*Note that Aureus Mining should be purchased in London (LON: AUE) given that there is little liquidity in the U.S. OTC Market.
Aureus Mining (OTC:ARSMF) just announced an updated resource estimate for its Ndablama Project, which is near its New Liberty Project in Liberia. The company now estimates that it has ~900,000 oz. of gold at ~1.65 gpt.
(Source: Aureus Mining's December 1st Press Release)
These figures assume a cutoff grade of 0.5 gpt. They are also roughly twice as large as the previous estimate, and the resource has reached a point where it looks like it could be a small second mine for the company.
Aureus Mining is currently in the process of constructing its flagship New Liberty Project, and as I argued in July the market has discounted the stock given the company's location - Liberia. Liberia is not only in Africa, which is a relatively high risk place to mine to begin with, but it was also one of the hardest hit regions by the Ebola virus which had been spooking markets. This, along with weak gold prices sent shares lower in spite of the fact that they were undervalued and remain so.
After collapsing in October, the stock seems to have found strong support, and it is trending upwards even as the gold price has been weak. Even as I write this the gold price is down 3% but the stock is up 2.5% on the back of the resource estimate. Not only are investors realizing the value of this stock, but it could be that investors in the better junior miners are sensing that we are nearing a bottom in the gold market.
Ultimately, this will be a cash-flowing stock next year with the potential to develop a second mine, and it is a potential takeover target for mid-tier companies focused in West Africa.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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.