Archipelago Resources Share Discussion Threads

[cockerell] 19/6/2012 12:18

My guess is it's down to a mixture of things. Lower production than forecast at start (shouldn't matter long term), general market, emerging market risk (limited in my view), under promotion, possible dilution risk if they raise cash for m&a, and what personally puts me off which is the liquidity and majority ownership by rajawali - would they take it private? Aside from that with gold staying high and oil goind down it should be throwing off cash. Thats my 2p worth.

[yorgi] 19/6/2012 11:44

I have to say this amount of fall is beginning to suggest to me that all may not be well and of course these things do have a habit of leaking sometimes. There may of course be no reason for the drop but concerning.

[silverfern] 19/6/2012 09:12

I have emailed the office in Singapore- this share price slippage is now concerning me greatly.

[lfc4ever] 18/6/2012 13:54

this is getting tedious, and hard to fathom.

[boadicea] 04/6/2012 11:05

Probably worth noting the pog-induced surge in some gold stocks beginning late on Friday (e.g. KGI on TSX exchange) and following through to MML an ASX last night.
The main benefit is accruing, understandably, to serious producers among which we should now be counted.
If things (pog etc) hold good, there should logically be some catch-up here on Wednesday.

[boadicea] 26/5/2012 00:42

From the extract of the accounts shown in the preliminary figures issued on 29th March it is difficult to gauge the likely earnings for the current year due to the change in circumstances, i.e. being in production for only part of the year.
If we assume an average gold sale price of $1500 (rather than the $1675 previously achieved) it would appear that earnings of around 21 cents per share could be possible on a forecast 140k oz output.
(Note: The prelim figures quote earnings as 0.022 cents when they clearly mean $, i.e. 2.2 cents.)
Converting to sterling gives a possible 13p/share and a per of about 4 at today's share price

If I am anywhere near correct, it does look cheap (but is not alone in that - just look at OMI) which discounts for plenty of downside risk whereas there is also potential upside such as the expected increase in head grade (lowers cost/oz) and very likely another extension of mine life due to proving of further reserves.

Also, in comparison with the dithery and over-remunerated management at OMI, AR appears to be well managed and rather more likely to deliver on its promises subject to the the normal vagaries of mining predictability.
In current markets I'm not even sure a full year's figures would trigger a deserved re-rating but there is every reason for continued patience here as the company begins to throw off cash. (All imho/dyor.)

[lfc4ever] 25/5/2012 13:18

baffled by share price

[yorgi] 15/5/2012 12:19

That's what I wondered ?

[silverfern] 15/5/2012 11:24

on what basis?

[cheiftown] 15/5/2012 08:40

I agree. I think this has further to fall

[yorgi] 15/5/2012 07:21

Cheiftown,

Not at the moment, but only due to fact I don't have the funds available at the moment. I have been surprised at the fall in the share price and it would have been better to have seen a director buying not selling. AR. have consistently done what they said they would.

[cheiftown] 15/5/2012 07:12

Yorgi

Are you still riding this.

[boadicea] 02/5/2012 17:45

yorgi - All the better for buying then.

[yorgi] 02/5/2012 12:35

AR. still seems unloved when so far it has done all it set out to do without slipping up and is now making a very good profit !

[yorgi] 30/4/2012 12:26

Ambrians latest on AR.


Metals & Mining
30 April 2012
Archipelago Resources (AR)

