What I Do Like About Abcourt Abcourt Mines has not been trading like a junior explorer. They have ambitions to drill. But they don't have the dollars. That is likely to change. Some institutional investment firms believe that gold could reach $3000 US in a couple of years.
https://smallcappower.com/expert-articles/gold-price-3000-dollars/ Gold has been in an upward trend for quite some time now. Recently that trend has been accelerating. But in the past, the market has given little value to Abcourt Mining shares.
This is in spite of its known 43-101 resource reports and the fact that it has a mill it already owns and operates. Indications are that their properties do seem to hold some significant value of high grade gold.
But, gold has little value if it can't be economically extracted from beneath the ground. And properties have little value if the mining company which owns them can't find the means to operate them. They need to be developed. That is what the market understands.
Based upon its past inability to make a consistent financial rate of return, Abcourt Mines has been an underperformer. Because its future prospects were uncertain, the share price has remained in the doldrums.
The market has treated this relatively small scale operation the same as any other company in the business of growing shareholder value. It is the inherent obligation of a publicly traded company to perform well for shareholders or pay the price for their failure.
And mineable properties, owned by failing companies, may also be acquired by some other successful corporate entity, public or private, just as willing, to accept the challenge.
To be successful, a company must grow its revenue stream with the objective of becoming a more profitable operation, on a longer term basis.
In the case of Abcourt Mines, growth in revenue will likely occur due to the increase in the gold price. But revenue growth in the short term need not be immediately translated into profitability to meet that same company obligation to its shareholders.
Profits translated into working capital may be re-invested immediately into the future growth potential of the company. Re-investing profits into the business also has positive implications from a tax perspective.
For Abcourt, the company has made it clear that their focus remains on the Elder mine. Past press releases indicate that management intends to pursue an aggressive drilling campaign to find the new resources that they fundamentally believe to exist. It is necessary to do so to increase the life of their only operational mine.
The Sleeping Giant mine has good potential, but it is on hold, awaiting its future funding. This fact is also reflected in the present day share price.
Investors buying today are looking out at least 6 to 12 months for a much improved revenue stream. The cash on hand may grow with any additional growth in profitability. But it will be up to management how much cash to re-invest in the company.
Spending is not written in stone. Management may decide that now is the time to shift some of their focus to the Sleeping Giant mine. More money may soon be spent on expediting its start up. After all, the mill sits on top of that property.
On the other hand, current transportation costs from the Elder mine are currently pretty cheap!
It is good to have options. But management must decide, where and when, it is best to spend the money!
Shareholders expect management to perform. They are the real owners of the company.
They have the most to lose. But it does add some additional confidence to any prudent investment decision, when management, are also significant shareholder owners. They have that very same stake as you! They care about the company's success, not just their salaries!
Abcourt management does have that significant stake!
All the best! Java