Another tip coming from a reader. Rest assured I have checked these stocks out myself, and you are free to do so. Atlantic Gold is an Australian gold project developer. It has a 1.8moz gold resource in Nova Scotia, Canada. The company has 228mil shares, which last traded at 5.2c, giving the stock a market capitalisation of $11.8mil.
The grades for this resource are not high, however the attraction is the capacity to process the ore through a nearby base metals mine 40km away. The net present value of these project options is around $CAN50mil. This does not strike me as great returns, though there is substantive upside from an increase in resources and higher gold prices. I have a bigger concern actually. Will not the operational viability of the gold plant depend on the processing of base metals. If the plant is designed for base metals now, one would want to be assured that the gold is processed through a completely different circuit as opposed to blending with the base metals ore. Actually I'm not so familar with gold hybrid processing plants. If they are separate streams, then it might in fact be an opportunity for ATV to purchase ADA in future to control the plant.
The charts show that both stocks are cheap, but I think the upside is short run for the foreseeable future. They need to clarify a strategy. There is a possibility of a merger between these operations, and perhaps between the companies. Not so interested in this play. Too many things can go wrong. eg. Processing, JV negotiations, exploration upside. The ADA resources are small satellite deposits making it messy mine planning. No way do I see them processing ore by the end of 2009.
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Andrew Sheldon www.sheldonthinks.com
The charts show that both stocks are cheap, but I think the upside is short run for the foreseeable future. They need to clarify a strategy. There is a possibility of a merger between these operations, and perhaps between the companies. Not so interested in this play. Too many things can go wrong. eg. Processing, JV negotiations, exploration upside. The ADA resources are small satellite deposits making it messy mine planning. No way do I see them processing ore by the end of 2009.
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