Forgive another basic query from a PI. I understand that AIM shares can be difficult to sell after a significant hike in the SP ( as we expect post PFS). At 'sell points' like £1 there are potentially more sellers than buyers and the SP stalls, or even falls back significantly. What do the professionals think will happen if this share rockets as most expect? Could we end up with a share worth £2 that we can't actually sell? Thanks to Missta for an excellent post too.
Some of the recent investors in Amur might be thinking what's next. Well, the next few weeks will be the most exciting in AMC's history. Here is a quick guide from a long term holder as to why?
The current independent (JORC) mineral reserve calculation was done in 2007. Based on this a Pre Feasibility Study (PFS) was done that demonstrated the net value of the minerals in the ground as at 2007 and AMC's approach to how they would set up the mine. It also gave a NPV (Net Present Value) which is the net value of the company at that time.
Since 2007, AMC has significantly increased the resource through continued exploration between 2007-2014. It has almost doubled the reserve and found additional metals in addition to nickel and will continue to explore more in this summers field season and beyond. New tax free breaks have also been introduced by the Russian Federation since 2007, further increasing the net value of the project. All this happened whilst the mining license application progressed through the Russian system. If we were to speculate the gross value of the minerals will be circa $12bn.
Whilst the board was waiting for the license, they began the process of carrying out a new PFS based upon the up to date mineral resource and the tax breaks. Due to this massive increase in an already significant resource, the board are now pursuing operating their own smelter as oppose to using a third party smelter. You can view a video with proactive investors, where Robin Young describes the new figures as "Superb" and why operating an own smelter is more profitable. This PFS in short will demonstrate the new NPV (Net Present Value Per Share) after taking in to account all capital costs. Long term holders inc myself anticipate this to be significantly above £1.00.
The board strategically did not release the updated PFS until the license was granted. A savvy move by Robin Young.
Now that the license is registered by Rosnedra and the entire project is derisked significantly, the board will be releasing the new PFS very soon. This new PFS will specify the route to production, gross and net values. It is a document that will be anticipated by the market in general but more specifically many of the Majors Miners and Private Equity Funds. It will give a clear indication of the takeover price we can expect to see.
Once out, many long term holders anticipate the "Mega Rally". A lot of us know the current SP is still at a fraction of the true value. There should be a major re rating by analysts. We should see institutional investors buying in and more speculation over a takeover of this huge asset. AMC is already the number one talked about share on AIM and is this years best performer already. It is building momentum. Slowly but surely the market is realising the fundamentals are compelling.
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