AGO presentation came out this week along with a signed MOU with Fortescue FMG. Talk at the presentation was that the inferred resource could be announced this month with the completion of the scoping study. AGO also announced that it will be engaging its development partner by next month aswell...and FMG signs and MOU with them last week, seems obvious to me FMG wants in on this co. AGO market is still only 135 mill before options dilution.
Take a look at the summary for Pardoo which is below, this is going to be massive, the company has been drilling for quite some while and they have just said drilling is confirming the initial resource estimate. That is up to 1.5 billion tonnes of ore and a 25 year mine life !! With their other projects on top of this they should be looking at an operating margin as stated in earlier posts of around 400 mill+ in earnings per year.
So you have a co valued at just over 100 mill which is going to make 400 mill a year for 25 years.
Thats why the brokers are saying this one should be worth $3-$4 and my guess is we will get that $3 figure sometime in the next 6 weeks, most probably when FMG and twiggy sign up to be jv partner.
No need to worry about raising cash during this period either, they still have $15 mill in the bank plus own 40% or 22.5 mill shares of shaw river resources
Summary - Magnetite Pardoo •Exploration Target over time 1-1.5bnt at 35-38% Fe •Major infrastructure advantage - gas, power line, port •MOU with FMG •Initial resource estimate July 2007 drilling to date confirms geometry and metallurgy •Scoping Study concluded July 2007 •Conceptual project metrics 8-10mtpa, 25 year mine life •Comparable projects forecast $30/tonne operating margin •Engage partner and confirm development strategy in 07/08
AGO Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
