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Allied Nevada Gold ┼×irket Message Board

  • investora2z investora2z Sep 27, 2013 6:58 AM Flag

    Has remained under pressure

    Allied Nevada has remained under pressure for several months now. Even the recovery in gold prices in August could not do much for the stock. An article on SA some time back had mentioned that Gold prices have been the biggest drag on the stock, but increased production costs, delayed construction of a proposed Hycroft mill, and missed production targets due to problems with its leach pad have only made matters worse. The author also highlighted the liquidity issues and mentioned higher risks if gold prices drop further, grades deteriorate, or if an unexpected cash outlay event occurs. However, the author contends that the stock is at extremely low valuations because company's market cap is below even the current assets it holds on its balances sheet. Further, most of the debt is long term and isn't due until 2019. While all this may not help the immediate cash position of the company, the valuations are low right now. The stock is trading at 60% of its book value, and the company still has a good profit margin on a ttm basis. This is better than many peers. The key to success remains reduction in production costs, and also increase in price of gold. The analysts are not that negative anymore, though the recent correction may have made some a bit wary. There have been investments in smaller companies also. Even smaller companies like Pershing Gold (PGLC) have been able to obtain funding at market price with even its Director Barry Honig making significant investments. This indicates the faith of the top managers in the prospects of the sector. For ANV, the next few quarters will be crucial. If it continues to post positive numbers and show improvement in cash position, then it may emerge as a good long-term bet for those looking to invest in the sector. Movement in prices of gold will be more crucial than ever.