AGO are still in ramp-up phase so I assume not generating major positive cashflow. They will need capex to develop Wodgina, Abydos and ramp-up Pardoo in the short-term. They also have major exploration programs planned. These combined would be tens of millions of dollars. There also may be strategic corporate plays on the radar.
So a capital raising makes sense despite the current cash position. Always wise to have a large cash cushion in case of the unexpected - would you want them to get down to $20m or less befoer they considered a raising? No. Very smart move corporately to raise cash when you are comfortable.
The share price has recovered significantly since it hit ~40c in the midst of the GFC so the dilution now is not so bad. And can anyone honestly say we have seen the last of the GFC and the volatile markets?
I am hearing through the grapevine that this raising may involve a placement to overseas investors in Europe, which would further strengthen the register.
AGO Price at posting:
$1.70 Sentiment: Buy Disclosure: Held
