Time for a reality check. Many posters on this site are keen to see huge advances in the share price of AGM, and some are wondering why the price hasn’t risen to $1, given the excellent prospects for the future. AGM has already experienced phenomenal growth in its share price- it has more than doubled this year alone. I have been accumulating shares in AGM for nearly seven years and I have seen a 12X return on one parcel. Well I’m sorry to tell you that it won’t reach $1- not for a few years if at all. Some of you will see this statement as near treasonous! Ill explain why I think 50c by late next year is a reasonable objective. First, the rises this year have already factored in the start of production, and to some degree the possibility of further finds of Nickel in the area. The Saxon deposit could be a huge high grade resource or it may to too low grade to be economically feasible. One drill hole is simply not enough to make any sort of assumption. Secondly there are nearly 700 million shares out there. So any profits have to be divided up A LOT. Most shares were issued in the 5-15c range, and will return excellent profit to those who still hold them. It must be remembered that we are are looking at a low grade resource. Even though mining costs are low, twice as much ore needs to be mined and processed to get the same result most other mines are getting. Nickel prices are very high now- amazing. But world production is set to increase by 10% next year; if this occurs the price will drop quite a bit, who knows how much. The Australian Bureau of Resource Economics predicts next years prices will average $18900 Au per tonne. They may or not be accurate, but theirs is an educated guess, whereas all you and I can do is hope prices will be maintained at record levels. But that price of $18900 is still a good one, quite profitable for all shareholders! Oh one small thing. Processing of ore won’t start until the 3rd quarter next year. So when will the first shipment reach China? 12 months time at the earliest! (I’m assuming the Bluestone deal doesn’t happen- even if it does it can only produce a modest output at high cost, a few million profit (divide that by 700mill shares!)). So whats the nickel price then? More likely lower than the prevailing 2007 price unfortunately. By all means talk up this stock. Get all your friends to buy in at 38c. They will probably get a 25% return on their money in 12 months. Well worth mortgaging the house for!
AGM Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
