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Amani Research from German forum

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    It excelent research was posted in german WallStreet forum. I traslated it by Google Traductor

    Fact analyst 6/30/20 6:21:27 AM Post No. 5.095 ( 64.229.020 ) Amani Gold Limited (ANL), ISIN AU000000ANL3, assessment from June 24, 2020

    I.) Exchanges, prices and share price development, number of shares
    1.) Amani Gold is traded on the Australian ASX, on the OTC, in Frankfurt etc.

    2.) On June 24, 2020 disallowed price was AUD 0.001, it has fluctuated between AUD 0.001 and AUD 0.002 in the last few weeks.

    3.) Share price development: January 2011: AUD 0.230 June 2011: AUD 0.039 May 2016: AUD 0.020 July 2016: AUD 0.057 March 2017: AUD 0.021

    4.) a) On June 11, 2020 there were several capital increases and the related ones Dilutions 6,834,496,747 shares.
    b) On June 23, 2020, Amani announced that a total of 2,550,000,000 new shares will be issued in 2 tranches at AUD 0.001 per share to collect a total of AUD 2.550,000 for planned exploration activities on Giro and Gada. Amani's share capital will then consist of a total of 9,384,496,747 shares.
    c) In connection with the 2,550,000,000 new shares, 3,825,000,000 options were also issued, which can be redeemed within 3 years at AUD0.0015. Upon redemption, Amani's share capital would then consist of 13,209,496,747 shares (without taking into account the inevitable future capital increases).
    d) The 197,500,000 options that expire on October 14, 2022 at the latest are unlikely to be redeemed because their strike price is at least AUD 0.01 (10 times the current market price, at a price of AUD 0.002 it would be still make up 5 times).
    e) There are also 1,127,000,000 performance rights issued to directors in 2019 that will automatically be converted into shares if the price averages at least 0.0075, 0.01 or 0 over 20 consecutive days within the next 3 years .0125 AUD.
    f) In addition, on January 29, 2020, convertible notes of AUD 2,100,000 with a term of 24 months were issued, which can then be converted into shares at any time by AUD 0.003, which would be 700,000,000 new shares.

    II.) Essentials about Amani Gold and the Giro Gold Project
    1.) On January 31, 2019, Klaus Eckhof, who was significantly involved in the founding of Amani Gold and also acted as Chairman for a long time, was appointed Executive Director. He has been Chairman of the company again since April 2019. He owns 377,500,000 performance rights, which are converted into shares at prices of $ 0.0075 to $ 0.0125. Management includes 4 experienced geologists who have worked for several other mining companies. Klaus Eckhof has or had functions at other mining companies, among others he founded Moto Goldmines and managed it very successfully. Moto Goldmines was sold for $ 488 million to Randgold after more than 12 million ounces of gold were found . Mr. Eckhof resigned from Amani on March 28, 2018, because with the Chinese project (Luck Winner Investment Ltd acquired 300,000,000 Amani shares for AUD 15,000,000 in July 2017), the Giro Gold Project (see 2.)) not to sell, but to bring it into production itself, did not agree. Mr. Eckhof wanted to develop the project, determine resources of more than 5 million ounces of gold and then sell them. After the Chinese failed to produce gold, they asked Mr. Eckhof to take command again. In an interview on April 15, 2019, he stated his goal of finding resources of over 10 million ounces of gold with 2, 3 or 4 interconnected companies, in order to then sell them to a larger, already producing gold company.
    2.) Amani Gold operates the Giro gold project in the Congo, whose exploration is funded 100%. The semi-governmental Congo company SOKIMO has a 35% share in the profits of this project if it should go into production successfully. SOKIMO's share of the profit is "free-carried", which means that SOKIMO does not have to make any financing contributions for the exploration activities, for the investments to enable production and for other expenses.
