I have always been under the understanding that you had to be able to prove your volume and quality of production before you could get a hedging agreement, and invariably you have to agree to a price that is lower than the prevailing market rate (unless someone thinks the price is going to rocket up).
I think the best outcome of the offtake agreement is that AGM doesn't have to market its product to anyone in order to encourage them to buy it, as all immediately forseeable production has been effectively purchased. This leads to lower overheads, as you aren't paying sales bonuses to anyone.
Perhaps its because AGM has no need for a marketing department it is having trouble attracting instos, but I prefer to think they will wait until the risk of further drops in the SP is lower than it is now. There seems to be a lot of uncertainty out there at the moment, and I'm seeing a lot of it over here in the UK.
AGM Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