Price: 60p Target Price: 89p Recommendation: Buy Market Cap: £344m

Post Site Trip Update
It has been 12 months since we last visited Archipelago's flagship project, the Toka Tindung gold mine in Indonesia, and we were impressed by the development that has been made over that time. When we last visited the operation production had only recently commenced, with teething problems, which occur at most gold operations, being encountered (in Archipelago's case there were issues bringing the mill up to speed as the clay-based ore was clogging the ball mill).
These issues have now been resolved, as the plant is currently operating in excess of nameplate capacity. What was really pleasing was that management is not satisfied with just reaching nameplate capacity; it is looking at ways of increasing the company's overall production through potential plant expansions, heap leaching lower-grade ore and M&A activity in the SE Asian region. This promises to be an exciting year for Archipelago.
Production
As previously reported, this was the first full quarter of production for Archipelago, and results were within our expectations. Importantly, the mill continued at its nameplate capacity (it actually slightly exceeded capacity), with recovery rates at over 91% during the quarter. Production was slightly below our forecast for the quarter due to slightly lower grade being processed. We expect the grade to increase throughout the year (2.8 g/t by year end) as the higher-grade satellite pits are mined at a greater rate. We maintain our forecast production guidance for Archipelago for 2012 at 141,000oz Au at a cash cost of US$561/oz.
Future Expansion
The company outlined two strategies to increase production further at the Toka Tindung operation in the near term: through plant expansion and heap leach.
We believe there is scope to increase the plant capacity from the current 1.7Mtpa up to 2.2-2.5Mtpa. This would potentially see production increase up to approximately 200,000oz Au eq pa. The company is also examining the potential to increase production through heap leaching the lower-grade ore. Archipelago highlighted that the nearby North Lanut gold operation is a heap leach to indicate it was possible in the region despite the heavy rainfall in the wet season. The company is currently completing studies on both of these options.
Archipelago is also revising its production guidance, which is due to be completed by the end of the year. We would expect one, if not both, of these options to be included in this guidance.
M&A
The company is continuously reviewing a number of M&A opportunities in the region. We believe the asset will be in the SE Asian region (it is not likely to be in Indonesia as it wants to diversify its country risk) and will be at a development stage, which has the potential to produce at least 100,000oz pa. Whilst the company will not rush into an acquisition for acquisition sake, we believe that it would prefer to make an acquisition sooner rather than later, to not only take advantage of the lag that is present in gold equities in comparison to the gold price, but also to put management's stamp on the company.
Exploration
As we have reported a number of times, the exploration potential at the Toka Tindung Project is exceptional, and should ensure that the company's current reserves and resources will continue to expand for some time into the future. Whilst we believe the current defined resources will continue to expand along strike, there is great potential to expand the resource at depth where only minimal drill has been conducted to date. We believe that it is highly probable that once open-pit mining has ceased the company will continue mining underground, most likely at the satellite pits where the grade appears to be sufficient to support an underground operation.
We also believe there is a high probability of finding additional high-grade satellite deposits near the current known deposits.
We expect further resource and reserve upgrades either later this year or early next year. It is highly likely that the company will increase the reserve at Toka Tindung to approximately 2Moz at the next reserve upgrade.
Changes to Indonesian Mining Laws
As has been widely reported, there are going to be changes to the current mining laws in Indonesia. Whilst this will not be favourable to a large number of current miners, developers and explorers, there will only be minimal changes for Archipelago as it has an existing CoW. Any changes to the CoW require re-negotiation and agreement by both parties (Archipelago and the Indonesian Government). Most importantly, there will be no changes to Archipelago's current ownership structure of the project (95%).
Recommendation
We maintain our BUY recommendation for Archipelago and our target price of 89p.
We believe that share price momentum for 2012 will be driven by:
· 2Q12 production - July 2012
· M&A activity - 2012
· Update mine plan - 2H12
· Update on heap leach potential and plant expansion - 2H12

Ambrian acts as Broker to this company

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[silverfern] 24/4/2012 19:29

quite- they're on course to make £85-90m profit this year Market value £350m. Assets..quite a lot! Management..impressive.

[molatovkid] 24/4/2012 19:23

i was one of those 2 trades....this has some growth potential I feel if they hit these production figures.

[yorgi] 24/4/2012 13:28

Only two trades so far today, surprising to me.

[yorgi] 24/4/2012 12:50

Yes pedantic maybe Silverfern but I do agree undervalued does fit the bill more I would agree :-)

I would say there is a subtle difference.

[silverfern] 24/4/2012 12:47

I don't know if it's oversold, just undervalued, because underbought. Pedantic, possibly, but I think it more a question of PR than P/e here. Englebrecht comes across very well, so maybe he needs to spend mre time in the City

[lucky_punter] 24/4/2012 12:07

---Adds broker comments and background---
Archipelago Resources (LON:AR.) said today it is on track to produce between 135,000 -145,000 ounces of gold this year from its Toka Tindung mine in Indonesia.

[yorgi] 24/4/2012 12:03

Agreed way oversold at this level.

[lfc4ever] 24/4/2012 11:55

they are looking at something well north of US$100m pre-tax profit next year.
the share price is way undervalued.