American Bonanza Gold Corp ABGFF

Not so bad...

[rotten2core]

In a perfect world, avoiding this dillution would be better.  But hey, the stock is trading at .05 and they are damn close to starting to make money.  Finance markets are tight and the interest on these loans is through the roof.  SUG and BZA management are very tight.  They are friends and in some cases, the very same people.  There is a definite synergy here.  SUG needs to drill something and their sitting on a few Million $, BZA needs cash and they have a little land to spare.  Good deal for both sides.
Now as far as the proposed 200M units of .05 shares and 100M, .08 warrants.  The shares will net them $10M (interest free)+ SUGs $1M for the debs(12% interest not bad).  So now they have $11M in the coffers.  No chance of going ***** up while being oh so close to being in the money; They make their friends alot of money on the conversion of the debs, the market hates the idea driving the SP down further in the short term giving these guys the perfect opportunity to add more or issue ultra cheap options to themselves.  Their thinking Win/Win/Win!!

Now as far as shareholders go, I think there is A LOT of money to be made getting in at these prices.  So they'll have what 575M shares on issue.  Once they get up to design capacity (2013), they'll be funding with free cashflow.  But, they NEED to make sure they get there.  they need equipment, pay loans, expand, etc.  The worst thing that could happen is they run out of money.  I'm estimating annual net earnings to be in the $17M-$19M range.  So lets throw a 10X multpiple on that, and your looking at a ~$180M Market Cap.  Were currently sitting at what? $10.5M.  $180M/575M shares = .31/share.  A 7 bagger from here!  Not bad!  Plus they'll funding further exploration and aquisitions with free cashflow and should need to go back to the market.  Cheer up fellas.  If you're way underwater, average down!  Good days ahead.

[rotten2core]

It's also worth noting that BZA is currently trading at less than 20% of its NPV ($51M, after tax, discounted at 5%, using extremely conservative gold price of $962/oz).  I mean 20%??!!??!! Using $1400/oz gold, BZA is trading at less than 10% its NPV! This is a gold producer we're talking about!  Not only is it a gold producer, but due to Copperstone's high grade, and

[KentWilkens]

Just curious, but if production costs are so low why do they have to keep borrowing money and doing private placements while they are in productions? Looking for a good intelligent answer on this.

[rotten2core]

Kent, their break even gold sales comes at 1300oz/month which they are pretty much at now. They have been working all this time to get to this point. As production continues to increase beyond 1300 oz/month, this will be profit and will create cash flow. Production ramp up happens incrementally over time. Take a look at the investor presentation on their website for production guidance and

[bizwiz]

While I like your comments , despite your honest stance I still can't beleive that they are at break-even at 1300 considering the grades they were previosly advertising. It looks ROTTEN ! Furthermore , past reports when the price of gold was much lower makes it clear in that regard... For me it looks liek something fishy is in the works. It sounds a little like what someone had uncovered with

[rotten2core]

Bizwiz, I am only conveying what I have read in the reports and their 43-101 compliant Feasibility Study. The numbers all add up to me.  Like I said, its a lot of hard work transitioning into a producer, with many bumps along the way.  They are using a conservative gold sale price, and accounting for capital costs, operating costs including ramp up to design capacity, gold loan payback

[Leafs007]

If total cost is $624/oz and BZA manages to produce 1400 oz/month and gold remains at $1350/oz: 1 month = (1350-624) x 1400 = 1.01 mil / month 12 month = $12.2 Mil annually When total share goes to 575 M o/s: EPS = 0.02/sh  

[rotten2core]

Leafs007, If they can achieve their base case production for 2013, they will produce ~14,000oz in 2013. But looking at 2014 forward, production ramps up to avergae 46,000oz/yr for the first 3 years.  Then, production decreases to average 32,000 oz/yr for the last 3.3 years.  This is due to the depletion of the resource.  Bear in mind, any additional proven resources will extend mine

[tree73]

Upon further review you must be really rottento the core rotten2thecore.....just joking but that is spot on analysis and in line with my thinking. The really value in the next major upleg is not going to the big guys but the companies that are early in production or just entering production while having an assessment of lower gold values. This going forward will do very fine. We now have an

[TheCardinal]

@bizwiz :  if that's your conclusion about what's happening with the Company, then your clear course of action is to sell every share you own, right here, right now........ and never look back ? Isn't it ?  Or are you just some inveterate masochist and this is today's outlet ?