Far East Capital Newsletter
Aguia to win from food security thematic
9 Mar 2024

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Weekly Commentary

Aguia to win from food security thematic

The gold price is doing everything we could have asked of it, rising to record highs. That is consistent with our view, espoused for several months, that gold is the best commodity to be focusing on. Whilst everything else (except uranium) has been in the doghouse, gold has gone from strength to strength. Even the suggestions that interest rates might not fall as soon as previously believed has not dampened the enthusiasm.

Last week I was in Brazil getting a better handle on Aguia's phosphate and copper projects. (Recall that I was appointed to Aguia's board in September last year). In summary, I have seen how the proposal to develop the valuable phosphate can be sharpened up to significantly improve the outlook and the potential earnings. Read below for a detailed assessment.

Aguia looks like a great turnaround story. After being punished in the market for lack of progress with the Tres Estradas Phosphate Project, the prospects of an effective Plan B should restore the markets faith in the company. Positive cash flow and earnings suddenly look much closer. At the same time the merger with Andean Mining will deliver a high profit margin gold mine at a time when the gold price is hitting record highs. Both projects will require minimal capex and therefore minimum dilution from equity issues. In fact, the gold mine could be capable of financing the phosphate projects. Happy days lie ahead for shareholders. 

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