Five Reasons Investors Should Take Interest in Amur Minerals

March 31, 2015 - PRLog -- A relatively unknown junior miner from London, Amur Minerals Corporation (AIM: AMC) has rapidly gained traction in recent months following welcome news of the progress of its application for a mining production license in Russia.

For the past decade, the company has been engaged in the exploration of its Kun-Manie project in Russia which has proven to be a very viable production site due to the presence of economic amounts of sulphide nickel and copper. To that end, the company decided that it’s time to push forward with production and has been hard at work in converting its exploration license into a production license.

In November, Russia’s Ministry of Economic Development (MED) has approved the company’s “Detailed Exploration and Production Licence” and has forwarded it to Rosnedra, Russia’s Federal Agency for Subsoil Use, for further approval. Within a matter of weeks, Rosnedra has already forwarded its report to its parent organization, the Ministry of Natural Resources (MNR), for further consideration and ultimate approval of Prime Minister Dmitry Medvedev. During the same period, the company’s stocks have soared to 9p from just 5.75p in mid-November.

Much has been said about the company’s fortuitous endeavors in recent months, but what is it about Amur Minerals that investors should stop and take a closer look at?  Below are five reasons:

Amur Minerals is debt-free. According to the company’s Interim Financial Report published in June last year, Amur possesses a cash reserve of US $1.018 million. Moreover, the company is well-funded through June 2015 by its cash and derivative financial assets. In terms of capital expenditure, the company has “no significant” CAPEX yet as its production is still in the pipeline and has just finished the exploration stage of its Kun-Manie project. The company has also received cash settlements this year via a financing agreement.

Operational costs are projected to be relatively cheap. The company said the total operating cost to produce a ton of concentrate and deliver it to the nearest rail load out facility is approximately $16.63. To generate a pound of nickel, it said, which include all mining, processing, administrative and transportation costs, is $2.51. Discovery costs, meanwhile, average at $US 0.03 per pound of nickel, which includes it among the lowest cost discoverers globally.

The project site itself shows promise. The Kun-Manie project, which is situated along the Chinese border and in Russian federal subject Amur Oblast, possesses high-potential resources. Kun-Manie has a prominent geological feature, the Kun-Manie Massif, which has economic amounts of sulfide nickel, copper, cobalt, platinum, and palladium. Data from the company’s explorations revealed that the site contain a probable ore reserve of 31.5 million tons with mean grades of 0.54 percent nickel and 0.15 percent copper. Once production starts, the company expects to  deliver a total of 38.2 million ton (MT) of ore at a grade of 0.55 percent nickel and 0.15 percent copper containing 210,000 tons of nickel and 59,000 tons of copper to its plant within a ten-year period. The 76-percent metallurgical recovery, meanwhile, will provide a total of 159,000 tons of nickel and 43,000 tons of copper.

The Kun-Manie site is ranked as one of the 20th largest nickel sulfide projects globally. The site made it to the list after a 24.5 percent increase in reserves, Proactive Investors reported in August. The site now has 39.2 million tons of ore reserves, a sharp jump from earlier figures of 31.5 million tons. “It equates to 219,000 tons of nickel and 58,100 tons of copper – a rise of 28 percent and 22.3 percent respectively,” the news outlet said.

Aside from the reserves, the company reported that 80 percent of the project’s measured and indicated resource totaling 20 million tons is “mineable.” The company added that another 70 million tons of inferred resources can also be “upgraded in the future” via infill drilling.

“In light of the fact that there are presently 70 million tons of Inferred Resource not available for inclusion in our current Reserve assessment and that our historical infill drill success rate has been high. We anticipate an opportunity to take advantage of the economy of scale by increasing the annual production rate at Kun-Manie,” Young told Proactive Investors.

Great revenue potential. Amur Minerals’ stocks, as mentioned earlier, have soared significantly over the past few weeks. It may not be much in real-world terms, but it means the company is rapidly expanding and weathering the fact that the precious metals and base metals markets are currently in turmoil.

Also, the company’s upgraded reserve could generate revenue reaching $726 million based on a nickel price of $8.50 per pound, or a little bit over US$1bn with a nickel price of US$9.50 per pound, according to Minesite.com.

“Having nearly a three quarter of a billion dollar EBITDA at today's metal prices is highly encouraging and supports the board's belief that Kun-Manie will ultimately become one of the largest nickel sulphide projects in the world,” chief executive Robin Young was quoted as saying on Minesite.com.

Many investors may be adamant about investing in junior miners and at times, they have a reason to. Most junior miners have a difficult time finding financing for their project and often times, operate in the red. Investor interest in small mining stocks has also waned over the last few years as most of these investors have lost billions of dollars on junior miners, according to the Financial Post. Additionally, some subsectors of the trading sector have boomed over the years, diverting investors’ attention.

But there are some that have proven to be “exception to the rules,” especially those that have very profitable projects and show no sign of slowing down in the short and medium-term. Junior miners engaged in the exploration and production of base metals, for instance, provide a great alternative for investors looking for positive income, especially now that a supply-demand deficit is seen by experts due to the Indonesian ore ban. Junior miners like Amur Minerals Corporation may not have started nickel production yet, but once it does, all eyes would be on it.