Where we are at today.....
Well gents I must admit that my predictions 6 months ago did not come to fruition, and that Allana has become a much longer position than expected.
We all expected the RE to propulse AAA to $3+ dollars as soon as it came out. Most of us here bashed out on the few that predicted a drop to $1.50 post RE release. But in the end, they were right for the short-medium term. I have learned a few things from this experience so far...obviously how much is a company in the drilling stage actually worth? There are no revenues, no sales, only a mobile drilling platform in the middle of the desert with resources underground. For sure the drilling results are very positive, and necessary should this project come to term and ship out potash to the world. But as it sits today, it only has a kinetic value which can only be around a buck, buck and a half max.
The next steps are the feasability study, the environmental impact, financial assessment, construction plan, actual construction of the mine and finally extraction. Not a single dollar of revenue is expected until that last stage, so what happens to the stock price until then? Dundee targets $3 within 12 months which is nice, but really how different will things be by then? It may be listed on the TSX rather than TSX-V, and have the same SP effect as AAA listing on the OTC which was absolutely nil, or the drill reports which also leave investors totally immuable.
What keeps major investors from ignoring AAA for a minimum of a year because it is purely speculation that drives its price right now? And with the recent stock markets extreme variations, the little stocks take the most beating as investors shift to blue chips heavily and drop penny explorers to the curb.
I am not trying to paint a dark picture; rather understand and accept why the post RE drop and current stagnant SP. If and when all the dominoes fall into place and potash ends up on a truck outbound, I can see a SP rising to $40 which would be in line with available resources, potash price and extraction costs. Question is do I hang on to my holdings and sit on it for a few years at marginal profit, sell half and play elsewhere for a minimum of a year, or sell all and buy again in 2013?
A few banks have signed on which is great, and coats this project with a thin layer of sweet icing. 60 million is a great start, and I'm sure Farhad is working hard to secure another 600+ million required to build this future mine in the not so distant future.
In the end it is an exciting project that has lost some lustre last june, and still represents an excellent 3+ years investment.
I'd love to hear everyone's comments on this.
Jean