Friday, November 10, 2006

Breakout!


This is it. The day I've been awaiting for...three years. I can take some comfort in Peter Lynch's observation that some of his biggest winners didn't do anything for 2-3 years before they did their thing. Perhaps Amarillo will fit that mold. After taking an initial position in early 2004, I averaged down a few times, lowering my cost basis. And then I waited...

Amarillo Gold is a junior exploration company with properties in Brazil. They are part of the Ironbark group of companies, which includes Aquiline Resources and a few others. Their main property has a historical resources of 700K ounces of gold, but further work has demonstrated that there is more than that. Recently the company staked additional ground adjacent to Mara Rosa based on their current work. They are also in the process of acquiring another property, Lavras del Sul, from Rio Tinto. Rio was looking for a 5-10MM ounce deposit. When they determined that was not likely to pan out at Lavras, they decided to let it go. They left a string attached though, that will allow them a substantial back-in option if in fact, it turns out to be a multi-million ounce deposit. Initial work on the property indicates a potential for 3MM ounces.

As far as I know, there aren't any imminent major announcements, but something lit the fuse today and buyers piled on, driving the stock up 20% on over 1/2 million shares (which is a lot, for Amarillo). This took the stock up through the .50 level which was roughly the last point of resistance and the rim level of a cup and handle formation that is traced out over the preceding three years. Could be good for a move to .80, short term. Depending on whatever is behind the action today, could be even more juice. We will have to see...

1 comment:

Titan_of_Metals said...

0.80 looks like a good target for the short term, like you said.

Nice job.

- titan