Q: Good morning,
WM updated its MRE and positive PEA but the stock does not move up with record gold prices. Eric Sprott still owns about 16% and AEM 10%, Is it a buy at .055 cents?
Thanks, George
WM updated its MRE and positive PEA but the stock does not move up with record gold prices. Eric Sprott still owns about 16% and AEM 10%, Is it a buy at .055 cents?
Thanks, George
5i Research Answer:
Keep in mind it is always difficult for some investors to buy into a small ($55M) company with a 5-cent stock. The stock has created no value in the past 10 years (down 5%). BMO lowered its target price from 75c to 20c in April which didn't help. The feasibility study was OK, but 21% return is not huge, given capital costs of $500M (and likely to end up higher). Expected all-in production costs were good at just over $1,000, and mine life of 16 years is also good. But at the end of the day we have a small company, negative momentum and a need for capital. WM has $21M cash currently, but will need more at some point. We would not see it as an overly attractive buy today.