Big Drop today .022 See no news?, page-4

I'm basing my estimate of a fair share price on the fact that they have net assets of about 3.1 cents per share. Of this, 2.0 cents per share is represented by cash in bank, and the majority of the rest is 'property, plant and equipment'. PPE has been written down and depreciated heavily in the last 2 reporting periods, so I'm willing to believe it's current value as reported.

So at the current share price of 2.1 cents, I'm currently getting 2 cents per share of cash, and for the other 0.1 cents I'm buying about 1 cent worth of construction equipment. Also included in the deal is their exposure to whatever ongoing work they have, and the potential of future projects.

So... 'the market', which prices RDG today at 2.1 cents, is basically saying that the equipment is worthless, and/or that ongoing work is actually a negative (i.e. just going to drain money). I, on the other hand, think that while they're in a pretty big downturn relative to a few years ago, they've still haven't failed to turn a small profit. So I definitely put a positive value on the management team (until proven otherwise).

My worst case scenario for the next 6-12 months is: no new contracts, carry out the Fremantle construction work and the odd other project they currently have, and generate $10-15 million revenue for little or no profit (that's being pessimistic). So in a year they'd be pretty much as they are now, and I still wouldn't be worried about my investment.

Mid-case scenario: as above, maybe start another project, $15-20 million revenue and $2-3 million profit. That's 0.3-0.45 cps, and probably would value the company at 4+ cents in my mind (still mostly cash backed and PE of ~10).

Best-case would just be speculative and sound like ramping, but I could imagine a rocket under the share price if they made successful tender for a multi-million dollar mining construction or services project as per their previous core business.

Not nice to see the current share price wallowing, but I'm not concerned about my choice to buy and hold rdg.