
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Re: RMP versus HRN

Post Tue Apr 24, 2012 8:32 pm

UncleFib,

Good post. Think that summarises the key point pretty well from my perspective.

Regards,

Barc1234.
Barc1234
 
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Re: RMP versus HRN

Post Tue Apr 24, 2012 8:38 pm

UncleFib,

To note though, given the factors you've mentioned the relative undervaluation of HRN still surprises me. You don't often see such glaring discrepancies which remain relatively easy to capitalise on.

Regards,

Barc1234.
Barc1234
 
Posts: 164
Joined: Mar 2012

Re: RMP versus HRN

Post Tue Apr 24, 2012 11:48 pm

HRN is the stock to be in if you believe Puntland will be a success.

I'd expect a 200%+ re-rate on Shabeel-1 success.




Barc1234 wrote:
> I'm currently invested in both companies by virtue of discovering RMP prior
> to HRN. Now I'm familiar with HRN and RMP, it surprises me HRN isn't
> getting much more attention. It's a relative arbitrage opportunity, a much
> greater upside in exchange for the same level of risk.
>
> Is it just the ease of access that has so many more people interested in
> RMP instead of HRN, or am I missing something?
>
> Regards,
>
> Barc1234.
User avatar
Your Majesty
 
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Re: RMP versus HRN

Post Wed Apr 25, 2012 8:24 am

Barc,

HRN were later to the picture. Lot more emotion tied up in RMP. Look at the chart from last year. Plenty wanting to take profit, get more profit, short etc. Feeling of RMP 'owes me'. There is a LOT of emotion in RMP (UK, Aus), look what happens if people say it will drop to the 20's. It peaked at 50 and has dropped and looks to be forming another run.

HRN has also peaked earlier this month, dropped by 100% from it's high and now 50% up from that point mid month, so fairly big swings. Did that money leave as profit taking at $2 and others saw it as a sign of bad news (remember people were getting phone calls in the UK from dealers FFS), that was quashed an HRN have done a lot better than RMP and RRL in that time.

Could also be as I said, people waiting for the first drill to be derisked. Miss the high risk rise, but come in once that sell off has come and gone and pile in for the future (derisked) drills.

Problem is - and this was seen on BOR if you read the BB's. Peoples expectation of price is very different from what the market values it at (esp dependant on how the news is delivered as well).
unclefib
 
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Re: RMP versus HRN

Post Wed Apr 25, 2012 9:42 am

There are several reason for a HRN v RMP, it depends on the individual and where they are based.

1. Not all investors can trade HRN in the UK, they can all trade RMP.

2. HRN is only involved in Puntland, but has 60% of drill. Bigger gain or loss depending on result of drill.

3. RMP also has Georgia, some may have prematurely written off. It may still be a success, so some underpinning.

4. HRN also carries a currency risk and cost, to buy and sell in C$

5. Investors may have different views as to what may get bought in a takeover. Would companies buy a share of Puntland by buying RMP, or RRL share? or would they buy HRN? If they bought HRN what would happen to RRL and RMP share?

6. RMP are more liquid, so easier to buy and sell.

7. HRN have a large number of warrants, which complicate things for buyers of HRN.

8. RMP have the money for a second drill, but have not yet formally comitted to it.

9 RMP have a good relationship with RRL, HRN maybe not so much. May impact on future opportunities.
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HopeAsWell
 
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Location: Leeds

Re: RMP versus HRN

Post Wed Apr 25, 2012 10:20 am

Just some counter thoughts:

1. This is true, but it's not that difficult to get a TDW account

2. RMP will get hammered just as hard on a duster, Georgia won't save it here.

3. Georgia is not factored in imho, the last drill failed investors will be wary. Still, S-N will be drilled soon after S1 whereas Georgia is still unknown, the return is still far greater than RMP's share and HRN will still return a lot more than RMP on the drill even with georgia factored in. I also expect more dilution from RMP to come through where as HRN should be fully funded, possibly with minor dilution due to much higher SP.

4. Currency is an issue, but not a big one, I've used it to my advantage several times on trading HRN. The return still far outweighs the currency issue if you hold.

5. I don't believe any company will just buy one entity, they will buy all the asset.

6. No issues trading HRN for me, but if you want to buy large you have to pay more

7. What's complicated about the warrants ? You know there's 125 million shares to be in issue on strike or soon after, that's what you base the calcs on, much like what you calc for RMP fully diluted.

