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GCM.TO Gran Colombia Gold looks to me to be the most undervalued gold producer when compared to any other gold producer, if you take into account their production growth profile. Colombia as a country has turned the corner and is now a business friendly jurisdiction with free trade agreements with both Canada and U.S. GCM has a $130 million market cap and production growth profile to over 600,000 oz per year in a few years time from their 2 main projects. They are currently producing around 100,000 oz per year and will be closing in the next week or so on their $100 million gold linked debt financing that will allow them to raise production to 200,000 oz per year at their Sergovia mine by end of 2014. This is one of Frank Holmes favorite juniors and his funds own 49 million shares or 12% of Gran Colombia. There has also been considerable insider buying over the past year and is still ongoing. Also Sprott (or their clients) have bought 70 million or 44% of the outstanding warrants. Once their first mine Sergovia is producing at 200,000 oz per year, the cash flow from it should go a long way towards funding the development of their second mine which is expected to be an open pit mine producing over 400,000 oz per year over more than 20 years. GCM is IMO by far the most undervalued junior producer out there with 2 world class projects in Colombia. Colombia at one time in the past use to be the one of the largest producers of gold in the world but was out of the picture the last 40 years or so due to internal strife, which now appears to have pretty much wound down. It has 2 out of the largest 20 undeveloped gold deposits worldwide, one of which is owned by Anglogold and the other is owned by Gran Colombia.
Carlos Andres of Frontier Research report recommends Gran Colombia in the link below:
http://www.theaureport.com/pub/na/14044
TGR: What are some other junior explorers that you believe have been unfairly punished by events beyond their control, or that are unusually undervalued due to perceived risk?
CA: Gran Colombia stands out in this regard. It sits in the junior ranks in the sense that it is continuing exploration on two very promising mining areas in Colombia. In reality, it has several legacy operating gold mines with large underlying deposits that are currently under development and hence is masquerading as a junior. The company's Marmato deposit has over 12 Moz gold and 75 Moz silver and yet it's valuation on an enterprise value per ounce level is around US$20 or 1.3% of the gold price. That's unbelievably low.
Marmato is in the heart of a historic mining district in the center of Colombia dating back to the centuries when the Spanish controlled it. The company is developing an open-pit mine, scheduled to begin production in 2015.
In the meantime, Gran Colombia is deriving cash flow from the existing underground mine, which produces about 30 Koz/year. The company has another well-known historic holding formerly known as the Frontino gold mine but recently renamed Segovia. Three or four underground mines are currently producing over 100 Koz/year. Segovia has 1.4 Moz so far, but it's going to get a lot bigger. So the company has cash flow from legacy operations, a world-class deposit at Marmato, lots of silver, a solid deposit at Segovia, with tremendous exploration upside.
TGR: The deposits tend to be high-grade underground vein deposits in Colombia, but they're difficult to exploit en masse. There are these smaller high-grade operations, but nothing at scale. That's what Gran Colombia is trying to do with the pit at Marmato. Do you think that it will prove successful?
CA: I do. Gran Colombia has a very experienced management team that has developed large gold deposits before. Although Marmato is operating a legacy underground mine, the massive deposit is being developed with a large open-pit bulk-mining design in mind. The drill results look good and I expect the company to be able to rationalize the pit dynamics and the grade.
TGR: These older operations that Gran Colombia is running have been grandfathered into the new mining act there. However, there have been very promising, much larger deposits that have not been green-lighted. What makes you think that this one will be?
CA: Because the management team has already accomplished what no other mining company would even attempt. Both Frontino (now Segovia) and Marmato had some significant legacy issues that had previously caused miners to shun them like the plague. Frontino had a $200M legacy pension problem from a bankruptcy in the '70s. Marmato was previously fragmented into dozens of different ownership interests. In addition, the historic town of Marmato, which sat right in the middle of the deposit, had been partially destroyed by a landslide, creating a humanitarian dilemma.
All of these issues have been completely resolved by Gran Colombia management. The company was able to raise the $200M in capital markets to resolve the pension issue in exchange for a 100% unfettered interest in Frontino. It consolidated all of the individual land holdings at Marmato so that it now has 100% ownership of the entire site. Gran Colombia has also aided the government in rebuilding the city of Marmato further down the hillside, which has been completed. All of this was considered impossible.
Atypically, the management team hails from the region and is well connected. Executive Co-Chairmen Serafino Iacono and Miguel de la Campa are from Venezuela and were responsible for finding and defining one of the larger deposits in South America. Their success with Bolivar Gold and later Pacific Rubiales established a tremendous reputation for them both and so they are able to open doors that few others can. In addition, the President and Chief Executive Maria Consuela Araujo is the former Minister of Foreign Relations and former Minister of Culture in Colombia. That gives you some idea of the pedigree of management.
