haha yeah, ok then, would make for a good change to have some honest debate.
I've offered my own opinions below and always greatly value sensible contrary opinion - how else would one make the right choices at the right time to make $ in a forward looking marketplace?
- I note that Aurelia has stumbled into a principal shareholding in Sky Metals - should it look towards holdings in other prospective juniors in NSW or further afield.
I doubt that was a stumble - SKY has at least two great assets in terms of people on board - Norm Seckold (well connected entrepeneur) and Rimas Karaitas (Geologist with a recurring habit of finding stuff). could be a very useful holding.
as for other prospective juniors - never say never and these are possibly good times for entry BUT only for those who can afford the risk and don't misinterpret the reward.
I don't know if AMI could feel that confident to see those kind of moves as clever right now unless the assets are very near to or cash positive (in which case they aren't going to be as cheap)
- Should AMI be constructing the drive towards Great Cobar?
Assuming too deep for cost effective surface testing (or undesirable due to town issues) i'd say ABSOLUTELY YES.
but there is possibly some conflict or risk as to where to put the drive. eg on "ore" may not be a great drillout platform (and thus retrospectively may not prove be the best access drive) but there is high likelihood of good free milling gold at decent grade. Imagine it that were already in place as it probably should have been years ago.
Does AMI know whether this is a bulk low grade proposition or a surgical HG proposition?
If they don't know that then putting in infrastructure could be extremely risky.
- Should AMI pursue talking on CSA?
I think there is a very strong case this "could" be a great acquisition assuming that:
-the price is at least half what has been bandied (going by latest glencore R&R figures few years old see csa website)
-the finance is tied only to that asset via a third party (not glencore) so the acquirer not taking on all risk - fair as G'core want out don't they ?
-no usurious offtake agreements with glencore etc
-possibly via trailing (reducing equity for current owner) JV ?
all about the price really. There is probably a case for going after it.
I worry that a board decision on this may not be truly independent, but I guess that depends on any terms also.
- Should AMI look at getting hands on Mallee Bull?
I don't think so. It is (obviously) too far from producing positive cashflow and there would be huge risk in cost of drillout via various means.
having said that PEX altogether possibly represents a better package of options than mallee bull solo.
but who knows what liabilities there are amongst all the JV and capital requirements to progress any of the prospects..?
- Should AMI JV Hillgrove with RVR.
I do not think so. I think it is too far from a likelihood of positive cashflow and the risk/reward/capital requirement profile to get it there is too high.
admittedly I don't know a lot about the actual resource or potential resource there. similarly to MB/PEX are there better assets in the mix via the parent? is the risk/reward profile right even for that scenario (thalanga for eg)?
For some of those smaller options I do not think prices have reached compelling levels just yet.
Unfortunately that probably includes AMI itself.
Finally - it is my view that AMI already have the right ground but are they using it effectively ?
cutting back broader exploration expenditure for an assumption about federation could be a huge mistake if there is something bigger/better nearby. I think it increases the risk longer term should fed become another MB SN etc etc.
Imagine if they found out in 2 years time they should have done the large scale IP and started on the future "real' orebody which could be nearby.
Its easy to tick and flick and please engineers and brokers by highlighting saving money as smart
but what is the cost of deferral of unknown cashflow potential ??
I think it would be far less risky and probably better reward to just stop second guessing themselves with the old short termist views and stick to their plans on the undiscovered assets they will have, but need to locate quickly.
Of course that wont happen and that is why i'm not comfortable. Someone who is meant to know better than me is taking away the time dependent potential upside and replacing it with more certain mediocrity. Great for in-house KPI's but that's about it.
(20min delay)
