AAM - A1 Minerals

There's Life in the Old Dog - 24.5c

1.2m shares through today as we speak.

Strong volume the last few days........perhaps news of the feasibilty is imminent?!

I hope so, its been a very good week so far.

23.5 is setting up as a nice strong support level and ALL of the charts are looking good

Gar said:

I hope so, its been a very good week so far.

23.5 is setting up as a nice strong support level and ALL of the charts are looking good

Click to expand...

There are definitely more buyers than there are sellers at present. The whole 0.245 line just got gobbled up. Sellers are paving way for a stampede I reckon. Next hurdle is 0.25 which is small compared to what's brewing on the buy side.

New ''Mining Investor" review on their website:

http://www.a1minerals.com.au/

Cheers
Skegsi

A few more characters here

I ran some numbers on A1's Brightstar project. I'd be interested to see what people think.

A1 Minerals (AAM)
(AUD prices)
Issued Shares 89,850,000
Options (exp 30/11/08, ex price .25) 26,540,000
Current Cash ($) 5,200,000
Cash on dilution ($) 6,635,000
ASX Share Price ($) 0.22
Market Cap ($) (fully diluted) 25,605,800

14.2Mt @ 2.2g/t = 1,000,000oz

Estimates
Recovery Rate 0.90
Capital Expenditure ($) 6,000,000
Cash Costs per tonne ($/t) 500
Gold Price Received ($/oz) 600

So say a margin of $100 for 900,000oz of Au = $90,000,000 minus capital costs of $6,000,000 = $84,000,000 NPV

This equates to share price of 71c, compared with current price 22c

Now the Deutsche Bank took a controlling interest of Crescent Resources (CRE) in June via $125.5M placement. Crescent have 1.5moz and are very close to AAM in the WA greenstone belt. CRE now have a lot of cash and stated that "The Company’s strategy has been to transform itself from an explorer into a producer and to further increase mine life at its Laverton Gold Project. The recent strategic alliance with Deutsche Bank AG has expanded the Company’s long term strategy to include becoming a mid-tier gold producer through various channels of growth including expansion, mergers and/or acquisitions."

The article in my post below states that Crescent are confident that they can operate at a margin of $250/t for the life of their mine (5yrs+, @1.5Mtpa). In the above estimate for the Brightstar I've used a margin of $100. Obviously any increase in this figure improves the likelihood of a better share price.

Still speculative, but to me still look like they're undervalued.

Skegsi

I agree with you on this one Skegsi. The figures all tell the story. The statistics (Market cap, gold reserves, production viability, outlook) are remarkably similar to another 20c Gold miner I bought into a couple of years back, AVO Avoca (now ~$1.60). The balance sheet is good too, they have plenty of operating cash.
I guess the Uranium is a bonus but I try not to get caught up in Uranium euphoria.

I reckon their gold resources will attract someone bigger, this would be a good medium term hold. Nice analysis on their website announcement. One to watch for an entry point I'd say. No use looking for low grade gold, there's too much competition, so they have a good strategy.

I know its a bit tricky to talk about buy and sell orders when the market is like it is at the moment. But... Is that someone with 1mill+ shares trying to cap @0.24 and get his other 700,000+ 0.20 buy order filled. That is a lot of shares!

BUYERS SELLERS
Orders Quantity Price Price Quantity Orders
3 245,000 0.200 1 0.210 92,550 2
2 85,000 0.195 2 0.215 80,000 1
2 65,000 0.190 3 0.225 12,914 1
1 15,000 0.185 4 0.240 259,100 4
1 50,000 0.180 5 0.245 50,000 1
1 100,000 0.175 6 0.250 158,083 3
2 58,000 0.170 7 0.255 7,700 1
8 0.260 95,000 1
9 0.265 67,220 2
10 0.270 212,000 2

I didnt follow you at all skegsi sorry. Can you clarify, I dont see what you are meaning. Thank you.

Yeh sorry Nick. I just realised that it wasn't 3 or 4 orders times the number of shares, but 3 or 4 orders totalling that number of shares. Just got access to market depth info and was playing around with it. Woops. Sorry to confuse.
Cheers
Skegsi