    3.) The resources of the Giro gold project concern the Kebigada deposit (more than 90% of the resources) and the douze match deposit. With a cut-off grade of 0.5 g / t, the following resources result in summary for both deposits: Indicated: 2,500,000 ounces at 1.10 g / t Inferred: 1,900,000 ounces at 0.98 g / t Together: 4,400,000 ounces at 1 , 04 g / t With a cut-off grade of 0.6 g / t, combined resources would result from 3,940,000 ounces of gold to 1.18 g / tg, with a cut-off grade of 0.7 g / t, the combined resources would be 3,510,000 ounces of gold Make up to 1.31 g / tg. The Kebigada Deposit has the potential to be expanded in depth and along strike. That is why further drilling is planned.
    4.) At Kebigada, very good gold recovery rates of 91% (oxide) and 90% (sulfide) were found using a simple CIL process (carbon in leach) .
    5.) In addition, Amani Gold agreed with SOKIMO on August 19, 2019 an amended Memorandum of Understanding (MOU) to acquire the Gada Gold project. After a six-month review of the project (the area to be explored is fundamentally much larger than Giro, the first soil samples have already been taken, which have shown promising results), a definitive agreement should be reached that Amani and SOKIMO are 70 and 30% involved in this project are. SOKIMO's participation should again be “free-carried”. However, the definitive agreement has not yet been concluded. There is also no current information in this regard. Nevertheless, Amani plans to continue exploring, including drilling, on Gada.
    6.) a) On January 18, 2020, exploration company AJN Resources signed a MOU with SOKIMO, requesting SOKIMO to convert its direct stake in various gold licenses in the Kilo-Moto gold province in northeastern Congo to AJN shares . Klaus Eckhof is CEO and President of AJN and also owns a significant number of shares in this company. But that is not the only connection between Klaus Eckhof, Amani and AJN, because SOKIMO's 35 percent free-carried stake in Amani's Giro Gold project is also to be transferred to AJN. Lt. This MOU should also be transferred 5 further “free-carried” holdings from SOKIMO to AJN: Goldmine Kibali: 10% Zani-Kodo: 30% Wanga (Tendao): 35% Nizi: 30% Kibali-South: 30% AJN should raise at least CAD 20 million through the issue of shares. Then SOKIMO should transfer the 6 shares in AJN and receive new shares from AJN. SOKIMO will then hold 60% of AJN's shares. AJN and SOKIMO wanted to review these plans within 90 days and then obtain all regulatory approvals. A final agreement should then be reached at the conclusion (the time and place of the conclusion are agreed by AJN and SOKIMO).
    b) On February 20, 2020, Barrick Gold published a clarification that SOKIMO is contractually bound to Barrick and the joint venture partner AngloGold Ashanti and cannot sell their shares in the Kibali gold mine without their consent. This consent will not be given.
    c) AJN then announced on March 2, 2020 that SOKIMO's 10% stake in the Kibali gold mine would not be acquired, but that the examination of the other projects with SOKIMO participation would continue.
    d) On April 16, 2020, Klaus Eckhof, CEO and President of AJN, announced the following: "Our due diligence team, with the support of SOKIMO and various government agencies, has made good progress towards closing the transaction."
    e) In early May 2020, Mark Bristow, CEO of Barrick Gold, complained about Klaus Eckhof's role in the proposed transaction between AJN and Sokimo. He believed that it should not be supported to play a role in the gold mining industry. He also said that he knows from a good source that the Congolese government has filed complaints about his behavior. Barrick Gold has good relations with the Congolese government. Lt. Report from Markus Bußler by the shareholder dated April 4, 2019, representatives of Glencore and Barrick met with Felix Tshisekedi, the new President of the Congo, who wants to work with the mining companies, and after the meeting gave his opinion on the introduction of a kind of super tax for Mining companies are said to have changed.
    f) Civil society and unions are hostile to the MOU between AJN and SOKIMO because SOKIMO has already entered into numerous partnerships with foreign mining companies without improving their own financial situation. On February 26, 2020, an association of non-governmental organizations asked Prime Minister Ilunga to invalidate the letter of intent with AJN because it would be very disadvantageous for SOKIMO. On February 27, 2020, numerous workers protested in Kinshasa to demand payment of 80 monthly salaries.
