Positive comments on nifty 5016 May 2015 11:25
Amara Mining* (AMA) has announced the results of a pre-feasibility study for its Yaoure gold project in Côte d'Ivoire. The shares are currently 5% lower, at 15p, on the announcement as a net present value, at a 10% discount rate and $1,250 gold, of $228 million compares to $566 million in a 2014 preliminary economic assessment.
However, this is noted to largely reflect the exclusion of some mineral resources on which drilling is currently underway to upgrade and which the company emphasises “will allow us to deliver a NI 43-101 compliant bankable feasibility study closer to the original preliminary economic assessment” (a company-generated scenario puts the net present value currently at $436 million).
It is also noted that there are “several optimisation opportunities” – including remaining drilling upside and project flexibility. An increased pre-production capital cost estimate of $447 million for example could be reduced by staged development. With such optimisation work, it is now noted that the bankable feasibility study “is expected to be completed in H1 2016”, compared to a previous Q4 2015.
Despite being well-funded and Yaoure being a rare, large project which remains decently viable at lower gold prices (currently estimated all-in costs of $827 per ounce), the market cap here is currently circa £63 million (sub $100 million).
This reflects that there remains a significant way (and thus risks) to production – but Yaoure's flexibility and scale (meaning potential attraction to an industry buyer) sees us remain positive on this current only Nifty Fifty Gold portfolio constituent. That, incidentally, may change - we are beginning to think that there are reasons to add to ones gold exposure. Amara is certainly a buy.
http://www.shareprophets.com/views/12218/amara-mining-yaoure-pfs-news
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