Allied Nevada Gold Corp ANV

RE:Should ANV Hedge Production?

[bxju]

I agree with the author who really spent a lot of time on this article. I think they will be acquired outright or in a JV.Current  Market Cap looks to be just under $360mm and he is saying worth $500-600mm. What do others think of his conclusion?

Conclusion

Allied Nevada's only has $13.6 million in cash at the moment, but the company has about $75 million in debt obligations per year over the next 3-4 years that it must fulfill. Current production from the heap leach operation at Hycroft can cover those debt obligations, but that is using a roughly $1,300 price for gold and $21 price for silver.

While Allied Nevada's policy has always been to avoid hedging, the company announced in its latest 10Q that they are now open to the idea. Given the decline in gold and silver, they need to do this or else they won't be able to cover their debt obligations should gold and silver decline even more.

In the end I think the better option is for Allied Nevada to just be acquired. I think the fair value would be around $500-$600 million.