St. Augustine Gold & Copper is earning 60% stake in a 20 million oz gold equivalent open pit mineable deposit. Strip ratio is 0.8 which is apparently lower than the typical 2.5:
http://sagcmining.com/
A year ago when Barrick bought a copper producer, I think it was Equinox, their share price got clobbered. With copper already at 20% of Barrick's revenues I seriously doubt they will be buying any more copper producers.
PennyStockInvestor, that article you linked mentions African Barrick not Barrick Gold. African barrick is 75% owned by Barrick and owns no copper. Also the following excerpt from the same article sounds like it is more good news for the acquirer than for their targets, in that Barrick is looking for 1/2 off price sale:
>>Chief Executive Greg Hawkins, speaking at the Reuters Mining and Metals Summit on Tuesday, said the miner had looked at some 25 projects across Africa and signed at least 10 confidentiality agreements in the last 18 months - and was finally seeing the prospects for a deal improve.
"When we were looking a year ago, we thought the valuations were too steep... Now most of (the assets) we looked at a year ago are about half the price from where they were," Hawkins said at Reuters' office in London.
"That's brought a lot more things that we like much more into range... I think that landscape has improved dramatically in the last year with the pricing change."<<
>Gold Bar is forecasted to produce 50,000 ounces <
Is that all we can expect from Gold Bar ? 50k oz per year hardly seems worth even talking about for a company with a market cap of $1.3 billion. It is not going to move the needle on the stock price.
AXM.V/AXMID.PK: The IFC's backing of the Passendro mine project significantly decreases the likelyhood that equity financing will be done at distressed prices, whether done out of necessity or as a favor to the main shareholder AOG. Per the miningweekly article, apparently the whole $50 million in financing from the IFC is under the loan category:
http://www.miningweekly.com/article/ifc-to-arrange-50m-axmin-debt-deal-2012-03-09
So with a total of $235 million in loan commitments that would leave only $40 million in equity financing needed to get to the $275 million total financing requirement stated in the feasibility study.
Page 18 of the below slide presentation also states that the IFC typically takes between 5-15% equity position. Also elsewhere it is stated that their role is to promote private industry in developing countries and that they serve in an "honest broker" capacity, which to me means they will not be attempting to raise equity at these distressed levels, since that would be a form of theft from existing shareholders:
http://www.slideshare.net/Kfuelster/international-finance-corporation-ifc-investing-in-the-mining-sector-in-emerging-markets
If we were to assume that Axmin is given a pre-money valuation of $100 million ( or $140 million valuation post the $40 million equity raise) and the IFC takes a 10% equity position, then this would mean that the IFC would be taking up $14 million of the $40 million equity tranche. This would leave only $26 million of equity that needs to be raised from other sources. I am sure this wouldn't be much of a problem for endeavor financial to arrange, once the debt financing is already in place and with a prestigious institution like the IFC backing this project. And for good measure some of those 5 year warrants that Endeavor is famous for can also been thrown into the equity mix.
Also those foaming out of the mouth fears over the 20 for 1 share consolidation and the dilution from the equity financing component are now starting to look like a tempest in a teapot. Maybe all those potential investors waiting on the sidelines out of fear may need to reconsider whether to get in now on the cheap or later at much higher prices ...
DMM.TO use to be my largest holding until I got fed up with the whole Ecuador situation and sold it all and replaced it with axmin (axm.v). While I have kept tabs on DMM's progress from time to time I have not seen anything yet to make me regret my switch into Axmin. Ecuador has the world's worst mining policies and tax regime bar none, with their 3 year+ mining moratorium and 70% windfall tax rate, while axmin's deal with the Central African Republic is one of the most favorable anywhere in the world:
-5 year tax holiday with 30% tax rate after the 5 years are up.
-Government holds no carried interest, but instead owns 20 million shares and 30 million warrants @ 30 cents strike price, so the government's interests are aligned with that of shareholders.
For those looking to do more DD on Axmin:
http://www.siliconinvestor.com/subject.aspx?subjectid=58114
I agree with Otto Rock of IncaKola blog that Ecuador to be avoided:
http://incakolanews.blogspot.com/
Ecuador: Groundhog Day
Let’s keep this short, yes? This came out of Reuters (13) on Friday January 20th, late last week (author’s translation):
Quito (Reuters) – ECUADOR expects to sign the definitive contracts for the mining of multimillion dollar gold and copper projects with the mining companies Ecuacorriente and Kinross during January and February, the Minister for Non-Renewable Natural Resources Wilson Pastor told Reuters on Friday.
