Their other exploration plays look good but the market is probably more focused on Tuvatu than anything else at the moment for AMG. If this deal fails they'll need to hit the market for some funds to drill the other prospects, which could get ugly. As far as Tuvatu goes, I'm really beginning to think the 26m capital cost guide given by the company is looking a bit light. I've just looked up some capital costs for past gold projects and the numbers aren't encouraging, e.g.
It looks like the "cost per annual unit" for developing gold mines is around $600/oz on average. Using this figure AMG's 60,000 oz /yr op would cost 36m in development costs. And Dr Rudenno's book was written before general mining and development costs shot through the roof!
Then again I wouldn't have the faintest clue on how to estimate capital costs in any situation. Could be wrong - hope I'm wrong. I'm still holding a fair swag of these. But the figures given earlier by the company, that's what I'm most concerned about. Bell Potter had previous done extensive due dilligence on tuvatu as part of their underwriting negotiations, them walking away doesn't look good in any case.
AMG Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
