Firstly, I think everyone needs to step back and get perspective. 5 years ago this stock was at $1.10. Yes, this is a massive loss of 96%. 2 years ago it was at 45 cents 89% loss. Basically total wipe-outs.
The current ABM at 5 cents is different from the 20 cent and 40 cents ABM. Yet, much is the same...only perspective has changed.
I do think one needs to look at what happened along every step of the way. Bad management and many other things but, I think the real blow was announcing (hasn't stopped yet) the closure of Old Pirate. Any time your a producer and then go to a explorer, that's bad.
If you invested anything over 20 cents your upset and showing a big lost. However, you have to look at the current stock price in relation to the current companies pluses and warts. If you aren't carrying a 75-90% lost, it's a really interesting company going forward. I haven't seen a prefect storm like this in years.
I spent a week back in Nov of 2014 and did a top down review of every gold stock on the ASX. As everyone knows there are 2 kinds of gold stocks.
1. A producer of gold.
2. A explorer of gold.
I discarded the explorers. I was left with about 30+ producers (miners of real gold being taken from the ground. I then set up every variable I could find (I'll keep those secret) and then read everything on the companies I could after. Then I wrote a brief line on the company and then my thoughts. Honestly, at that time...I blind man in a brothel couldn't help but, get lucky as I think that was by chance the bottom of the gold market.
Of the 30+ about 6 stuck out. St.Barbara was one. I'll show you what I wrote..."High Risk high reward. Problem with 1 mine shut down in SA but 1 other in WA and PNG…decent reserves…costs. Could be 15 bagger."
I then saved may work and forgot about the research for months. I was lucky to get in on St.Barbara a couple times but, missed the whole run starting at 14 cents which is when I wrote my report. In the last 3-6 months all of the 6 have exploded in no coincidence with the price of gold going up only a $100-200.
So...with that said, here are my reasons why I believe ABM is going to take off.
I've never seen a stock hit so many bells.
1.
Drilling , Drilling , Drilling.
This rights offering good or bad will at least get drilling happening. How much, we don't know. Will they do current areas or explore virgin areas or a mix of both? One hopes what ever management does, most of the money is spent on drilling. If there is a risk ABM could go under and we lose everything...I want it because they spent all their money looking for gold and ran out of petrol money til the very end. I can live with that.
2.
Gold Price.
I was thinking of making this number 1 but, the current price is decent. What everyone is forgetting is WHEN gold goes up and you don't buy gold stocks unless you think GOLD will go up. Gold went up $200 and look at the gold stocks. Mining rights increase dramatically. Net profit margins double or triple. Money flows into the gold sector and WILL flow into ABM, as it does have real value.
If Trump get into office they'll be a war in 6 months. My #1 reason for liking Gold is the US debt
http://www.usdebtclock.org/ now over 19 trillion. Next week or in 10 years...it will happen. Gold will be the only money.
3.
Gold stock profit inflows. I know this is real, as it's how I found ABM. In the last 6 months many gold stocks (producers) have gone up 10-40% in a day, let alone a month. Investors will take money out of winners and reinvest in a lower value gold stock. When the next upward movement in gold comes in...it will trickle down to ABM.
4.
ABM is so bloody small:
ABM only has a market cap of 20M. Seriously? If a 500M miner stock increases 5% in a day that's 25M. ABM avg. vol is 1M shares or $50,000. It won't take much to move ABM a lot.
5.
ABM the Gold Producer: As of this second ABM is still a producer/miner. It's the smallest producer of them all that I'm aware of. I think and hope the Old Pirate get's a reprieve or is re-started in the next few months. As said above...being a producer of even a some amount is still a miner and gets better investor attention. I think if the decision is made to re-start, the stock has a 5-10 cents day/week. Considering it lost 15+ cents on the news. I also think the new board will know this.
6.
Rights offering:
It's not ideal but, it should hopefully give ABM 20M in total cash. This is equal to the market cap. So you're buying the company for free. I understand there was a RI last year and the assumption of LT investors is this is just another waste of money. However, that money did provide gold finds and gave the company a better idea of where the Gold is on the lands. If there was better management...yes you might have found more gold. Maybe 20 feet away?
7.
Joint Ventures:
With the above drilling program underway and a few new finds you hope to have many more J/V partners. I think you just need 1 good one, who's willing to invest some serious coin. There's just too much land. ABM should become like a Westfields IMO.
8.
Bad Management weren't investors:
I get it...the last 2-3 years they were bad guys. As a new investor I have a fresh view. I'm not really sold on the moral compass of our larger shareholders and who wins but, it looks like the larger shareholders are NOW taking matters into their own hands. Management with skin in the game always do better that ones with-out. They may not like each other but, we all want the stock to go up and letting one of them drive the boat is better than the last 3 years.
9.
Take-over offer?
OK...this could be bad news or good news...depending were your avg buy price is. I believe and hope that any offer starts at 30 cents. I'm too old for the" This offer is 40% above the 3 months avg price crap." Anything less is disrespectful and greedy. I think you'd find one of the bigger miners wouldn't let that much KMs of rights given away and they'd put a solid bid in. However that's just my thinking. It just makes senses.
10.
Merger?
It seems logical to me that with so many gold companies here and around the world that some may wish to do a merger with ABM. I don't think too many other gold companies in the world would come close to land right size. Maybe there are miners out there that have cash and their current mines only have a few years left. Might they want to team up?
11.
ABM News:
If you take the above and add the fact of the low volume, you have a powder cake waiting to go off. Look at Kingsgate and BeaDell. These stock aren't small caps. They had 50+% and 30+% of good news DAYS! I expect the same from ABM in the next 6 months. Don't believe me...look at the news and price movements of ABM the past few years.
12.
Land:
Lots of land rights. Someone said there's 2.5 billion of resevere$. Well, with a 20M market cap, someone's wrong. Getting out there and drilling is the key.
As Field Marshal Gering said of the German military before the Battle of Britain " If we screw this up...we deserve to get our ass kicked!"
The risk/reward is incredible. Only a few things needs to go right and not even that. The price of Gold could carry the stock alone. There's too much going for it. Yes, my buy price is not even close to many investors here. The stock may even go down but, at some point the market, based on news from ABM will be happy to pay 10 cents, 25 cents and 40 cents for the stock.
As I recall it was hovering around 2c to 3c 5yrs ago. In fact I cannot ever recall in my 9 years dealings with ABU that it ever got above 7c pre consolidation.
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