Asanko Gold Inc (NYSEMKT: AKG) is off to an overwhelmingly rough day in the market today after Muddy Waters Research waged a sell-side attack on the stock. Of course, this led to fear among investors who sent the stock tumbling downward. From there, the stock was halted with news pending. As is normally the case, our partners at Trade Ideas were the first to alert us to the movement. At the moment (10:51), AKG is halted at $1.29 per share after a loss of $0.58 per share (31.02%) thus far today.
AKG Gets Attacked By Muddy Waters
As mentioned above, Asanko Gold isn’t having the best of days in the market today after a sell-side report was released by Muddy Waters Research. Here are the key points from that report:
“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.”
After falling dramatically, the stock was recently halted with news pending. It is expected that the pending news is going to be a rebuttal to the sell-side report. However, at the moment, no one quite knows what that news will be. All we know is that it’s coming.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will be keeping a close eye on AKG. In particular, we’re interested in the pending news associated with the stock. We’ll continue to follow the story closely and bring the news to you as it breaks!
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