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Monday, January 16, 2012 1:37:37 PM
Sunday, 15 January 2012
Junior Gold Stock Up On Speculation of Massive Increase to Resource Estimate
Vancouver, B.C. - Argus Metals Corp (TSXV:AML) traded up 29% on heavy volume on Friday as investors speculated about a news leak that suggests a massive upgrade to their resource base of 117,000 ounces of gold at their 100% owned Hyland, Yukon property. The company is expecting to get the results by the end of January with an NI 43-101 compliant resource estimate based on the successful 2011 drill program.
In addition to the speculation that has taken place on the Yukon gold deposit, the company also expects to receive the license and title to the Kaituma uranium and gold exploration project in Guyana, one of the few uranium exploration targets left in the world that has not yet been drilled, within the next few weeks. As quoted from AML's website, "The project represents a world class target with a low exploration cost, solid infrastructure and a rapid timeline to a conceptual resource definition and development" so once exploration is set to begin, it won't take long before the site turns into a revenue-generating mine.
Given the recent positive developments for the company, it can be understood why investors bought heavily into AML on Friday. The company has 57.9M shares outstanding with 2M warrants with a strike price of 15 cents and 13M warrants with a strike price of 25 cents. Given that the warrants are out of the money, AML has a market capitalization of only $5.2M at 9 cents. A healthy price increase from this level as warranted by the exciting developments currently in motion for the company would provide the necessary cash injection to get the projects to an operating stage through the exercise of the warrants.
With a preliminary estimate of 117,000 ounces of gold, the market cap of $5.2M would price the company at approximately $44.50 per ounce, already below the low end of the industry standard "in situ" gold value of $50 to $150 per ounce. This valuation does not take into consideration the great possibility of a significant resource increase from the Yukon property nor does it place any value on the Guyanese holding or the five other property claims the company has.
In comparison, The Gold Report's pick from earlier this week, PC Gold, was a buy recommendation at 36 cents based on their $19 per inferred ounce of gold market cap. Since then the stock rose to 48 cents, reaching as high as 56 cents (close to The Gold Report's short term target of 60 cents only two days after the announcement) and currently has a $25.40 "in situ" value, showing that companies trading lower than this $50 threshold that have positive developments on their properties are due for a great increase in stock price.
Reviewing AML's chart, we see that the company recently broke through the 50-day MA with the 200-Day MA of 12 cents within reach. Reviewing the weekly chart shows a strong possibility of the company returning to the level seen in August 2011 of around 17 cents in the near term. Depending on much of an increase is seen on the NI 43-101 for the Hyland property, the 52 week high of 36 cents - achieved about a year ago after the last spike - is possible as a longer time frame target.
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