8. HRN have the money from the warrants they will get exercised one way or another either pre-td or after.

9. Are you saying RRL doesn't have a good relationship with HRN, that's quite amusing when you think about the history ;)

All imho, you pick your own investment choices and everyone has differing views.
MWW
 
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Joined: Apr 2012

Re: RMP versus HRN

Post Wed Apr 25, 2012 10:49 am

MWW,

you are one of many. But there are also many with different point of view:

1. I don't want to open another account only for one investment
2. I feel a bit blind trading without L2, don't want to pay extra fees just for another one
3. I don't want to follow my investment after my usual working hours (later is family time)
4. I prefer to have shares nominated in one currency to be able to swap quickly into another shares
5. I wouldn't discount Georgia so quick. According to OPL it can have very significant impact on RMP's sp. Lower quantities of oil/gas but no security, political risks.
6. Georgia is going to be spudded very soon IMHO so it can be another factor lifting sp.

All we know HRN is bigger leverage for Puntland but small cups are also being moved by news and sentiment. So you can't say how much of NPV market will reflect in sp of both companies.

MWW wrote:
> Just some counter thoughts:
>
> 1. This is true, but it's not that difficult to get a TDW account
>
> 2. RMP will get hammered just as hard on a duster, Georgia won't save it
> here.
>
> 3. Georgia is not factored in imho, the last drill failed investors will be
> wary. Still, S-N will be drilled soon after S1 whereas Georgia is still
> unknown, the return is still far greater than RMP's share and HRN will
> still return a lot more than RMP on the drill even with georgia factored
> in. I also expect more dilution from RMP to come through where as HRN
> should be fully funded, possibly with minor dilution due to much higher SP.
>
> 4. Currency is an issue, but not a big one, I've used it to my advantage
> several times on trading HRN. The return still far outweighs the currency
> issue if you hold.
>
> 5. I don't believe any company will just buy one entity, they will buy all
> the asset.
>
> 6. No issues trading HRN for me, but if you want to buy large you have to
> pay more
>
> 7. What's complicated about the warrants ? You know there's 125 million
> shares to be in issue on strike or soon after, that's what you base the
> calcs on, much like what you calc for RMP fully diluted.
>
> 8. HRN have the money from the warrants they will get exercised one way or
> another either pre-td or after.
>
> 9. Are you saying RRL doesn't have a good relationship with HRN, that's
> quite amusing when you think about the history ;)
>
> All imho, you pick your own investment choices and everyone has differing
> views.
niszczu
 
Posts: 161
Joined: Mar 2012

Re: RMP versus HRN

Post Wed Apr 25, 2012 10:56 am

I suppose what I was saying was. It is a personal choice based on circumstances whether to invest in RMP or HRN. Given the issues I listed, it is not a straight forward one or the other. Georgia 1 did NOT fail, it has been suspended due to time constraints to resolve the G....... issues. It may still come good. Problems, yes. Failure no. There were no declared issues with HRN, but it was suggested RRL were unhappy with the delays in drilling put at the door of AOI prior to becoming HRN.



MWW wrote:
> Just some counter thoughts:
>
> 1. This is true, but it's not that difficult to get a TDW account
>
> 2. RMP will get hammered just as hard on a duster, Georgia won't save it
> here.
>
> 3. Georgia is not factored in imho, the last drill failed investors will be
> wary. Still, S-N will be drilled soon after S1 whereas Georgia is still
> unknown, the return is still far greater than RMP's share and HRN will
> still return a lot more than RMP on the drill even with georgia factored
> in. I also expect more dilution from RMP to come through where as HRN
> should be fully funded, possibly with minor dilution due to much higher SP.
>
> 4. Currency is an issue, but not a big one, I've used it to my advantage
> several times on trading HRN. The return still far outweighs the currency
> issue if you hold.
>
> 5. I don't believe any company will just buy one entity, they will buy all
> the asset.
>
> 6. No issues trading HRN for me, but if you want to buy large you have to
> pay more
>
> 7. What's complicated about the warrants ? You know there's 125 million
> shares to be in issue on strike or soon after, that's what you base the
> calcs on, much like what you calc for RMP fully diluted.
>
> 8. HRN have the money from the warrants they will get exercised one way or
> another either pre-td or after.
>
> 9. Are you saying RRL doesn't have a good relationship with HRN, that's
> quite amusing when you think about the history ;)
>
> All imho, you pick your own investment choices and everyone has differing
> views.
User avatar
HopeAsWell
 
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Location: Leeds

Re: RMP versus HRN

Post Wed Apr 25, 2012 8:17 pm

A lot of good points raised there guys. As a general market assessment of the two companies I'd lean towards MWW's points for accuracy.

HopeAsWell, everything you listed seems reasonable, although more confined to the realms of the PI. Even though perfectly relevant, I think valuation will be driven by more sophisticated investors, that simply wouldn't be concerned with some of those points.

This to me, outlines what a fantastic and rather uncommon relative value proposition HRN is.

Regards,

Barc1234.
Barc1234
 
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