I only recently bought into AQG as there was little point in buying too far ahead of the completion of the sulphide project, and am not aware of the more detailed background - I just read the main presentations.
My view had been the same as has been discussed here - its a of money to spend for only a 150k ounce per annum operation with an IRR of 19% and the debt needed to build it, even if its a long life mine. However the high upfront production starting in CY2019 has kept me interested as the revenue should be very good (note the tax benefits they are accruing) and hopefully translate into a high share price (at which point my thinking is that it would be best to sell). I am no expert on this project, but their nearby deposit being defined could have a significant positive impact on later cashflows and is something that could perhaps sustain a higher PE multiple over time. Plus down the track there is the JV project. So in summary I have a pretty simplistic views, and no in-depth knowledge.
I feel that if things go wrong operationally with the sulphide pant then given the debt burden there could be some significant pain for shareholders. Given the spend on other various activities I do not think there will much left over from the debt facility once the new plant starts delivering, despite the reported cost savings.
AQG is a gamble for me, and the company is only cheap if they deliver and the gold price does not tank. A $USD100/ounce increase in the gold price would not impact them positively to the same extent that it would a high cost operator such as PRU, so I did not buy it in anticipation of a higher gold price.
loki (gambling is fun, especially on goldies operating in Islamic countries)
AQG Price at posting:
$2.15 Sentiment: None Disclosure: Held
