Austindo Resources is developing a 70,000 oz per annum gold mine a few hours drive from Jakarta in West Java, Indonesia. After early problems the project seems to be back on track. In the latest quarterly report the company highlights the fact that underground development has reached the 600m mark, with a further 180m of development required. Most of the plant is already onsite. The company has cash reserves on hand of $12mil after raising $20mil late last year. In the last quarterly the company acknowledges that costs are rising. On that note there is some doubt as to whether the banks will require any additional equity cover. The cash reserves seem rather tight, and given the previous problems there might yet be another capital raising. With 3.7 billion shares on issue - which must be a record - the company doesn't need the extra dilution. The flipside is that they have at around another 6mth before they need to raise that capital, and I thus think the issue is likely to come at a time of rising gold prices. For this reason, I see the current weakness in the stock as a buying opportunity, and I do think the current price support will hold. The project might be experiencing a cost blow-out, but then gold prices are more than compensating. For further info see Google Finance or my discussion forum.----------------------------------------
Andrew Sheldon www.sheldonthinks.com
No comments:
Post a Comment