Let's have an objective view on A!s history. The company has been under financed from day one with no contingencies in place for any untoward events. With no feasibility studies done to a bankable level the system was open to having limited verification and examination. Consequently plant delays, inclement weather, accesses being granted etc which are frequent in start up mode became more traumatic than they should have been. Who is to blame? One aspect weighing in heavily is the JW and MH relationship which changed radically around August last year around the time of the last fund raising effort made to the existing shareholders.
On the positive side it should be remembered that Bill Hobba has basically effectively "sold" the processing plant to A1 and instead of payment has shareholding in the company and saddled A! with more debt. The replacement cost for such a plant would be in excess of $25M. Without any security against the assets of the company ( unlike the mining contractor ) he will be very motivated to see the operation become a success.
Other positives to bear in mind is that the worst should now be past. To put it mildy the Beta was a dog with less that 50% gold being produced at a much higher cost than anticipated. Alpha should be better ( if it isn't kiss your investment bye bye!! )confidence is high and verified. Gold price is expected to remain strong for the foreseeable future, exchange rate does take a litt;e off though. The mining contractor appears to be supportive of the operation and unlikely to place the company into administration, that could change if Alpha does not perform.
What does the company have to do? Basically it has to acquire serious funding. If it relies solely on Alpha in the short term then all the eggs are in one basket. Dilution by placement of shares is probaly not too attractive an option as the effect would probaby reduce the current low SP. Money has to be invested in the plant, camp, exploration, retirement of debt and exploration to firm up Reserves and Resources. If the early indications from Alpha are not positive the option to close the mine down and concentrate on exploration and conduct appropriate feasibility studies to determine the future of the company
Add to My Watchlist
What is My Watchlist?
