A1 Minerals set to perform

A1 Minerals yesterday released a glowing outlook for their mining project. The company is due to commence mining this month (Dec'09). News could not be better as gold breaches the $1200/oz mark. In its latest drilling it encountered 6m of 69g/t. This looks more impressive than it is given the the bulk of the high grade occurred over 2m, meaning that its less likely to be continuous. This is near-surface enrichment of gold. The promising aspect about such gold discoveries is that they promise the mining company a 'bonanza' in terms of upfront cash flows. This is the type of situation in which miners can have exceptional years. Importantly the A1 ground has yielded some very high grades over the years, so we might expect some higher output than is indicated by grade control. There is even talk about expanding output to 100,000 oz per annum. I suggest the likelihood of this is likely to come from toll treatment of their ore. Remember - when you have the highest grade in the district - everyone wants to process your ore. You price the competitors out of the market. See the presentation at the A1 Minerals website.
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Andrew Sheldon www.sheldonthinks.com