RE:RE:Bigger Trend. There's absolutely no need to panic Argonaut Gold still has an extremely strong balance sheet with a working capital position of in excess of $100M, with almost $44M in cash (of which the majority will be needed to make the final payment for the San Agustin project). The inventory level of $58M might seem to be a bit high, but that's actually pretty normal for a heap leach operation. As it takes time between putting the ore on the leach pad and recovering the gold, there continuously is a large amount of 'work in process' on the balance sheet. That's just gold which has been put on the leach pads but hasn't been recovered just yet. And of course, should the gold price drop to less than $1000/oz, Argonaut will have to record an impairment charge on the value of its inventory (which it has just done). Argonaut has reiterated its production guidance of 135,000-145,000 ounces gold, which would mean the production in the final quarter of this year has to be 26,000-36,000 ounces. I'm now aiming for Argonaut to reach the lower end of this guidance and I would be very surprised if the full-year production came in at in excess of 140,000 gold-equivalent ounces.
The strong balance sheet also means this company would be in a good position to pursue some M&A activities with companies with interesting projects but a weaker balance sheet. I think I mentioned this before, but I think a merger of Argonaut Gold and for instance Timmins Gold (NYSEMKT:TGD) might make a lot of sense given the potentially large synergy benefits (both companies have their main activities in Mexico).
GLTA