Came Here From Rye PatchThe acquisition of Rye Patch brought me here, and I have mixed feelings about the combination of the two companies. Florida Canyon and many of the nearby properties are very nice undervalued assets. Within the old Rye Patch, Florida Canyon had just been brought into production after a number of delays and missteps due in part to poor management. The other Rye Patch properties were to be developed from the cash flow now being generated from Florida Canyon, with the end result being a 200,000 oz producer in Nevada.
Now Florida Canyon’s cash flow will attempt to finance Ana Paula, leaving the other Nevada properties for the future. Florida Canyon should be very successful, but I doubt that it will produce more than 120,000 oz per year, and the AISC has been too high thus far. My guess is that it will take higher gold prices to self- fund Ana Paula. I consider a more likely outcome that ALO gets taken out within the next 12 months unless the share price rises north of $2.50 at $1300 gold.