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AAU - Antilles Gold

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Definitely not one I would put my money into but each to their own.
did you reference Sherritt International and Trafigura Mining Group as predecessor JV miners ? pretty easy to land on sovereign risk, and in doing so you'd inevitably rule out a much lower AISC producer, which $18m AUD in for $35m AUD p.a. returns from just the smaller project certainly highlights
 
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Low volume but AAU is down almost 6% today? Market depth looking a bit weak with not a lot of buyers lining up.
this is headline reaction on the sell side to the recent cap raise at 6.5c which came with 2 for 1 free options to spohisticated investors only, so also some of those players players may be going a "free options" only posiiton for close to free carry with over 12 months to go on those options.

at 6.8c the recently diluted NPV% comes at as per below with both SOI and SOI+options assumed:

1649047925906.png


also with thepotential $40m AUD settlment around June 2023, there isn't really alot of extra cap raise forseen, let alone the JORC being upgraded with more assays to come in any day now and also the Financial Scoping Study being done at $1650 USD price of gold, at $1950 gold the project NPV goes up by around 50%

1649048320462.png

the numbers certainnly stack up quite well, and currently present as a potential 2x - 4x between now and the November 2022 DFS and mine decision, without giving any credit to the other projects to follow, or the underground stage of the first project open pit mine.

and what happens when a 4th or 5th project gets identified under the Exclusivity Agreement ?
 
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the Silver component and modelled sales revenue under the Financial Scoping Study

1649049978182.png


my calcs / estimates here are that the 70% of US$22/oz = US$106.5M sales revenue, itself equates to 6.9M / oz equivalent of silver in concentrate sales

as per the very interesting video below about silver's demand shortages and the possibility of US$30/oz silver, using the same 70% of value for 6.9M oz equivalent would equate to US$144.9M sales revenue for silver alone, which over a 6 year LoM equates to an additional US$6.4M per year onto the NPV business case too.

so, apart from this video being quite bullish for good industry demand reasons on silver, towards the end it gets really strategy suggesting some of the larger tech players with the need for silver, might find themselves securing the supply / supply chain via mine ownership - quite an interesting slant on things there.





the whole situation is highlighting quite a fair amount on excluded inherent value in the current NPV valuation base case as we know it.
 
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Open Pit phase #1 (project #2 (major Copper resource) not factored into any NPV calcs) % of NPV values in light of "free-carry Options" trades selldown to 6.3c

NPV $218m USD @ PoG $1650 / oz USD*
NPV $308m USD @ PoG $1950 / oz USD*

* Scoping Study February 2022


Current Share Price: 6.3c AUD

Shares on Issue: 354,004,961** (assumed all 50m shares from recent Cap Raise Issued, 5.9m to go to via Resolution vote)**

Current metals Prices:

1649723497232.png


at current Share Price minority interest currently valued at:

currently 15.7% of minority interest of NPV (49% of 218m USD)

currently 11.1% of minority interest of NPV (49% of 308m USD)

(75c AUD/USD conversion rate assumed)
  • further assays to come into JORC resource (April / May)
  • 2nd phase Under Ground 10 year LoM not factored in to any NPV calcs
  • project #2 (major Copper/Gold resource) not factored in to any NPV calcs
  • project #3 (significant Gold/Copper resource) not factored in to any NPV calcs
  • expected $30M USD settlment agains DominecanRepublic Govt nor factored into any NPV calcs
  • Investor Information Roadshow to commence after Easter
 
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just out - Further High Grade drilling Results for Open Pit mine phase
  • DFS on track for Nov 2022
  • Offtake negotiations continuing
  • Final JORC expected around August 2022
  • 720,000 oz Gold
  • 9.57m oz Silver

1649724929612.png
 
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quite a succinct yet constructive update interview with Executive Chairman Brian Johnson who states

  • expecting a 1 million oz resource after all assays are recalculated for the project #1 Open Pit stage
  • beleives management have identified an innovate approach to minimise shareholder dilution
  • DFS and re-calculated Financial Scoping Study on track for November 2022
  • reiterates the Supplier Financing backed by China-Exim Bank, plus traditional project loan
  • Offtake discussions continue, taking them to the next level with one party
  • Upcoming visit to Cuba
  • Project #2 begins exploration drilling in June and should overlap the mine contruction phase of project #1
** not advice / do your own research **

 
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another interesting interview / discussion on gold price predictions, where things are at in the overall inflation cycle and the mention of miners as a physical derivate option to get access to gold

