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Amara trends with bullion

Shares of Amara Mining have risen and fallen with the price of gold
November 20, 2012

The past few months have shown exactly why investors should be simultaneously excited by and wary of junior gold miners, in particular Amara Mining (AMA).

IC TIP: Buy at 60.5p

As the price of gold rose about 10 per cent from August to early October, or from $1,600 (£1,000) to $1,790 an ounce, shares of Amara rose nearly 80 per cent, or from 50p a share to 90p a share at their peak.

Yet the subsequent sell-off in gold to $1,680 an ounce in early November erased nearly all of Amara's previous gains. Gold prices have since stabilised just above $1,700, alongside Amara's share price at 61p.

Operationally, Amara performed well over the same period with third-quarter results demonstrating lower cash operating costs and higher earnings margins. However, heavy rains in Burkina Fasa have forced the company to lower forecast gold production from the Kalsaka mine to between 53,000 and 57,000 ounces in 2012, down from prior estimates of 60,000 to 70,000 ounces.