Goodone - There is an accumulative sum of reasons why explorers...

Goodone -

There is an accumulative sum of reasons why explorers / developers / non-dividend paying early producers ect.. have come under significant selling pressure.

1. Recently - Dividend paying, low risk stocks (bluechips) have been rallying fairly hard. Funds , traders, SI's etc would rather have exposure to the rallying asx bluechips than parking any cash in non-dividend paying stocks in the short or medium term [thinking that the rally will continue and pick up some nice dividends along the way]. Goldies have been shunned harder than most as the POG has been stagnant ,with a slighty lower bias during the equities rally. Money will move out of no yeild gold stock while this is going on .

2. Many of the West african stocks are undervalued with plenty of upside , but are facing cap raises to fund mine builds or further exploration. So not only are you getting no dividend , but you face imminent dilution also. Many investors will stay away until cap raises and financing have been done [see GRY recently]. Another reason why blue chips will get the investment dollars first.

3. Unrest in Mali and ivory coast , hasn't helped the risk profile of the area. All countries get tarred with the same brush by the market, despite BF being uneffected.

4. Changing of tax regimes in Ghana and Ivory coast hasn't helped the risk profile of the area. All countries get tarred with the same brush by the market, despite BF being uneffected.

5. Many of the co's including AMX, have had to focus less dollars on exploration and more on resource drilling. This is a thankless task that doesn't inspire the market unfortunately. Value investors on the other hand.....

6. Rising operating cost in the area. In just a few years , the costs of some co's have gone from $500/oz to $750/oz or greater. And costs for lab work , drilling and labour for explorers has also increased significantly. It is unclear whether these cost will continue to increase, plateau or decline from here. Market doesn't like uncertainty. Immediate costs for explorers in BF seems to be dropping from what i've heard, as labs and drilling co's are slowing right down and looking for work. AMX have the lab going and have negated some sample prep costs (plus i think they are selling excess capacity to other co's in the area??)

So there are good explanations for the negative sentiment and the market will always overreact to the upside when things are going well and to the downside when things aren't all roses (which is where we are now). Positives have been few and far between in the last 12 months for AMX. Hard to keep the sp afloat when news flow has largely been focused on resource drilling and early stage target definition. But this will change shortly....Funds' like Taraus understand this and are voting with their $$ and others that understand the business.

Sounds all fairly negative right ? But i think all the above is all well and truly factored in ,and then some for good measure.

Remember, its best to buy things of value while they're unloved , not at the top of rallies, so watch this space....The greater equities rally is losing steam by the looks and $$$ could easily cycle back into undervalued stocks soon. POG not doing much , but not dropping either , so there seems to be good support for the metal out there. Europe and USA fiscal mess will return to the spotlight soon enough no doubt.