Update: Alamos Gold Receives Approval For The Agi Dagi Project

Aug.21.14 | About: Alamos Gold (AGI)

Summary

Alamos Gold recently received approval for its Agi Dagi project which shows the Turkish government is still mining friendly.

This means that we believe there is a good chance the company's legal issues surrounding the more important Kirazli project will also be settled.

Investors looking to front-run the anticipated fourth quarter decision may want to acquire shares now because we believe the Turkish government will not unduly hold up the Kirazli project.

Alamos Gold (NYSE:AGI) just received Environmental Impact Assessment ("EIA") approval for its Turkish Agi Dagi gold project. The Ministry of the Environment and Urbanization, the Turkish government agency responsible for reviewing the Company's EIA, has signed and issued formal approval in the form of an EIA Positive Decision Certificate for the Agi Dagi gold project. In our previous piece on Alamos Gold, we emphasized that one of the biggest catalysts for this company will be the approval (or rejection) of its Kirazli project as it is a significant pipeline for the company's future gold production growth. While the government did not yet approve Kirazli, the approval of Agi Dagi is a positive step in that direction and does show investors that the Turkish administration still open for new mining projects and committed to the industry - an important thing to note as Prime Minister Tayyip Erdogan recently transition to the presidency.

Additionally, and perhaps more importantly, it shows that the Turkish government does not have any issues politically with Alamos Gold. This is an important thing to remember because often if a company runs afoul of a government in the developing world, all of its projects start to encounter issues with approvals, permits, and other bureaucratic stop signs designed to slow and discourage the company. In this case, we think that the Turkish government has no issues with Alamos as evidenced by this first approval on Agi Dagi - a positive development for its ongoing legal process to get the more significant Kirazli project rolling.

Obviously, this decision doesn't mean that Kirazli will be approved, but in our eyes this development means that the risks for approval outweigh the chances of rejection or continued regulatory paralysis. Investors need to remember that Kirazli is only 25 miles northwest of Agi Dagi, so we're not talking a great distance here or a completely different locality. We think investors looking to front-run the legal settlement of Kirazli (anticipated in the fourth quarter) may take this as a good sign to initiate a position in the company, or increase an existing position, as we expect a positive Kirazli decision will be a significant positive catalyst for the company and the share price.

Disclosure: The author is long AGI.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.