(Recasts; adds analyst comment, historical stock performance,
closing stock price, volume)
By Susan Taylor
TORONTO, June 1 Asanko Gold Inc shares
closed nearly 8 percent lower on Thursday after whipsawing
between gains and losses during the session, as investors
weighed hedge fund Muddy Waters' short bet against the stock
with rebuttals by the company and equity analysts.
The most active equity on the Toronto Stock Exchange, with
more than 19 million shares trading hands, Asanko ended at
C$2.02, modestly recovering from a 20 percent plunge after
"It's just moving all over the place and the volumes are
huge," said Raymond James analyst Chris Thompson, who has a 'top
buy' rating on Asanko. "I think we're going to see a lot more of
Vancouver-based Asanko on Monday will announce a feasibility
study on expansion plans that it says will provide a "complete
rebuttal" to Muddy Waters' claims and allegations.
Muddy Waters argued in a report on Wednesday that Asanko
will run out of cash in 2018, as it services its $165 million
debt, amid problems with its Ghana mining operations.
Several analysts said Asanko has already addressed a key
operations issue, on remediating the damaged wall of its mine
pit, which Muddy Waters said could cost up to $115 million.
Thompson said much of the report's material was already
covered by Toronto hedge fund K2 & Associates, which argued that
Asanko's gold resources were overinflated. Asanko shares have
lost 62 percent of their value since K2 shorted the stock last
Asanko will likely demonstrate the mine's long-term
viability in its June 5 update, alongside a funding gap toward
the end of the expansion program, BMO analyst Andrew Breichmanas
said in a note to clients.
"We had expected that requirements for an additional $75-100
million could be addressed through a combination of refinancing
current facilities, seeking additional capital, or slowing
development plans," he wrote.
Asanko plans to boost output from 230,000-240,000 ounces of
gold this year to 450,000 ounces by 2020.
Canaccord Genuity analyst Rahul Paul, in a note maintaining
his C$5 stock target, said he does not foresee any operational
challenges that could cause material funding shortfalls.
"That said, we acknowledge the negative headlines could
continue to weigh on the stock in light of the increased
volatility resulting from expected ETF rebalancings."
Van Eck Associates, which oversees VanEck Vectors Junior
Gold Miners ETF, holds 41.65 million Asanko shares,
according to Eikon data, with a 20.5 percent stake. The VanEck
ETF is reshuffling its holdings.
(Reporting by Susan Taylor and Solarina Ho; editing by Jim
Finkle and Jonathan Oatis)