 
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wow - this message here on the silver physical supply mismatch to the highly leveraged paper silver market is quite insightful

** not advice / do your own research **

the echoed sentiment that silver is one of the best long term propositions in the metals space.

so Antilles Gold with it's 9.5m oz resource over the 6 year LoM open pit, does really stand to beneft from the scopingstudy base silver revenue at just $22 USD spot price.

in % terms this seems to further support that silver concetrate sales will outperform the rises in gold spot price, and silver being $105m USD of the revenue stream LoM for just a $218m NPV (or $307m NPV if we use gold spot $1950 USD) could really add significant value to the mine operation

 

greggles

I'll be back!
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Informative video. It seems like precious metals, base metals and lithium/REE are a no brainer at the moment. What he says about green metals (nickel, cobalt, copper, lithium etc.) is true. Government policy will keep demand in this sector high for the foreseeable future. Supply will eventually catch up, but it may take several years and it may struggle to keep pace if demand keeps increasing.

What are the risks with AAU? I haven't been following it, but it does look interesting.
 
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Informative video. It seems like precious metals, base metals and lithium/REE are a no brainer at the moment. What he says about green metals (nickel, cobalt, copper, lithium etc.) is true. Government policy will keep demand in this sector high for the foreseeable future. Supply will eventually catch up, but it may take several years and it may struggle to keep pace if demand keeps increasing.

What are the risks with AAU? I haven't been following it, but it does look interesting.
Hi there greggles

** not adivce / my opinions / dyor of course **

straight off the bat, most people will see the jurisdiction as the biggest risk, because the company has an exclusive Joint Venture with the Cuban Govenrment.

But to that (and to my research), Antilles is only the third intternational welcomed into the mix, the other two being Sherritt International since the 1990s (their JV is called Moa and is Nickel) and also Trafigura Mining Group since 2017 (their JV is called Emincar and is Lead / Zinc). Also ASX:MAY could be considered the fourth with their recent Oil explorationsin Cuba too.

so back to Antilles, they have been brought into the mix stemming from many years of relationship building, and no doubt on the strength of the reputation of the Executive Chairman - Brian Johnson and team to bring projects to fruition. Where it recently got really interesting, is the exclusivity agreement (competitive moat) whereby Antilles are granted the first look at other prospective projects that usually have historical drilling data, but not JORC compliant so Antilles will fund further JORC exploration as confirmation fo the resources and then the projects go forward to be recommended into the official JV arrangement, at which point Antilles gets reimbursed for it's confirmation exploration expenditure.

There are two quite significant additional projects already on this path, beging the JORC exploration in July / Sept respectively.

The maiden project is the Gold / Silver and the initial Scoping study NPV is basedon some low spot prices and a known / expectation thatthe final JORC resources will be revised upwards to an epxetced 1m oz Au equivalent, AAU currently trades at (my opinon) a crazy low just 20% of that already conservative NPV, and yet they're quite a way progressed towards the mine decision in by the end of 2022.

Also because the Executive Chairman himself, owns and has been quitea regular on-market buyer accumulating a current ~ 23% holding (strategic stake with respects to hostile takeover to lowball offers), there is an inherent preference to minimes further dilution - which is one of the bigger upsides here other than spot prices themselves. to that extent, there is a recent youtube interview with Proactive where "innovative financing option to minimes if not eliminate further dilution" was mentioned (scroll prior posts)

So, what are the risks ?

- sanctions may make "typical" finance a somewhat limited pool to shop around at
- offtake agrements (also mentioned in the recent interview) need to be finalised before DFS (Nov) so the finalisation of financing can be sealed - they are apparently progressed to a prefered offtake partner with whom further discussions are progressing (again the prior video)

I don't see any real issued around execution risk be that building the mine and infrastructure, because of thetrack record of the company's management, plus the skin in the game too.

On Jurisdiction risk,well with the two other international miners having operated for multiple years, when you check their Annual Accounts they are booking up healthy proceeds from their respective JVs too, so that doens't bother me either. I actually think jurisdictionis a catalyst for success of the projects because of the importance to the local ecomony of the export dollars it will generate, andhaving the government as your JV partner surely ought to see things on the permits and approvals side be well supported.

