This was the universal assumption back in April 2024. Per usual, I was criticized for questioning how AUMC could be ordering equipment advancing engineering design/permitting and guiding towards production decisions BEFORE having all of the necessary permits in hand. My investment in Peru suffered from a full year of delays waiting on permits BEFORE the company could break ground. In this case we simply don’t have enough information to know if this is a fatal blow or just another, prolonged delay (permitting matters like this don’t resolve themselves in a few months).
This is clearly a “local” issue which, can be more complicated vs dealing with the federal agencies. In South America, managing community relations often requires a company hiring a dedicated individual/role. Buidling a school or hospital or employing a certain percentage of the locals in the mining operation can become imperatives to a successful mining operation. Communities are run by both official and unofficial “leaders” who are typically motivated by quid pro quos (legal or illegal bribes). The environmentalists can make the most amount of noise but the drivers are rarely “envioronmental.” Yes, a failure at the tailings could theoreticaly create issues down the mountain but there are other ulterior motives. Even in situations where a company has been exhausitive in their efforts in attaining all of their permits (which AUMC clearly was not), the local communities can create problems. If there are holes in the permitting it can be disastorous. The Curacavi crew used ACDC as their background music in their video of them shutting down the operation. They ain’t rolling over on a clerical filing matter.
We don’t know all of the variables but this is not solely related to the camp. Give me a break. This is operational (mining) and environmental (tailings) related. Translation: anything to do with digging and processing. Even if you assume a successful appeal to Sernageomin, this project will not have wings until AUMC is able to get the community on their side. This can take years. I speak from personal experience.
Beyond the obvious, I would highlight two main concerns:
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AUMC entered into debt financing to build the plant. Mining co’s typically shy away from debt b/c of the risk of delays. The debt servicing has or will kick off regardless of the state of production. This is why Maurizio was focused on an equity raise for a year prior to being forced into debt. Time will tell if Maurizio will be to able to convert the interest payments into a PIK or if he’s willing to continue to allocate personal funds to cover the interest payments.
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This is clearly a material event. The company has not commununicated with investors since January and this community related issues didn’t pop up a few weeks ago. As a public company, there is a requirement to inform investors of any material events, typically within 48 hours of them occurring. As of now, MGold’s post serves as the only disclosure.
I can only laugh at the recent posts, calling for $30+ price targets ($2B+ market caps), on a stock that isn’t even investable. The lack of disclosure just further highlights this fact.