Post by
asforecasts on Nov 05, 2019 11:14am
No debt, possible to develop Ana Paula
Just bought some ALO on the basis of stabilization of Florida Canyon and using debt to develop Ana Paula at a cost of $140mil per the 2017 technical. Company already owns much of the process equipment and can refurbish and transport for $4mil. Ore is all sulphide of varying composition so a challenge to process but base case of 85% recovery is realistic. Company has already sunk most of its initial underground shaft in 2018, even though the economics favor exploiting open pit first. $60mil operating cash flow after a 2 year build. This company would be crazy not to build it themselves. A nagging thought: Ana Paula has been explored since 1970. How come nobody has developed it? I won't let it keep me up at night.
I think that mgnt has to get Florida Canyon profitable first and then can go looking for finance after they build up a decent cash position. A clean balance sheet opens up possibilities. This is a 5 year hold for me, assuming I see some path to Ana Paula in the next year.
Cheers!