Amara - really bullish claims on Yaoure: buy

Comments

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   MrMoto

   27 February 2016, 06:28

   I like and own this stock too, however in Gold & Bears they did say a placing was required in Q2 of 2016. Is it not better to wait till after that?

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   fineanddandy

   27 February 2016, 06:47

   Tom sorry for offtopic but hoped you may have a look at Highlands HNR and would appreciate to hear your views on it.

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   Duck and Dive

   27 February 2016, 07:30

   Surprised and saddened that – for once – you ignore the clearly imminent fundraising here.

   In their FY results to Dec 2014, Amara assured shareholders that with $2m in the bank plus $22m raised after the year end (21 Jan 2015), they were “fully funded to Q1 2016 including the delivery of a Bankable Feasibility Study”.

   Then on 20 April they announced a $10m “strategic investment” by IFC, following which Amara would be “fully-funded to the end of 2016, allowing time for discussions with banks and other financial institutions for the financing of Yaoure to the production stage”. It was noted that by the end of Q1, cash had dwindled to $17.2m so they were burning it up at the rate of over $2m per month. However, this IFC investment never materialised, as reported in the H1 2015 results.

   Now, here we are eight months later still with no IFC investment and presumably having continued to burn cash at over $2m per month since the end of Q1 2015 – at which rate they will definitely be running on fumes.

   Moreover, they haven’t delivered the BFS. In fact, whatever work they may have done on the original BFS is presumably now in the trashcan as they have changed the mine design. Arguably they need to raise another $20m very quickly to cover the new BFS as well as working capital for the next six months.

   That would presumably be at a discount to the current SP so shareholders could be looking at up to 35% dilution within days.

   In my humble opinion of course.

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   wildrides

   28 February 2016, 03:38

   Duck
   Fair enough ………. but I think they will be looking to an SP raise to at least 15p before placing at a narrow discount . The reserves are world class according to the gold bug “retired drips under pressure” so being “out” chances missing a bid for the whole pie while its still cheap and the gold space has a new found conviction around it ………….. Just sayin ………… but then I do have a position ( ahem)

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   Duck and Dive

   29 February 2016, 01:04

   @WR – good call on the sale which I assume was easier than funding production themselves. But at this bargain price, a lot of Amara shareholders will be crystallising heavy losses if they elect to cash out.

   I know nothing about Perseus or their Edikan mine beyond what’s in today’s RNS but with Edikan apparently not generating cash until 2018, I imagine they will soon run out of working capital themselves.

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   BRITTA

   29 February 2016, 01:10

   Glad neither of you run a fortune telling stall at the local fair.

   The plan for AMA was always to look for a partner (e.g. JV partner) to develop this asset. Someone with loads of cash. Which is what has happened today with the proposed merger of AMA and Perseus, valuing Amara shares at 16.4p and a move to a main market listing.

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   Duck and Dive

   29 February 2016, 02:40

   @Britta – that 16.4p valuation looks a bit rich at the moment with Perseus shares down 11% on the news and a big rise needed for the warrants to have any value. The fall is at least partly due to uncertainty over the $334m funding needed to build the Yaoure mine, according to Canaccord Genuity; so Perseus doesn’t have enough cash, especially as its Edikan mine looks to be a cash gobbler for the foreseeable future.

   The proposed deal is of course a takeover and not a merger nor a JV partnership.

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   wildrides

   29 February 2016, 04:11

   Duck ………. your right about a lot of AIM holders of AMA being out of the money at circa 16p as it has been a lot higher than that in the past as I recall . Seems a bit cheap to me with Gold on the up . Maybe they should wait for another partner to come along .I came in recently , but was hoping for more than 16p longer term to be honest . Cant decide whether to quit on a small gain or stay for the long haul now ……….. but plenty of time to think about it anyways.

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   Duck and Dive

   29 February 2016, 06:54

   @WR – I’m no longer involved (Cluff Gold triple bagged for me so I jumped ship) but if I were a long term holder now I would prefer solo Amara (complete with inevitable financing baggage) to the proposed Perseus/Amara combo (complete with inevitable fundraising down the road to build Yaoure). That’s because I didn’t like my cursory look at the Edikan mine which looks sure to drain Perseus’ resources over the next two years. Yaoure looks a much better investment than Edikan going forward so I would take the money and run, assuming that the offer is voted though.

   Amara’s SP hasn’t exactly jumped for joy yet on the news and I’m guessing that’s partly because the offer is already reduced by the 11% fall in Perseus’ SP overnight…and there is a risk that it could fall further on Yaoure financing concerns, even though Yaoure is a superior asset. Of course, if it falls far enough, it won’t be voted through which imho would be the best long-term result even though Amara would need a fundraising PDQ.

   What would Algy do? The current Amara BoD own less than 1% of the equity so I would take their recommendation with a pinch of salt until we see the detailed reasoning behind it in the shareholder circular. Maybe they have tried and failed to raise working capital on reasonable terms and see this bid as the only way forward.

   But with only 16% of the shareholders so far pledged to supporting the bid, it looks like most of the IIs are against it, or are undecided. In fact, it looks like only Auurum Holdings (15.18%) have so far pledged support so this vote is by no means nailed on.

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    wildrides

    29 February 2016, 08:58

    Looks like Maker is holding the price down this afternoon ………. let someone in cheaper probably .