seeing through the fog....

Lets have a look at a hypothetical situation for AMX.

Imagine that the lads packed up all the drill rigs , all the samples and never did another day of exploration in Batie west.

What are they left with ?

A 3.1mil/oz deposit with average grade well above 1g/t

But for this scenario , let just say they are going to only mine the 1.3mil oz @ 2.9g/t highgrade component.

Lets say a recovery rate of only 80% , so 1.3mil/oz becomes 1.04mil/oz @ 2.9g/t.

So we are left with production of 150k oz per year for 7 years.

Make the following set of conservative assumptions:

1. recovery rate of only 80% ( as above)
2. total cash costs of $1000/oz including tax, royalties oppex etc...
3. Mine cappex of $300mil
4. Average gold price of $1550/oz
5. Full share dilution of 300mill issued.

So we get the following:

Net annual profit of $82 500 000 per year
Profit over 7yrs = $577 500 000
Minus mine costs of $300mil leave us with $277 500 000 profit over 7 years or around $40mill a year annualised.

This gives us EPS of 13c
Apply the average PE ratio of x8 for gold producers (historically low atm , and could go much higher)and you get a share price of over $1 (which is where a few analyst targets are coming in at )

So the above is basically a likely worst case mining scenario for AMX imo . And that is based on a very conservative set of metrics.

Start adding in a few higher and probably more realistic values into the equation like:
- recovery rates around 90%
- cash costs closer to $800/oz
- gold price above $1700
- longer mine life well beyond 10 yrs
- production ramping up to 200k/yr
- PE ratio around x10

You start to get a picture of a company worth around $4+/share or $1billion + market cap.

Today currently worth around $90mil or 35c /share

Do you see a valuation gap ?

Ever wonder who's buying all those shares you're selling ?

Who would want AMX at 36c / share??

I would, and others that have crunched the numbers would too.

Reckon the co's that got a peak at the data earlier this year are taking another look ?

Moral of the story - AMX could walk away from all other prospects and stick with what they got at konks and still be worth multiples of todays prices , even in a conservative minig context.

See value, know value - Buy when its staring you in the face. Don't follow the crowd out the doors and donk off your holdings.

Cheers.