well done, page-132

"I still don't get it, ABU has amazing portfolio, the company keep releasing great news throughout 2011 - now, why did ABU share price fell gradually since then? Even last November Hartleys give a 12 months price target of 12cps, what happen now? Global market sentiment? The company looks way undervalued, can someone enlighten me."

Yosa,

Almost every gold producer, medium size or very large (even Newcrest mining) fell by around 50% as did ABU.
Most explorers fell by more with some falling 80-90%.
So the fall for ABU was not stock specific.

The main reason for the fall was not because of the correction in the POG or because the bull market is over for gold. That's all rubbish.
The reason for the large miners falling is that both capital costs and cash costs rose very significantly.
Many large producers were priced for growth but either had to put growth plans on hold, or the much higher costs meant they were no longer worth what the market was pricing in last year. These cost escalations came at a time when the price of gold was correcting so that just compounded the problem.
The fall in the majors fed through to drag the juniors down as well. Many of these now face much higher capital costs than originally expected. That will lead to delays, higher funding costs mean less net profit after repaying capital and more dilution to get into production. Therefore generally speaking, this group suffered more than the producers. This is why gold stocks fell 50-90% while the price of gold is currently only down 16% from its peak.

This has created an excellent opportunity for us and I have been happy to take full advantage.
ABU's very high grades from surface ensure very low cash costs and the very high grades mean a very small plant can be used to produce relatively large amounts of gold from a relatively small amount of ore being processed.
The high recovery rates from gravity processing gives a very simple plant and together with only the need for a small plant, our capital costs will be extremely low.

These very low costs mean that the ABU share price does not deserve the same harsh treatment and that is why I bought.
The market will value this correctly I think sooner rather than later.
The quality of this project meant this stock only fell in line with the producers and not as much as many other explorers.
The quality stocks bounce earlier and more strongly than the others. Usually producers first but we are making up good ground as well.

I like this quote from David Narcus, CEO and CIO of Evermore Global Advisors;

“History has proven over and over and over that taking advantage of opportunities in the midst of a crisis can create significant value."

Sounds like ABU over the last few months.
We just need the gonads to take advantage, and I have big gonads :)