We are short AKG because we believe it is highly likely to end up a Zero.
- On the back of flawed geology, AKG made investments in Nkran, its satellite pits, and Esaase that we believe will never be recovered.
- Nkran is already experiencing a serious collapse of its west wall that we believe is a sign of AKG’s desperation. We estimate AKG needs to spend $75 – $115 million soon to keep mining Nkran, or the mine will “pinch out”. Spending the money likely means AKG will run out of liquidity in 2018; not spending the money leaves the company without the cash flow to develop its largest deposit, Esaase.
- AKG’s “satellite deposits” are unlikely to yield significant cash flow, due to likely flawed geology. In a December 2016 upgrade to their resources, AKG used a record gold price – $2,000/Oz – to boost their estimated value. This is only one of the serious flaws we see.
- There are indicia that some of AKG’s resources models have been “smeared”, which would cause estimates of their ore contents to be inflated.
- Management is outwardly assured and confident, but their behavior reeks of desperation and short-termism.
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