Shares in mining company Amur Minerals (LSE: AMC) have risen by as much as 18% today following further positive news flow regarding the company’s future. Today’s announcement that the company has made a total payment of around £300,000 to cover the assignment of production rights for all recoverable metals at its Kun-Manie project in Russia has caused investor sentiment to again jump, thereby taking Amur Minerals’ share price gains to an incredible 176% since the turn of the year.
Looking ahead, there could be more gains to come, since the company is now due to commence the next phase of its operations, with it due to evaluate the project by infill drilling and the initiation of the metallurgical test work. Clearly, this could generate news flow that causes the company’s share price to move further upwards, although it must be stated that as with any exploration stock, there are likely to be disappointing news items as well as the potential for positive ones over the medium to long term. As such, it is likely that Amur Minerals’ share price will remain volatile which, of course, is not a major concern for long-term investors in the stock.
However, a major positive for investors in the company is the fact that the market does not seem to be concerned about the fact that Amur Minerals will be operating in Russia. For a number of other mining and oil sector companies, this has caused investor sentiment to decline, with tension between Russia and the West causing considerable uncertainty regarding the opportunities for growth and the sustainability of operations in the country.
And, while further sanctions against Russia cannot be ruled out and there could be a further strain on the country’s relationship with Europe and the US, investors in Amur Minerals appear to be very comfortable with the status quo. This means that, while there is a risk of challenges arising from the fact that it operates in Russia, it the prospects for them are unlikely to hold back Amur Minerals’ share price to a significant extent.
Of course, today’s news comes just after Amur Minerals received approval for its project plan. It had until the end of the year to get this approved and can now start re-drilling so as to further build up the resource. In fact, Amur Minerals is planning on drilling a total of 6km over the next few months which it is hoped will turn 20m tonnes of inferred resources into being indicated in the short run, with the results of the programme set to aid the company in deciding on the specific process design for the project.
Clearly, there is still a long way to go before Amur Minerals becomes a fully-fledged producer but, with a 20-year licence for an excellent prospect, it seems to have sufficient time to do so. And, while its share price performance may not be particularly smooth, as is often the case for small exploration stocks, it could prove to be a sound long-term investment.