    g) The main actors of SOKIMO are people of the former President Kabila, whose supporters have a large majority in both parliament and government. Therefore, the situation for Klaus Eckhof and AJN is not that bad, despite the factual situation mentioned in f).
    h) Because of the connections between Klaus Eckhof, Amani Gold, AJN, SOKIMO and Barrick Gold, the explanations in a) - f) are also essential for Amani Gold. 7.) Due to the capital shortage and the high cash consumption (drilling, other exploration activities, feasibility study) of Amani, it will be inevitable in the future to constantly carry out new capital increases in the millions, whereby the number of shares will be increased and thus watered down. Around AUD 2,500,000 is generally required each quarter. As of March 31, 2020, only AUD 319,000 was available. On April 20, 2020, 699,047,035 new shares were issued to Shining Mining Limited for AUD 0.003, or a total of AUD 2,097,000. On June 23, 2020, Amani announced that 2,550,000,000 new shares will be issued to collect a total of AUD 2.550,000 for exploration activities planned for Giro and Gada. Despite these amounts, Amani will need new funds soon (in less than half a year) to continue working and to exist.

    III.) Market capitalization, resource values, ratio of market capitalization to resource values and market capitalization per ounce of gold in USD, as at June 11, 2020 1.) Market capitalization a) Number of shares: 9,384,496,747 shares Market price on June 24, 2020: 0.001 AUD market capitalization: 9,384,000 AUD = 6.413,000 USD With a market price of 0.002 AUD, the market capitalization would be 18.768.000 AUD or 12.826.000 USD. Taking into account the 3,825,000,000 options issued on June 23, 2020, a diluted market capitalization of 13,209,496,747 shares would result in $ 13.209,000 = $ 9.027,000. At a market price of $ 0.002, the diluted market cap would be $ 26.418,000, or $ 18.054.000. b) Amani has received a total of AU $ 74,345,105 from shares through its issue through Dec. 31, 2019. This money was used primarily to explore the Giro Gold project. AUD 18,545,942 was capitalized as exploration expense on the balance sheet as of December 31, 2019. The total accumulated losses were $ 53,058,582. Adding this up to an amount of AUD 71,604,524. This means that Amani's current market value is only part of the amounts invested so far.
    2.) Resource values total: 4,400,000 ounces a`USD 1,750 = $ 7,700,000,000 Since Amani is only 65% of the profits from the Giro Gold project, I only use 65% of the resource values, which is $ 5,005,000,000.
    3.) Ratio of the market capitalization to the total amount of resource values a) basic market capitalization at a price of 0.001 or 0.002AUD USD 6.413,000.- = 0.128% of USD 5.005,000,000.- USD 12.826.000.- = 0.256% of USD 5.005.000.000.- a) diluted Market capitalization at a price of 0.001 or 0.002AUD USD 9,027,000.- = 0.180% of USD 5,005,000,000.- USD 18.054.000.- = 0.360% of USD 5.005,000,000.-
    4.) Market capitalization per ounce of gold in USD Each basic ounce of gold is valued at $ 1.46 and $ 2.92, respectively. Each diluted ounce of gold is valued at $ 2.05 and $ 4.10 respectively.

    IV.) Assessment and future prospects 1.) An undiluted market capitalization of 0.128% or 0.256% in relation to the resource values or a valuation of each ounce of gold with only 1.46 or 2.92 USD is also very low for an explorer. The diluted market capitalization of 0.180% or 0.360% in relation to the resource values or a valuation of each ounce of gold at USD 2.05 or USD 4.10 is also not high. In addition, there are 4,400,000 ounces of gold at an average of 1.04 g / t, for which - at least as far as Kebigada is concerned - very good gold recovery rates of 91% (oxide) and 90% (sulfide) have been determined using a simple CIL process, everything else as bad, even if Amani is only 65% of the profits. Higher cut-off grades would result in 3,940,000 ounces of gold at 1.18 g / t and 3.510,000 ounces at 1.31 g / t. That also sounds interesting. The chances of increasing both resources and gold grades (in the case of deep drilling) through further drilling (especially deep drilling) are pretty good. There is also the promising Gada gold project, but it is currently still unclear how it will continue.
