be confident, page-48

Makamint,

You were looking for a pros' and cons list.

I posted this time last year at 24c, comments now need review / updating but at least there are some details to re-check. (gups, hedging, debt etc.)

Holders at the time jumped on me, however their needed to be some discussion about capital structure / details as ordinary holders were at the top of the stack for risk and lowest for reward.

- Previous Post - (24c about may 09)
Most likely, uncertainty surrounding cash costs, however for me most of the shine is taken away by the cap raising.

The only certainty with axm is that Goldmans are having a party.

Upside
Grades appear good without larger variances over announcements / time
Likely to turn a profit - Recent cash costs hard to find, however company has stated in the past circa A$560 and recent broker report outlines company seeking circa A$600 oz margin. (Argonaut report, 23.3.09)
Very, very likely to be optimistic especially at ramp up, however positive nonetheless.
Can't see this being a SBM.

Downside
Every financial instrument in the book.
Bucket load of shares. Nearly 1/2 Billion.
Cap raising via Goldmans was far better for Goldmans than AXM.
Coupons at about 11%, issued warrants and use of raised funds to place hedging, aiding to mitigate noteholder risk.
Hedging takes some shine away, however with recent forex not as much of an issue.
GUPS is another blow, takes away more shine again with 30% of revenue skimmed when gold prices are good, (exceeding floor price)
Debt not pretty, however manageable if margins are sustained. Goldmans have secured notes, so sleeping soundly at night no doubt.
Eagle Research report, 30.3.09, shows debt to be $112 M as at 31.dec.08.
If this is the case, appears to be about two years profit if all goes well, to pay down debt alone. (150k oz, realise ~A$400, oz)

Work in progress and welcome anyone to updates figures etc.

- end of old post -