Tailing Tailing Away

Sep 4th, 2009 – Comment

Hi Lou, Your take on ARG please. Kind regards, Bish Hi Bish, Amerigo Resources Ltd. ( ARG TSX) is an interesting company. They own and operate an extraction facility that works the tailing ponds from the the El Teniente mine in Chile which is a huge resource. ARG’s stock suffered as copper and molybdenum prices […]


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amerigo

Hi Lou,

Your take on ARG please.

Kind regards,

Bish

Hi Bish,

Amerigo Resources Ltd. ( ARG TSX) is an interesting company. They own and operate an extraction facility that works the tailing ponds from the the El Teniente mine in Chile which is a huge resource. ARG’s stock suffered as copper and molybdenum prices fell off but there is an interesting pattern forming that could provide an opportunity.

Technical Analysis is a discipline that uses pattern recognition as part of an analysis to help identify opportunities and reduce risk when trading.

arg2

The three year chart is generating a cup and handle pattern which is a bullish formation that suggests a further upside in the shares in ARG.

We also have the benefit of average daily volume on the stock of 483,375 shares a day which means you have liquity and can enter and exit positions without much concern about moving the price.

argThe three month chart shows a nice golden cross and the range bound trading between support at $0.50 and Resistance at $0.57 which is forming the handle of the cup. The MACD is not supporting a breakout at this point so it will have to be monitored.

The factors that will help to move the ARG story forward are of course commodity prices and greater efficiency in operations. The company has put in place an enhanced extraction process and expects production to increase from 5% – 10%.

Amerigo Resources has a long term partnership with National Copper Corp of Chile and the El Teniente Mine has been operating for over 100 years and is expected to continue to produce for another 60 years. Which means that there will be oceans of tailings that need to be treated to harvest copper and molybdenum.

ARG has lots of factors in its favour for a buy. A bullish pattern, decent volume, seasoned management, an improved extraction process, and recovery in metal prices.

Happy Capitalism!

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