The numbers and assumptions run here are not suggesting ago would ever mine 165 mil tonnes but rafter saying if they were mining 11 x their current output then you would assume their SP to be 11 x current SP ie 31.9 cents. Because AGO have nearly 9 billion shares on issue and FMG 3.11 billion shares on issue then AGO has 2.89 x more shares on issue. Therefore to arrive at a comparison you would need to divide the theoretical SP of 31.9 cents by the multiple of 2.89 to make the comparison. This would value AGO at 11 cents if you used the same dynamics as FMG. I'm not saying that ago would ever reach the heights of FMG and yes they have future reserve issues but purely on current production / number of shares / market cap / earnings AGO are hugely undervalued and have a share price target in my opinion of 11 cents. This of course assumes IO prices remain stable. In fact if IO prices remained at current levels for the next 18 months AGO would return more like $450 mil and their SP should push 15 cents.
All the best to AGO holders over the next week. I would like to think 3.5 - 4 cents and upwards is possible at the close next week.
AGO Price at posting:
2.9¢ Sentiment: Buy Disclosure: Held
