A1 Minerals presents at Mining 2009 - Santa is comingby Andrew...

A1 Minerals presents at Mining 2009 - Santa is coming
by Andrew McCrea company news image

Mining 2009 revved up a notch today as delegates heard a pitch from Perth based near term gold producer A1 Minerals (ASX: AAM).

John Williams managing director of A1 enthralled investors with, "all things going well, we should be pulling gold by Christmas".

The company is fully funded to production, a rarity indeed.

With the Brightstar Gold Project, seven deposits in the Laverton district of Western Australia, A1 has a current JORC resource of 1.7 million ounces of gold at 2.5 g/t gold, with 150,000 ounces in the reserve category at 4.2 g/t gold, and 350,000 ounces in the probable category.

There is potential to go deeper. As well as get stuck into exploration in other nearby deposits.

Anglogold has the nearby Sunrise Dam and Barrick, the Granny Smith gold operations.

Establishing a 100% owned gravity/CIP treatment plant next door to the resource at the Beta plant site enabled A1 to keep the project costs down. In fact, to date the company has only spent $20 million, with $4 million left in the bank. Not bad for a company that will be in production in a few months.

Previous owners of the Beta plant site got into financial difficulties, providing an opportunity for A1.

The gold treatment plant is rated at 300,000 tonnes per annum, with potential John Williams said, to expand this to 700,000 tonnes per annum in due course.

The Beta orebody is high grade, near surface material with overburden removed.

Williams estimates the plant can produce a handy 30,000 ounces of gold per annum over a four year mine life. With cash operating costs at A$600/ounce, that's a nice margin for A1. That production level is likely to be increased, to around 50,000 ounces per annum in time, once cash generation commences and the market cottons on to the transformation of the company to producer - with resource upside.

Delegates heard there is significant exploration upside at the company's other prospects, with upside in the resource base, and likely production increases to follow.

On a comparison basis, A1 seems to stack up well and appears lightly valued, relative to its listed gold peers on a resource basis and on a comparative value per ounce.

A1 Minerals has ticked all boxes it said it would to investors, developing a multi-million ounce gold resource and into gold production on time, with exploration and production upside.

In fact, there aren't that many gold producers that will get into gold production within the next few months.

You'd expect a person in his shoes to be bullish and Williams backed the presentation up with, "There's going to be a massive re-rating - has to be, when we get into production".

With a market capitalisation of $35 million, share price of 20 cents, cash of $4 million, fully funded into production, there appears good reason for his exhortation.

As he said, "Santa is coming...we will be producing gold by Christmas." Yes John, there may very well be a Santa Claus - afterall.


Source: http://www.proactiveinvestors.com.au/companies/news/3059/a1-minerals-john-williams-tells-delegates-at-mining-2009-company-undervalued-3059.html