world annual gold production: an analysts view

I found an article of interest that is particularly relevant to AAM.

http://www.miningmx.com/special_reports/conf_cover/2010/mining-indaba-2010/world-gold-production-to-stabilise.htm

In provide guidance on the near term and medium term annual global production rates. Near term is seen to increase slightly but the annual decline is thought to resume from 2013/14 .

Also of particular interest is the analysts views on the cost of replacing gold reserves (i.e. exploration costs).

Quote:

"He also highlighted the soaring costs of gold exploration work pointing out that the cost of replacing gold resources/reserves had risen from around $10/oz in 1986 to $52/oz in 2008."

We could value AAM on this alone.

1. Reserves: 155000 ounces at $52 USD = $8.06 million USD

Convert to AUD = $8.95 million AUD

2. Resources: 1500000 ounces at $52 USD = $78 million USD

Convert to AUD = $86.67 million AUD

If we discount the resources by 50% (risk that resources are not all converted into reserves) then resources is valued at 43.33 million AUD

1 and 2 = 51.39 million AUD

Shares on issue = 198,000,000

value/ share = $0.26 AUD

This valuation does not consider the assets of company and cash at hand. It also does not value the capacity of the company to actually deliver gold to market at a debt free operational cost.

You make your mind up on AAMs value!

GC