There's more to Argentina than gauchos and Peronists. There's metal down there and Argentex Mining Corporation (AGXMF) says it found some. Argentex is drilling at a number of prospective properties in Santa Cruz Province, Argentina. The company's property at Pinguino looks particularly intriguing. The ore grades appear decent, with a 43-101 report estimating fairly low grades of gold but decent grades of silver and indium.
The Pinguino property is smack dab in the middle of an active mining sector but that does not guarantee it can become a viable mine. The nearest road leading to Pico Truncado and a port for export appears to be about 50 km away, based on eyeballing the company's map.
The IFC's equity investment in October 2010 is a huge vote of confidence in the company but the warrants attached to their equity, if ever exercised, will dilute existing shareholders by about 14%. The consolation for investors is that the share price will have to rise by 245% in five years before that C$1.14 exercise price is triggered. Getting the price to the level requires management's commitment to make Pinguino a viable producer. I do not know at this time whether Pinguino has the logistics trifecta - water, power, roads - to make this possible.
Argentex's burn rate of approximately $602K/month means its cash of $1.9M (as of April 30) would have lasted until the end of August 2011. The problem is that they still had liabilities of $1.87M; netting that against the short term investments of $3.2M would have left them them with a reserve of $1.4M. At their present burn rate they were perilously close to running out of cash at the end of last summer. They're obviously still operating as of the present date thanks to a recent bought deal that netted them C$10M in cash at a valuation far higher than what the IFC obtained. That is a very encouraging sign for a junior resource company; if the company was having operating problems or sitting on poor properties, subsequent investors would demand lower prices for investments.
Argentex lives to fight another day. If they use that C$10M wisely, it will last 16 months and they will have the opportunity to show later investors that they can commit capex to logistics infrastructure at Pinguino.
Full disclosure: No position in AGXMF at this time.
The Pinguino property is smack dab in the middle of an active mining sector but that does not guarantee it can become a viable mine. The nearest road leading to Pico Truncado and a port for export appears to be about 50 km away, based on eyeballing the company's map.
The IFC's equity investment in October 2010 is a huge vote of confidence in the company but the warrants attached to their equity, if ever exercised, will dilute existing shareholders by about 14%. The consolation for investors is that the share price will have to rise by 245% in five years before that C$1.14 exercise price is triggered. Getting the price to the level requires management's commitment to make Pinguino a viable producer. I do not know at this time whether Pinguino has the logistics trifecta - water, power, roads - to make this possible.
Argentex's burn rate of approximately $602K/month means its cash of $1.9M (as of April 30) would have lasted until the end of August 2011. The problem is that they still had liabilities of $1.87M; netting that against the short term investments of $3.2M would have left them them with a reserve of $1.4M. At their present burn rate they were perilously close to running out of cash at the end of last summer. They're obviously still operating as of the present date thanks to a recent bought deal that netted them C$10M in cash at a valuation far higher than what the IFC obtained. That is a very encouraging sign for a junior resource company; if the company was having operating problems or sitting on poor properties, subsequent investors would demand lower prices for investments.
Argentex lives to fight another day. If they use that C$10M wisely, it will last 16 months and they will have the opportunity to show later investors that they can commit capex to logistics infrastructure at Pinguino.
Full disclosure: No position in AGXMF at this time.