    2.) But there are also negative aspects and risk factors. So it is unpleasant not only for AJN, but also for Amani Gold that Barrick Gold and possibly also the Congolese president and parts of the government are bad to speak of Klaus Eckhof. SOKIMO managers could also be instructed on how to proceed when granting and extending exploration licenses, specifically regarding Giro and Gada. This risk should not be underestimated. In this regard, I do not like that the deadline for the MOU between AJN and SOKIMO of January 18, 2020 already passed more than 2 months ago without a specific agreement being reached. There is also no news on the current state of affairs. It cannot be ruled out that no definitive agreement between SOKIMO and AJN will be reached. That would not be so important for Amani. As a result, the MOU between Amani and SOKIMO regarding the Gada gold project could also be canceled. It would be very bad if Amani would lose the licenses for the Giro gold project. Then they could shut the shop down. Hopefully the relationship between Mr. Eckhof, those responsible for SOKIMO and government officials is so good that it won't happen.
    3.) Mr. Eckhof would like to sell Giro and, if the exploration was successful, other projects to a larger mining company, but of course Barrick Gold would be the first choice because it operates the Kibali mine around 35 km next to the Giro Gold project. In this regard, the question arises, what are the consequences of the dispute between Eckhof and Barrick. Does this mean that Barrick will generally not do business with Amani, AJN and other companies in Mr. Eckhof's sphere of influence in the future? So will Barrick refuse to buy projects from such companies from the outset, even if they have combined resources of more than 5 million ounces of gold? I don't think so, because that would be behavior that is in the interests of Barrick shareholders would disagree. This would cause Barrick's directors to commit a breach of duty. In extreme cases, they could be released without notice and even used for liability. However, it is clear that there will be no friendly business relationships between Barrick and Mr. Eckhof in the future. This could be expressed in such a way that Barrick Amani and other Eckhof companies only make takeover offers if they are very tempting projects for Barrick that they absolutely want to have.
    4.) The future development of the gold price offers great opportunities for gold producers and the Explorer Stand today, but also great risks. It could be discussed for a long time, I would even say philosophize. There are countless facts that can affect the price of gold . I warn against the so-called “experts” who believe that they can forecast future gold prices and are not afraid to predict specific price targets. At the moment, the prospects for a further rise in the gold price are not all that bad due to the additional uncertainty and weakening of the global financial economy due to corona. Central banks are buying bonds like crazy againof states and companies (many of them are already ready for bankruptcy and are only kept artificially alive by these bond purchases or loans) and also the zero interest rate policy at the expense of savers (negative interest rates are not so seldom charged) will continue for many years, because that is the only way that the economically ailing states and companies can be artificially kept alive. The newly created “paper money” increases the money supply and in my opinion it is only a matter of time before there is inflation that can no longer be controlled. In this regard, too, I don't have any concrete forecast. This may happen soon, but it can also happen in 5, 10 or 20 years. Once investors lose confidence in the globally troubled financial sector and especially in the currencies, the devil can quickly be rid of. The trust of investors is essential, which is also a decisive factor for the future development of the gold price. If they lose confidence in gold again and no longer consider gold as a “safe haven”, things can quickly go the other way. You saw that after the gold price rose to over $ 1,900 an ounce in November 2011. It then fell to around $ 1,200 by Dec. 31, 2013 and subsequently to even lower amounts. I hope that this will not be the case this time, given the current facts, it is also not very likely, but I would not rule it out.
