Why is AQG so sluggish when gold is surging?, page-2

AQG has two main issues.

Firstly it operates in a location which is perceived to be a geo political risk.

Secondly, it is facing a decline in easily converted ore. FY15 volumes were around 200k oz. FY16 & 17 are forecast around $170k oz.

Despite being flagged for months and years, the second issue seems to have impacted the share price because short term investors have been scared by the volume decline. The recent fall in price started after preliminary announcements of the FY15 results and FY16 outlook.

In reality, AQG has massive upside potential as it has many positives despite some admitted risks.

It has no borrowings and a cash balance of $US 350 m +.

It has a realistic strategy to convert sulphide ore which is planned for commissioning in late CY 17.

From CY or FY 18 volumes are anticipated to climb dramatically to 300k oz +

It has an outstanding team of seasoned professionals which have been brought on board to commission the new sulphide mining and processing. These are ex Newcrest type people who have worked at Lihir etc.

It has an extremely low cost of production.

There is risk because there is only one productive mine, but this also means that there is concentrated focus.

All in all.....AQG is currently suffering from perceptions of the above. It is not too much of a stretch to see AQG manage these issues and the geo political risk to be overstated. If all comes together....including price of gold....then by late CY17 AQG's price will be spectacular compared to where it sits now.

If all goes well and gold gets back to $US 1900 by CY18....AQG will have a price per share of $ 15+.

Certainly...things could go wrong...what you do depends on your attitude to risk.