Hi Rubbersoul!
I took a hit on my AGI this week, since I was buying more a bit too soon and paid way too much as a result. I went through the management discussion and decided that the bad news had been rolled forward and baked into those numbers.
For example, AGI averaged less than 8000 ounces of production per month in Q3 but they are on track for 10,000 ounces in November, and presumably in December. One would expect that many of the cost parameters are constant and therefore the costs per ounce will decrease as the ounces produced increases. So I think next quarter we get higher production and lower costs.
Also, the realized price for gold was in the $670 range in Q3. I would expect we will significantly improve on that number in Q4, which is nearly half over.
The company also reported that they have completed a lot of the surface stripping of waste rock at the pit this quarter. That effectively means they have already booked production costs pre-paid for Q4. It means the Q3 numbers look bad, but the Q4 numbers will be much stronger.
So in a nutshell, my buying this week was expensive, but I do not think my extra shares will be underwater for too long. These big, low grade mines are complex to get running properly, but the resources are real, AGI is still booking a marginal profit, and the company should eventually get a handle on that learning curve to wring better operating efficiency out. AGI under $6 is a steal, IMVHO...
cheers!
COACH247 |
