News Release / Re-set Button PushedThe re-set button for AGG has effectively been hit. Yes there is dilution and the market reaction is disappointing but this is good news on a number of fronts in my opinion.
1. The fact that F&M are coming on board re-affirms and validates my opinion that Kobada is a hidden gem of an asset. These guys have done some very successful deals in the past and they're not coming on board witha an above market equity financing for a two-bagger. They don't invest unless they think they have a shot at a multi-bagger.
2. Don't know much about the new CEO but the new directors have alot of cred and have been involved in some very successful mining plays. They're well connected and will get an audience in North America and Europe. Maybe in the not too distant future AGG will finally start getting some analyst coverage.
3. Between Cohen, the Bharti group (F&M), the old board/management team and a tight group of long time shareholders I would estimate that 60% - 70% of AGG is very tightly held with a good balance between the 4 key groups. I don't think any one group will be able to do anything predatory now which was always my worry when 1st Pinetree and then Cohen had large stakes
4. AGG now has working capital to get boots on the ground. I've heard rumours today they are going to start drilling Kobada again which if true makes a lot of sense to me. I've been told in the past that they can basically double the current reserve with approx. $1MM USD in drilling. If this is true (and my source should know) you could basically double the NPV of Kobada to approx. $180MM USD (at current POG) for a pittance and this should help with a valuation re-set. A 1MM oz reserve also starts to get the attention of the mid-tier producers, not to mention streaming and royalty financiers. Assuming they doubled the reserve, a Mali discount to NPV of 50% for valuation and assuming 400MM shares fully diluted that would potentially value AGG at $0.30 a share.
5. The $7MM CAD raised won't be enough get Kobada into production but it is enough to drill and continue site work. If we get a decent POG environment (> $1300 POG) and double that reserve and the share price moves north of 20 cents they could potentially raise another $12MM CAD or so from the excercise of warrants and options. That may just be enough to fund the rest of production financing with debt and no further diltution given the extraordinarily low CAPEX requirement.
It will be interesting to hear what the board and new CEO plan in the next few weeks. It would be nice to start generating a steady positive news stream again and re-kindle some hope for the future for us long suffering AGG shareholders. GLTA