The minister said that the Andean nation would receive investment of U$2.8Bn from these two projects and said that the country would sign the agreement with Ecuacorriente at the end of January and with Kinross in February.
Meanwhile we quote from IKN134, dated November 27th 2011:
Vice Minister of Mines Fernando Auquilla said that the contracts between The State and both Kinross (Fruta del Norte) and Ecuacorriente (Mirador) (translated by your author), “..are practically negotiated, we’re in the phase of construction of the definitive document”.
The same IKN134 quoted President Rafael Correa: “In the next few days they will be signed. We are negotiating these contracts very hard..we are also negotiating the forward payment of royalties and with those we will do a series of projects.”
And Federico Auquilla again: “The mining companies have accepted the conditions of the Ecuadorian State and we are completely satisfied.”
All that was followed in early December by Wilson Pastor saying that Kinross would officially sign by the end of that month. Oh well.
As for your author’s opinion on developments and the viability of ECUADOR as an investment destination, those haven’t changed one single iota from the opinions expressed in IKN134 and a couple of times after that piece, too. Feel free to check back but they can be summed up with one word, AVOID. They also differ from a silly piece out of Canaccord last week that tried its very hardest to pump the country to its readership after being invited to look at the excellent rocks Salazar Resources (SRL.v) has to offer in the country (and they are excellent, just a pity they’re in Ecuador). People, the fact is that strong and viable projects are selling at considerable discounts in many places, in countries with good mining acceptance and traditions too (xxxxxxxxxxxxxxxxxxxxxxxx just one prime example that springs to mind) so there’s no reason at all to tack on extra risk by exposing yourself to ECUADOR. Avoid, avoid and avoid once again, because that’s what all exploration companies that aren’t already up to their necks in ECUADOR are going to do in the years ahead, signatures with Ecuacorriente and Kinross forthcoming or not. Even if these elusive deals are signed, the situation in ECUADOR remains far worse than the brokerages pumping their stories to the ignorant would have you believe.
axm.v with a market cap of $66 million is one with near term production of 200,000 oz gold per year that is very cheap. It is selling for a valuation that is under 1x 2014 cash flow when their 200,000 oz per year low cost open pit Passendro gold mine will have been producing for the full year. One important thing to understand about axmin is that the 3.5 million oz found so far in Passendro are only a small part of what is anticipated to be found thru out the 140 kilometer gold belt that is 100% controlled by Axmin. This gold belt is on trend with the vast world class gold fields that extends from the Lake Victoria gold fields of Tanzania thru the Northeastern DRC and on into Central African Republic where Passendro is located. My expectation is that the enormous cash flows generated by Passendro will be used to further develop the Bambari gold belt controlled by Axmin so that ultimately production can be raised to 500,000 oz plus per annum.
If interested, you can start your DD here:
http://www.siliconinvestor.com/subject.aspx?subjectid=58114
http://www.axmininc.com/site/OperationsProjectsnbsp/ResourcesReserve.aspx
http://www.mineweb.com/mineweb/view/mineweb/en/page66?oid=131959&sn=Detail&pid=34
Axmin (TSX-V: AXM) looks to have taken a big step toward financing its Passendro gold project in the Central African Republic.
Axmin said it had signed a mandate letter with the Standard Bank of South Africa (SBSA), the terms of which have the South African bank taking the lead role in an effort "to arrange and underwrite" a $100 million loan, backed by the Export Credit Insurance Corporation of South Africa (ECIC), to in part finance Axmin's Passendro gold project.
Furthermore, Axmin said, SBSA would try to find additional sources of debt financing up to $230 million.
In return for arranging a $100 million loan Axmin said it would issue SBSA 25 million share purchase warrants exercisable at C$0.18.
If it all came through the funding nearly cover the anticipated $246 million capital cost of building Axmin's Passendro project, where in a feasibility study out earlier this year it outlined an eight-year gold mine that would produce produce 163,000 ounces gold a year from indicated resources of 32 million tonnes @ 2 g/t gold. The mine, Axmin estimated, would generate a $340 million net present value after tax and at a five percent discount, putting payback on the project, based on $1,100 gold and $80 per barrel oil, at just over two years.
While the financing won't be a slam dunk until, or if, Axmin passes SBSA and ECIC's due diligence and credit approval, the support of a major bank in arranging this scale of debt for the junior explorer, which has a market capitalization of $70 million, clearly gives Axmin a major boost in confidence in its quest to develop Passendro. It also validates statements made by Axmin's President and CEO, George Roach, who in January said he believed the company was close to arranging debt financing.
