Axmin Gold, AXM.v C$.045
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Posted: Thursday Jan 10 7:32:13AM 2013
Sold Axmin today. Yesterday there was a PR at the close. CEO says mine will be delayed at least a year. I have waited for the financing to close for a year. Apparently the rebel activity is spooking the banks and Axmin still needed equity financing for their share of the mine costs. That possibility appears dim right now. So I took a big loss and took what I could get. My success with Mart caused me to ignore the cardinal rule of junior resource investing. Location and country risk are very high on the list and in this case trumped the drilled out deposit with tons of upside potential in CAF.
I will take what remains and try to buy something else with a higher probability of operating success.
It's not like there aren't a thousand bargains out there in the resource sectors.
Posted: Thursday Dec 15 5:28:06PM 2011
I have followed this co. for years, owning it in the past. I agree that there is great potential. I guess my only concern would be the 600+ million shares outstanding. I wonder if the share structure will have o be "cleaned up" somewhat before any advancement of their property towards production.
Have a good evening.
Posted: Wednesday Dec 14 1:55:38PM 2011
Axmin is a junior gold explorer. They have been developing the Passendro gold deposit in the Central African Republic. The deposit has been drilled and contains about 4 million oz of gold in an open pit deposit(1.4 million in reserves and 3.1 in resources).
The company has had a feasibility study done and is trying to arrange financing for ~$300million in construction costs. They have announced a $100 million debt facility with Bank of South Africa but that is still in the DD stage and not formalized yet. Once that is done(early to mid 2012) Axmin can raise the remainder thru equity financing or JV.
Axmin has a current market cap of C$28million dollars.
The Feasibility Study used $1100 gold and $80 oil and estimated NPV of $340million after production of 163K oz/yr for 8.3 years.
Why the big difference?
1. Central African Republic has no operating gold mines. The country is poor. Political risk is high, not so much due to negative government policies but rather to unknown strength and stability of the current government.
2. There is no infrastructure. Axmin will have to build their own, including roads and power plant.
3. Current instability and troubles in the European and world banking community are hampering financing efforts for miners in general. This untested country represents additional challenges to more familiar mining areas.
4. Previous financing to get the project to this stage have been very dilutive. 628million issued, 791million FD.
What are the positives?
1. This is a large gold deposit suitable to open pit mining. Grades are low but comparable to many successful operating mines in West Africa. 4 million oz is a good sized deposit but the company feels this is just the beginning. They feel there is a large mineral belt running thru the country that should yield several economic mines.
2. the government is a substantial holder of Axmin shares and warrants, giving them a vested interest in completing the financing and mining. They hold 20 million shares and 26million warrants.
3. Feasibility economics look good with gold substantially higher than 1100/oz used in study. Cash cost estimated at $484/oz.
I think this is worth the risk. Very hard to find multi million oz gold deposits. This one appears to be economic and buildable. The mine is located in a remote region with no previous population. After the company established a camp, a village of natives has grown nearby.
The key is financing. The company just announced they sold off a non core project to give them cash to payoff the final installment to CAF government and provide cash for G&A while the financing negotiations continue.