American Bonanza Gold Corp ABGFF

New post at www.goldsilverdata.com

[Newager23]

American Bonanza Gold is a near-term producer in Arizona. They began producing in 2012, but had to halt production in October 2013 when costs escalated and gold prices dropped. They ran out of cash. Now they need new financing to get back into production. They currently have about $5 million in short-term debt and $8 million in long-term debt. Most of the debt is secured with gold production (about 8,000 oz). 

Their Copperstone mine in Arizona is a 450,000 oz high grade (9 gpt) deposit. The mine life is projected to only be 7 years at 35,000 oz per year, but that does not include inferred resources. This is likely at least a 10 year mine. The economics were very good in the feasibility study with an NPV of $100 million at $1400 gold and an IRR of 170%. Cash costs were supposed to be $500 per oz with all-in costs under $1000 per oz. They did not hit that number during the ramp up. 

With a FD market cap of only $5 million, this stock could soar if they get new financing and gold prices rise. They do have two red flags besides financial problems. The first is their potential for expanding production. They have low reserves and may never reach 50,000 ounces of production. The other is a highly diluted share structure, which will limit the explosiveness in their share price rising. That said, they have significant upside potential. They state in their company presentation that they plan to use their cash flow to grow via acquisitions. In other words, this is a company that has plans to grow. If they can reach their two goals of increasing production at their Copperstone Mine and purchasing another late stage mining project, this company could do really well.