A1 Minerals (AAM) has just absorbed a $4.3 million placement. The implication of that issue is that is that the company is well-placed to expand gold output over the coming year. The company is the most recent gold producer, and is thus best positioned to benefit from the current increase in gold prices. Being a new miner, it is probable it will be able to process some of its higher grade ore, as it has a number of resource areas to chose from. This will of course depend on the ore distribution, however I seem to remember some very attractive near-surface drill intersections. We might thus expect a high profit in the first year, particularly to benefit before the 'new tax', which I believe will be dropped. That is more upside of course for this market. It will of course depend on the quality of the argument presented by the mining industry...they do not give me confidence.
AAM might get an immediate kick from the $40/oz rise in the gold price, though the market might be more conservative because the gold price is lingering below the $1220 resistance level. We have yet to see gold break out to a new high. More importantly however is that AAM is poised on support above 20c - see chart from Google Finance. The other attraction of AAM is its relatively higher grade gold compared to other miners. There will be quarters where they are mining 4-5g/t average, maybe better judging from the grades.
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Andrew Sheldon www.sheldonthinks.com
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