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At 89 tonnes produced in 2012, Ghana is the world's 10th largest gold producer and is second on the continent only to South Africa, which produced 170 tonnes last year. But that could be jeopardized by the country's proposal to impose a windfall tax on mining operations generally and gold producers such as AngloGold Ashanti (NYSE: AU ) and Gold Fields (NYSE: GFI ) specifically, which currently operate at a loss in the west African country. As gold prices have fallen, their projects may become even more uneconomical.
Gold mining in Ghana is expensive because of rising water and electricity rates, which the country blames on unstable natural gas supplies from Nigeria. Anglo's leading but aging Obuasi mine produced 68,000 ounces in the third quarter, but it has all-in sustaining costs of $1,910 per ounce that generated a loss for the miner of $8 million. Gold Fields' Ghanian Damang mine also has higher all-in costs, which were reported at $1,727 per ounce last quarter.
Because of government spending that's running far ahead of receipts, Ghana's budget deficit is approaching 10.2%. It wants to reduce that to 8.5% in 2014, but rather than live within its means, the country wants a quick fix of taxing miners instead. It proposed that solution once before when gold prices were soaring, but failed to find enough support for it, and now that gold has lost a quarter of its value or more this year a tax would seem to be specially counterproductive.
Which one will be AMBS's first partner?
We believe fundamentals are improving at Amarantus Bioscience, both with respect to the development of MANF and LymPro, and on the balance sheet. These improvements are the primary reasons why we believe investors should buy the stock today. Yes, the company still has significant challenges with respect to clinical development of its products and in securing long-term financial flexibility. Keep in mind, this is a $0.04 stock ($24 million market value), so set expectations accordingly! But stock prices tend to follow fundamentals, and right now the fundamentals are pointing to a potential breakout in 2014.
One of the additional "orphan indications" for MANF is in the field of diabetes. Take that to the bank.