When I last wrote about ATW Venture Corp. they had just acquired their first production asset, The Burnakura Gold Project in Western Australia. The stock was trading in the $1.05 region and solidifying there.
The company has since added another 950,000-ounce gold deposit to their portfolio (JORC compliant), The Gullewa gold mine. The company now has nearly 1.4 million ounces of gold between their two core assets, and are moving towards an October production date at Burnakura.
During the course of their latest acquisition, the company added another $11.5 million to their treasury in a financing that included Sprott Asset Management and Tocqueville Asset Management at a price of $0.95 Cdn.
So (and here comes the interesting part), in the process of adding essentially 1million ounces of gold to their portfolio, increasing their treasury to $18 million, garnering the support of two of the leading investment funds in the sector, releasing excellent drill results and moving closer to production, ATW is trading 20% lower than the financing ($0.75 Cdn as I write this update). Today ATW has a lower market cap than it did with just the Burnakura asset and $11 million fewer dollars in the bank.
In addition, several more industry letter writers have picked up on ATW. The word is getting out.
What can it be? What is the problem with the company? There must be something that I don’t know? I had better call the company.
On talking with management I found that the company was actually firing on all cylinders. Production is still on schedule for Burnakura, a 43-101 is in its final completion stage for the Gullewa project to cement the acquisition, and there have been no major cost over-runs. All in all, the company is in better shape by the day.
Ok, so now I am confused…what is the market discounting? It cannot be management, these guys are the real deal—two ex-Kinross execs, a reputable mine engineer and some pretty smart capital raisers. Besides, Burnakura is already production proven. It only stopped production in April of last year. Production costs were reasonable: $450AUD/Oz.
So, I called management again. This time I decided to ask their opinion as to why their stock is trading at these levels…and that is when I began to figure it out. There is NO good reason as to why ATW is trading here. A fund or two are forced to sell a position and the market capitulates alongside.
Thus, my reason for a special alert on ATW Venture Corp.
It was clear from the first moment that management’s strategy was not to sit on one project, but to acquire several. Burnakura was a great, near-term production acquisition, but 40,000 ounces of annual production was not enough to get noticed by the serious players it the industry.
To this end, on March 13, 2008, less than three months from the closing of Burnakura, ATW announced their second acquisition, The Gullewa Gold Project.
Gullewa has many of the same characteristics of Burnakura: 800 tpd CIL plant, 40-person camp, workshops and office space. This time though, ATW also acquired a 953,000 oz/Au equivalent deposit—one that is still open laterally and at depth. Currently, a 43-101 report is being completed on the property and until it is completed the company cannot release any numbers to the public. The company is expecting the completed report in approximately two weeks.
In line with the aggressive approach the management has followed over the last six months, a 30,000-meter drill program is planned: 15,000 at Burnakura and 15,000 at Gullewa. Shareholders should expect a constant flow of results over the summer.
To refresh your memory, at Burnakura there is a fully permitted mine which includes a 450 tpd CIL plant, workshops, office space, 90-person camp and extensive underground development. Past mining on the property had focused on a series of 15 open pits along 12 km of strike. Only recently had the past owners started to develop the underground potential of this system. And, as I stated then, this property has the potential to host a multi-million ounce deposit. Production is scheduled to begin there in October targeting an initial production rate of 42,000oz Au per annum with plans to expand.
Bottomline –
Yes, it’s one of the ugliest times I can recall in the junior resource market, especially given the price level of most metals themselves. And it’s absolutely painful to watch good holdings slip, slip away. But there comes a time when you size up everything you know and decide this has been way over done. ATW appears to fit that mode.