    5.) The impact of COVID 19 on the Giro gold project is difficult to assess and depends on whether the Congo can get a handle on this disease.
    6.) I am assuming that Amani retains the rights to the Giro Gold project. I also believe that capital increases will continue to raise sufficient funds to carry out the proposed drilling and other exploration activities. However, I also assume that these capital increases will generally have to be carried out on terms that are downright catastrophic for the existing shareholders. This was also the case with the capital increase announced on June 23, 2020. How bad the conditions were can be seen from the fact that Neo Gold committed on January 29, 2020 to buy 1,000,000,000 new shares at AUD 0.003 per share for a total of AUD 3 million, but this commitment again on June 11, 2020 has withdrawn. Instead of 1,000,000,000 new shares at AUD 0.003, 2,550,000,000 new shares will now be issued at AUD 0.001, i.e. at a third of the originally planned price. In addition, 3,825,000,000 AUD15.00,000 options had to be issued, which will only need to be redeemed within 3 years, although Amani's main problem is getting cash now and over the next 1 or 2 years to drill, etc. can. It seems inevitable that a stock split will occur in the near future, e.g. For example, 1,000 shares could be converted into one share. At a price of $ 0.001 per share, the new market price would then be $ 1.00 per share. Then the game could go on with the constant issuance of new stocks and long-term options at low prices, which would cause the price to drop ever lower.
    7.) What would have to happen that this scenario does not occur and that the Amani share price would rise again? This would be necessary e.g. Example a) good drilling results on Giro, which would lead to a significant increase in gold resources and gold grades b) The definitive conclusion of an agreement with SOKIMO regarding the Gada gold project and positive exploration results c) The publication of a positive feasibility study for Giro d) Sale of Giro or at least speculation in this regard:
    8.) The chairman Klaus Eckhof is also a risk factor for Amani himself . The question is, what is he going to do with Amani and AJN? What are his intentions? Mr. Eckhof has already proven that he can do something (see II.) 1.)). In principle, it can be trusted that he can achieve his goals. But he is also a player who takes risks and tries everything. This was also seen in the MOU with SOKIMO from January 18, 2020 (see II.) 6.)). He wanted AJN to receive SOKIMO's 10 percent stake in the large producing Kibali gold mine. He certainly knew that there could be problems with Barrick. But he tried it anyway. He completed this large MOU with SOKIMO through AJN, not Amani. It should be noted that the board and management of AJN currently own 39% of the shares issued. I assume that Klaus Eckhof, as President and CEO of AJN, owns a large part of these shares. So he would also benefit greatly from an increasing AJN stock exchange price, even if his share would be significantly watered down by the planned large capital increase and by the issue of the shares to SOKIMO. That looks a little different at Amani. He does not own any shares, but only 377,500,000 performance rights, which are converted into shares at prices of $ 0.0075 to $ 0.0125. If these prices were reached, depending on the market price, he would receive Amani shares worth at least around AUD 3.775,000. As things stand today, this is unlikely. The agreement on these performance rights also proves that Mr. Eckhof is a player. I therefore believe it is possible, if not probable, that Mr. Eckhof will focus on AJN's interests and that his commitment to AJN will therefore be greater than that to Amani. If a definitive agreement on the transfer of their 5 "free-carried" holdings in AJN can be concluded with SOKIMO, I would not be surprised if Mr. Eckhof then primarily acts for the interests of AJN and maybe even his function as Chairman at Amani again because the chance that his performance rights can be converted into shares is slim. Of course, my considerations are very speculative and do not have to be right.
    9.) I also think it is possible for Klaus Eckhof to play with the idea of further developing the Giro project and also Gada with AJN. If Amani's market capitalization remains low or falls even further and Amani only makes ends meet from one capital increase to the next, AJN Amani could take over cheaply by issuing new AJN shares to the Amani shareholders and thus also the one Acquire 65% of Amani in Giro and also the Gada Gold project. AJN could then (with possibly increased motivation from Mr. Eckhof) drill further, increase resources and later resell Giro at a profit. That would of course be a very bad scenario for Amani.