The Australian Investor: Analyst Review August 2007


A SOLID CASH RESOURCE BEHIND A1 MINERALS’ EXPANDING GOLD PROSPECTS
A1 Minerals Limited is an emerging Australian gold miner based in Perth with projects in the highly prospective Laverton district in the Eastern Goldfields of Western Australia.
The Company’s BrightStar Gold Project has delivered over one million resource ounces and provides A1 Minerals with a solid resource inventory to turn into cash. Mr. John Williams, Managing Director of A1 Resources with over 20-years experience, described the current financial and production position at A1 Minerals. “Brightstar, located near the world class Sunrise Dam and Granny Smith gold mines, is a short to midterm cash flow project which has underlying opportunities for growth as it is in an area with some big producers.” “At A1 Minerals, our primary focus is, quite simply, gold exploration and mining. For our company to get to the production stage, we initially had to build up an inventory of resource ounces. A1 Minerals holds over 1 million ounces so we have gone into feasibility study mode at BrightStar.” Mr. Williams detailed further. “Narnoo, on the other hand, is ideal for gold and uranium and we are in a joint venture with Oklo Uranium Limited. Using the geophysical data generated by our JV partners we will also begin looking for nickel.” The Narnoo Exploration Project is found in the Great Victoria Desert in an area with high gold, nickel and uranium prospectivity. The region is undergoing advanced and sophisticated exploration for such minerals as well as base metals. Recently, a large uranium anomaly was identified at Narnoo by Oklo Uranium Limited which plans to follow up the discovery with ground spectrometry, regolith sampling and drilling. “At A1 Minerals, we are always on the look out for complementary tenements and acquisitions; we try to remain acutely aware of any or all available assets that could really improve A1 Minerals portfolio.” Mr. Williams explained. “Our current market capital is $20 million, which is actually quite low for a company with over one million ounces, but that is mainly due to the tight share cap we have employed. Although, we have not excluded the possibility of an increase over the coming months as we finalise a feasibility study at BrightStar. This has taken some time because we are focusing-in on only high-grade results so as to increase our profit margin.” Mr. Williams said. “Within our industry, gaining publicity in a market where there is a girth of resource companies can be a real challenge.” He commented. Mr. John Williams is a geologist with experience in all avenues of the mining industry. Mr. Williams was involved in the discovery of a number of deposits including BrightStar and has been involved with A1 Minerals from its inception. “A1 Minerals is dedicated to advanced research and exploration programs. We examine all areas of a prospect through test work and feasibility studies. This diligence is what has made us so successful. We have over one million ounces and exciting prospects on the horizon. This approach led us to the gold assets in the Laverton region which are now proving to be extremely resourceful.” Mr. Williams concluded.

Keeps getting to that 25c resistance, ready to break out, and then the market craps itself. Hoping it craps itself a little more so i can buy some more!
Is it just me or do the options look expensive at a 9c premium. Must be held pretty tightly.

sitting at 25c now just waiting for announcement to break her upward. Timing would be great. Any one know the depth?
Cheers
Skegsi

skegsi said:

sitting at 25c now just waiting for announcement to break her upward. Timing would be great. Any one know the depth?
Cheers
Skegsi

Click to expand...

Just broke through the $0.25 resistence. Sitting at $0.26 right now but presented with a rather solid wall. Needs to close above $0.25 which I don't think would be a problem considering the current gold environment. Above average volume. Would be a good time for an announcement.

Close at 27c is nice, 52 week high close.
Big buy order at 25c should provide a little suport for now.

What do you think of a possible equity raising for say ~6mill extra cash. Maybe at 25c and we only add ~25mill shares, not too much dilution.

That should pay for their mobile plant etc. and they'll still have their ~5mill in cash

Cheers
Skegsi

Skegsi,
Still better, an announcement to move the sp to >30 cents, and then some cap raising at 30 cents... Judging by the buy and sell side, the sp may go theire even without any announcements.

I have not seen the resource estimate together with grades for a while. I know that JORC should not be far, but, could anyone post this resource info if available? Last year's annual report mentioned results of an initial FS of 266,000t at 5g/t, but that's about all we know until now. I am excited about the high grade components, but the large volume of 1.1g/t they have may not be very economical unless the POG goes much higher.

One way or another, currently the sp does not reflect the true value of this company, so we should experience some exciting times between now and Xmas and beyond. The annual report, due relatively soon, should be worth reading and may prop the sp up, too .

Regards,
Dratoz

I feel it might be JORC compliant already. Maybe wrong though. Haven't got time to look right now.
Here is the mineralisations at Brightstar

From their June Quater Activities Report
"A1 Minerals recently announced an updated JORC compliant resource of 1 Million ounces had been completed for the BrightStar Gold Project"
and

Skegsi,
Thank for this. The numbers look good, and especially the grades, which was my concern. The sp should head up IMO, based on the recent rush to gold, the technical brakeout, strong fundamentals, possible resource upgrade, the move to production and the speculation of a take-over . Cannot think of anything negative to balance the positives .
Regards,
Dratoz

I can't think of too many downsides either.
It just seems like the road to production is gong to be too easy. With their location, the proven track record of producers literally right next door, and the predicted low capital costs (<6mill for mobile plant + extras). The fact that they already have a 1Moz resource and a market cap of only 25mill is a real bonus for us. Like you say, the likelihood of them finding significant amounts of more gold is very good also.
Definitely a keeper for me, just wish i had more money when i was buying.
Oh, and the current and predicted gold price.

There has been some talk on another gossip forum about CRE having to take out AAM because CRE's own low grade operation is just not going to cut it. But I'm not convinced. It would have to be a prety good offer! For the reasons outlined above.
AAM have the chance to be a self-funded explorer by turning a small part of their resources quickly into a cashflow. So by then you could add 'producer' and 'cashflow' to the reasons above and if it's still at 25mill market cap I'd sell whatever isn't nailed down and buy some more.

Hope I haven't just repeated what you posted Dratoz