Valuation and Recommendation Tollhurst Noll 25th Oct 07. DCF valuation 66c target 80c
On reported quarter to quarter plant completion statistics, it appears that AGM will need to accelerate its progress to meet Q1 production, we highlight that vigilance is needed on this aspect. While exploration has located a new mineralised intrusive zone, earlier potential at East Avebury / Saxon has been reduced. We expect to see a new resource calculation at years end to clarify the exploration success. Our DCF valuation of A$0.66 per share is based on delivering 9 months solid production in 2008, furthermore we have been generous with our exploration valuation as part of total. Nevertheless, the DCF has reduced slightly due to production moving out from Q4 2007 to Q1 2008 and a slight modification to our exchange rate forecasts. We have maintained our price target of A$0.80 per share and have amended our recommendations from HOLD to ACCUMULATE as we expect that all going well, AGM should see a re-rating once production nears/occurs. Any price weakness should represent an opportunity for stock acquisition.
AGM Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