    10.) What would be the proceeds from a sale of Giro (e.g. in a good 2 years)? In the following, I venture very speculative considerations and estimates to somehow express the opportunities and risks associated with buying Amani shares: Amani will continue to explore and the giro resources of 4,400,000 ounces of gold with an average gold content of 1.04 g / t increased to approximately 6,500,000 ounces with an average gold grade of 1.2 g / t. Amani then already carried out a successful feasibility study. Amani offers the Giro project for sale and also finds a buyer. Eventually, Amani can sell the Giro resources at AUD 60 an ounce of gold. That would result in sales of $ 390,000,000 at 6,500,000 ounces. Amani has a 65% stake in Giro. 65% of AUD 390,000,000 is around AUD 250,000,000.
    11.) How many Amani shares could there be at this time? I continue to speculate. As a result of Amani's shortage of capital and high cash consumption (drilling, other exploration activities, feasibility study, etc.), it will be inevitable in the future to constantly increase and thus dilute the number of shares through new capital increases. As of March 31, 2020, only AUD 319,000 was available. On April 20, 2020, 699,047,035 new shares were issued to Shining Mining Limited for AUD 0.003, or a total of AUD 2,097,000. On June 23, 2020, Amani announced that 2,550,000,000 new shares will be issued to collect a total of AUD 2.550,000 for exploration activities planned for Giro and Gada. Around AUD 2,500,000 is generally required each quarter. I therefore estimate Amani's cash usage over the next 2 years at AUD 24,000,000 (8 quarters of AUD 3,000,000 each on average). I anticipate that Amani will be able to raise the required $ 24,000,000 through capital increases at an average of $ 0.001 per share. That would mean that Amani would have to issue 24,000,000,000 new shares in the next 2 years. I also expect Amani to issue not only 24,000,000,000 new shares, but also 24,000,000,000 new options with an average exercise price of AUD0.0015 within 2 or 3 years. I also expect the price to go above Giro 0.0015 before making the sale of Giro due to good news (drilling results, new resource estimate, sales speculation, etc.), so all options will be redeemed. Amani Gold would then have a total of 61,209,496,747 shares if Giro was sold. That would mean that the Amani share of the sales proceeds of AUD 250,000,000 would be AUD 0.0041 per share. That would be more than a quadrupling of the current market price.
    12.) Of course it is possible that the market price rises again when positive news is published (see 7.)) and therefore fewer new shares have to be issued. It is also possible that options are redeemed early and therefore no new shares need to be issued. A lot is possible, which is why I repeat that what I have said is only very speculative considerations and estimates in order to somehow express the opportunities and risks associated with buying Amani shares. In 2 years the situation can actually be completely different.
    13.) I did not go into detail about the Gada Gold project because it is not yet possible to determine whether economically usable gold resources can be identified. V.) Conclusion In view of the uncertainties and risks mentioned, I am currently foregoing the profit opportunities undoubtedly given by the purchase of Amani shares. But I will watch the future developments at Amani. If the prospects should improve (e.g. due to some good drilling results), some further capital increases have already been carried out and the future capital requirements should be limited (this is only the case if it should be foreseeable that at In the next resource estimate, a significant increase in the gold ounces and perhaps also the gold content can be determined), I could imagine that I will reevaluate the situation with a low market capitalization. Another important factor is Mr. Eckhof. Will he remain Chairman of Amani? Does he represent Amani's interests or does he just have AJN in his head? Let's have a look. If I come to the conclusion that the opportunity-risk ratio has improved and Mr. Eckhof also represents Amani's interests, I will buy shares. PS: I already analyzed Amani (formerly Burey Gold) in 2011 and at that time I assessed the risk-reward ratio as very positive and as a result bought shares for around 13,000 euros. These shares are now worth 336 euros. So my analyzes should be assessed very carefully.
 
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