New York, NY (PRWEB) July 23, 2011
This last week saw a series of positive centralist moves within Peru’s central bank and governmental cabinet signaling a stable and friendly business climate for mining interests active in the region. The moves coincided with a major M&A move by commodities giant Glencore, announcing it is buying a majority (70%) stake in Peru’s Mina Justa copper mine for US$475 million, subject to conditions including the completion of satisfactory due diligence. Peru is the world’s second-largest producer of copper and the move by Glencore demonstrates a level of confidence for investments in mining within Peru after the recent election of President-elect Ollanta Humala (to be sworn in July 28) attracted attention in investment circles as to how matters would be conducted for the benefit of both the people of Peru and the mining industry which has been the leading industry fuelling strong economic growth for several years now (accounting for over 60% of the country’s exports). The positive developments also serve as a signal to investors to take a closer look at junior miners with projects of significance in the region as getting involved with the right junior miner could significantly enhance ones portfolio -- see case study of AM Gold Inc. further below.
It is increasingly clear that the powers that be in Peru understand the importance of establishing a stable environment with pro mining policies in relation to the laffer curve, recognizing the maximum extraction of revenue exists when business is given incentive to take investment risks. Late Sunday July 17, 2011 President-elect Humala announced he will reappoint central bank chief Julio Velarde, 59, who is highly respected by investors on Wall Street. Velarde has stated he accepts the appointment and will remain on as president of the central bank where since taking the position in 2006 he has helped triple international reserves to a record $47 billion and raised lending rates to a two-year high in May to curb inflation, which has been the lowest in the region since 2006. Also on Wednesday July 20, 2011 Peru’s President picked moderates to fill two major Cabinet posts as he tries to reassure investors he will govern as a centrist mindful of the importance of maintaining macroeconomic stability, monetary and fiscal policy, plus the need for an autonomous central bank.
Case Study – AM Gold Inc.
Investors in AM Gold Inc. have an opportunity to gain exposure to a growing gold exploration/mining company in the process of exposing additional serious potential value on two front at an attractive share price. In fact, AM Gold Inc. was recently identified in a metal value content report by mining industry research analyst Dennis Boyko as one of the best intrinsic value opportunities in the mining sector on a comparative market cap per ounce of gold equivalent and average ore value per tonne basis (a copy of that report is available along with an overview of AM Gold Inc. is available at the following URL: http://www.miningmarketwatch.net/amg.htm online).
AM Gold’s Two Fronts:
1) 100% owned Pinaya gold-copper deposit in Peru; AM Gold Inc. was first to the region and now finds itself surrounded by majors. The Pinaya possesses 969,000 ounces gold and 610 million pounds copper in all categories, broken down as follows: 152,000 oz Gold Measured + 464,000 oz Gold Indicated + 353,000 oz Gold Inferred & 57,991,000 lbs Copper Measured + 234,778,000 lbs Copper Indicated + 318,171,000 lbs Copper Inferred and also possesses near term open pit mine potential at Pinaya. The Pinaya gold-copper project possesses very large bulk tonnage potential, is favorably located, and has no NSR.
2) Red Mountain gold project within the Tintina Gold Belt, Yukon; In Q4 2010 AM Gold Inc. released a new NI 43-101 resource estimate on Red Mountain revealing 1,230,000 ounces gold (68 million tonnes grading 0.56 g/t gold inferred at a 0.3 g/t gold cut-off, 1.318677 million ounces gold at a 0.2 cut-off). This resource estimate appears to represent just the very tip of the iceberg at Red Mountain as the interpretation of the geophysics indicates the target size is very large and extends to depth. The project is in the same geological belt as Underworld and several very large multi-million oz gold type bulk tonnage open-pit world class deposits including gold producer Kinross's Fort Knox mine and International Tower's 12M oz discovery. The amount of gold AM Gold is amassing in the Yukon is astounding and the project now has the earmark of a world class gold deposit in the making with the potential to rival biggest area reference Fort Knox -- AM Gold’s target objective from a comparative exploration viewpoint is 10M oz plus as the published resource constitutes ONLY ~2% of that target area. The project contains a large aeromagnetic anomaly and AM Gold Inc. has aggressive plans to add to the estimate by targeting buried intrusive structure in 2011.
The risk-reward characteristics are highly advantageous for investors establishing a long position in AM Gold as the current market cap of AM Gold relative to the inherent value of their properties seem disproportionate. Shares of AM Gold Inc. appear poised for significant upward price movement with only ~54M shares outstanding (~67M fully diluted) and is trading under CDN$0.55. AM Gold’s current in-situ gold resource (Market Cap/Oz Au In-Situ) valuation presents one best investment opportunities in the mining sector. For additional research/insight on AM Gold visit http://miningmarketwatch.net/amg.htm online.