So on a pure value perspective, what I beleive is compelling is the returns for minimal capex down (even on the base case undervalued NPV) and that the majority of the finance is intending to be non-dilutive. That coupled with the period between mine decision and first production by all accounts is likely to see the demand story really step up and surely supports a revaluation of resources in the ground during the period pre-mine revenue.

so a 6 year LoM Open Pit with ananticipated 1m Au equivalent resource of which at least 9.5m oz odf that is silver, and then underground stage and feasibility etc etc

We are also expecting the true potential value of the previously described "massive" and "company making" project #2 and to a lesser extent #3 to be communicated via a series of Investor workshops through the country during May / June, it's the signficance of those when taken into consideration that they're planning to be self-funded by the cashflows of the open pit stage / project #1 where the real mutli-bagger potential will all become clearer.

my opinion from being involved following / researching everything now for over 12 months, is this is serious multi-bagger potential

What I am really keen to see / get an update on in the revised Top 20 after the recent cap raise, as it's suggested / rumoured in other forums that some cornerstone investors have joined the register.

what I'll sign off here with, if the preference for minimal / maybe no further dilution plays out, then we could be enroute to serious cash flows and a project pilpeline many times over with fewer than 500m shares on issue, so even at $1 / share it'll still only be a $500m market cap

for completeness / supporting this post

1650758138923.png
 
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pretty pleased to come accross these recent analysis updates on GoldStockData.com - which is run and adminstered by small cap / multi-bagger gold buff, Don Durrett who is considered a bit of an expert in his own right in this niche investment space of spotting them early.

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announced just today, a 3rd significant Major pipeline project has been brought into the scope of the Exclusivity Agreement for confirmaiton exploration and possible elevantion to become a JV project following that.

this project being a cluster of deposits along a 40km zone and within easy access to infrastructure

full announcement and presentation here



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found this article as a bit of background reading on VMS and polymetallic deposits, as per the recent announcement about the 3rd pipeline project

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another succinct update interview with Executive Chairman - Brian Johnson on the pipeline projects and how they fit into the organic growth strategy

 
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a very interesting period coming up for AAU, firstly in the next 4 weeks which sees Investor tours and the AGM, followed by a few months of pipeline project drilling commencements culminating in the DFS and Final Investment Decision for the flagship Open Pit gold/silver project
  • 12th May - Sydney (1 day)
  • 16th May - AGM including vote on reinstating the Employee Incentive Performance Plan (Rights)
  • 18th May - Melbourne (1 day)
  • 23rd May - London, UK (1 week)
  • 30th May - Torronto, Canada (1 week)
  • Aug 2022 - expected final JORC and Scoping Study Update to NPV8 for La Demajagua Open Pit
  • Q3 2022 - commence Drilling of El Pilar deposit (14,000m)
  • Q4 2022 - commence Drilling of New Horizons deposits (14,000m)
  • Q1 2023 - commence Drilling of Golden Hills deposits
  • Nov 2022 - completion of DFS for La Demajagua Open Pit
  • Dec 2022 - final Mine Investment Decision for La Demajagua Open Pit
In particular the next 4 weeks of May and early June should see the potential for a number of new shareholders to come to the register and also for the Employee Incentive Plan to set in place rewards for those that have a challenging and rewardnig period before them in thenext 12 months to 18 months.

source: Investor Update Announcement 3rd May 2022

https://antillesgold.net/news/
 
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AAU share price chart is currently weak/bearish

a TA chart approach on an Explorer / Mine Developer is kind of pointless in these early stages, this is about being undervalued to the NPV of just the near term Open Pit mine (less than 20% currently), and therefor all the other pipeline projects and the strong likliness of the $40m Dominican Republic claim being settled by June 2023 aren't in any way represented in share price.

At this stage for me anyway, it's about understanding all of that value above, and observing all of the on-market buying too by the Executive Chairman and other movers into the Top 20.

TA on the charts wont trigger signals until maybe 9c and a 10c breakthrough, by that time the shares will be up around 40% and the options even more I would expect, but I understand the charts approach, I actually use Amibroker to write heaps of signals to get radar stocks, AAU was one of those about 15 months back and since all the research and projects have panned out, it's now IMO a deep value opportunity with an almost certain likeliness of going to mine decison following the November DFS, which is normally when 50% NPV will be reflected by the share price, which is at least 15c on current shares on issue.

I would be suggesting at least a watchlist stock.
 
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with the couple of (potentially significant) copper / gold and copper / zinc projects now in the pipeline and commencing JORC compliant drilling this calendar year, the leverage to the EV demand story starts to become relevant IMO

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