Amur Minerals Corporation Jumps On Licence Approval

Amur Minerals Corporation (LSE: AMC) has jumped by as much as a third today after the company said that its mining license, for the Kun-Manie prospect in the far-east of Russia, had been approved by the Russian authorities. 

All that remains is for the license to be signed off by the Russian government, after which Amur’s Kun-Maine project will be able to move from the exploration to production stage.  

Robin Young, CEO of Amur Minerals Corporation, commented:

“We are pleased to inform our shareholders that the license conversion process continues to move forward…all required Russian Government agencies have now approved our application on the strategic asset of Kun-Manie and we now await final signoff by the Prime Minister, Mr. Dmitry Medvedev…”

Amur acquired the Kun-Maine project during 2004 and the license area contains all drilled mineralisation identified during the last ten years of exploration.

Important step

Approval from the Russian authorities is an important step in Amur’s development plan. However, the company still has a long way to go before its Kun-Maine project is fully developed and operational. What’s more, there’s a chance that the license approval could fall at the last hurdle, as relations between Russia and the West deteriorate, following Russia’s intervention in Ukraine. 

Still, Amur’s Kun-Maine nickel sulphide project is one of the largest nickel prospects in the world. The ore within the exploration area has been found to be of high quality and easily extractable, making it one of the best nickel discoveries in the past two decades.

Specifically, figures show that the Kun-Maine mine contains 39.2m tonnes of ore, 80% of which is mineable. Alongside the nickel deposits, there are deposits of platinum and palladium, by-products of the nickel mineralisation.

Based on the company’s extensive reserve statement the Kun-Maine project could yield earnings in excess of $700m. This figure was based on commodity prices at time of writing. Operating costs per tonne of ore mined are expected to average around $42. The current price of nickel, as traded on the London Metal Exchange, is $16,820 per tonne.

So, if Amur manages to get the Kun-Maine mine into production without a hitch, the company and shareholders ought to be richly rewarded.  

A risky play 

If Amur can get the Kun-Maine mine into production, the company’s future is bright.  However, Amur is still in its early stages of development and there’s plenty that could go wrong as the company attempts to bring the Kun-Maine prospect into production.

Moreover, with a market capitalisation of around £50m, Amur is a high-risk, high-reward micro-cap that may be unsuitable for many investors.

But if you think that Amur would fit well into your portfolio, then the safest way is to use a basket approach. Simply put, a basket approach uses a basket of risky high-growth shares and reliable dividend-paying stocks, reducing risk and allowing you to sleep soundly at night.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.