Yes, the message out of this announcement is disappointing. Although it doesn't say there definitely won't be a bulk mining resource declared, I guess that is the implication.
But if there had been, our market cap would be much higher - a share price in excess of 10 cents if you compare it to other small explorers. So I take it that little of that potential had been priced in to the current 4 cents/share.
What I think we need some clarity on is the potential of the upgrade of the existing artisanal operations and the cash flow that represents to Ashburton.
The announcement was positive in this regard as they confirmed the presence of "near-surface gold-bearing structure". And I believe there is still quite a bit of unexplored area to cover, so I don't think the site has been drained of gold by the current miners. The disappointment seems to be in the fact that the host rock (under the current mining works?) has little gold within it.
On the figures we've been advised so far, production is expected to be around 20,000 ounces of gold per year, of which ATN is entitled to 25%.
From what I can work out, out-of-ground costs of producing gold tend to range from $450 - $800 per ounce. So if we take the conservative approach at $800, that would leave revenue to ATN of around $1,000 per ounce at 5,000 ounces per year - Approx. $5,000,000.
Now, this isn't going to make us shareholders rich, but surely for an explorer like ATN, being cash-flow positive will enable them to secure more prospective projects not too far down the track.
There will be a sell off tomorrow, but I will be holding until we get more information.
ATN Price at posting:
3.8¢ Sentiment: Hold Disclosure: Held