Roach also stated Axmin was working with Endeavour Financial, another financial institution, to source additional loan capital, saying the junior is "in advanced discussions with additional debt facility arrangers for the balance of the funds."
In an after-hours request for comment, officials at SBSA could not be reached for comment.
That was me selling my shares. Trading is illiquid and when a large bid came up, I sold what I could as fast as possible. That joint venture where they sold 49% stake in their flagship toukhmanuk mine for $5 million investment seemed excessively dilutive to me. This means that GBGD's share from the 15,000 oz of production will now only be 7500 oz. The first massive dilution a few months ago where they exchanged outstanding debt for shares made tremendous sense and the market also liked it a lot. But the latest dilution of shareholders stake in their prime asset seems sort of pathetic to me, and the market reaction to the news seemed lukewarm. May be I am misreading the situation and someone can shed more light on the deal ?
The $500K payment just received and the further $1 million due end of this year should help their financial position, so I think I will hold on to my remaining shares for now.
http://www.axmininc.com/site/Portals/0/CARLunchOct5Handout.pdf
AXMIN – Significantly Undervalued
Why invest in AXMIN…
M&I oz / EV is US$20/oz peer average US$248
CAR risk profile overstated
Mining Licence secured covering 350 sq km
Exploration permit granted ring fences the Mining Licence which includes an additional 240km2
Competitive fiscal terms offset infrastructure challenges
Komahun proving to be next in project pipeline
Experienced management & team…
Management has extensive project development experience in west and central Africa
Passendro mining team in place for rapid development
Backing of large shareholders
Excellent JV Partnership negotiations minimize expenditure
Any further unloading of their west african properties has stopped. They still have the Komahun project in Sierra Leone where a scoping study showed they could produce at 50,000 oz per year. But I am confident that this can be increased to 100,000 oz per year in time. So this project alone may justify 1/3rd of Axmin's current $80 million market cap.
I agree with you about the CAR, but I am of the opinion that the actual risk is less than is currently perceived. In addition I feel I am being adequately compensated to take on this risk. Where else can you find a near term gold producer selling for less than 1x 2013 cash flow ?
While LVCA is without doubt an interesting spec, axm.v (axmin inc.) is the most undervalued soon to be intermediate gold producer and here is why:
-great management with established track records. The biggest shareholder with 30% are the same people behind Addax Petroleum which a year or two ago got sold to the Chinese for over $6 billion. Also with the recent merger with aim listed Afnat, they picked up the new CEO George Roach who has the African experience and abilities to take the company to the next level as an intermediate gold producer. Roach was one of founders of UraMin which got sold to Areva for $2.5 billion.
-asset base that can take them to 200,000 oz per year gold production with their first gold mine within 2 years (BFS already completed, just needs updating) and then on to 500 – 600,000 oz per year level in the subsequent years with their second and third gold mines.
-absurdly low market cap of only C$82 million. Assuming 1.2 billion shares outstanding post mine financing, the $200 million per year cash flow from their first mine at Passendro works out to 16 cents per share.They can reinvest this cash flow to bring their second and third goldmines online with very little further share dilution, thus increasing cash flow per share to around 40+ cents per share 5-6 years out. Share price is now only 12 cents.
Below is more info for your DD:
George Roach President and Chief Executive Officer
Mr.Roach, the former President and CEO of AfNat, has been involved in the mineral exploration industry in sub-Saharan Africa for many years. He has extensive experience in securing and establishing mineral exploration tenure and operations throughout Africa namely, Central African Republic, South Africa, Chad, Mali, Namibia, Zambia and Tanzania to a name a few.
Mr. Roach was a founding Director and Managing Director Africa for UraMin Inc., a uranium resource company with operations in Namibia, South Africa and Central African Republic. UraMin was sold for US$2.5 billion in 2007 to Areva. Mr. Roach maintains interests in G&B African Resources Ltd, a mineral exploration company and in African agricultural projects, including a sugar estate in CAR under development and spice trading and milling operations in South Africa.
major shareholder Jean-Claude Gandur of AOG:
http://www.forbes.com/forbes/2007/1015/099.html
Trouble Is My Business
Christopher Helman 10.15.07, 12:00 AM ET
Billionaire Jean-Claude Gandur has braved war and corruption to build an oil empire on the cheap.
Recently a huge explosion shook northern Iraq. Not the usual kind. This blazing fire and billowing black smoke came from a test drill at TaqTaq, an oil field 30 miles southwest of Irbil in the Kurdish region. With no pipeline or storage tanks in place, Addax Petroleum had little choice but to burn off the oil rather than let it soak into the rocky ground.Opening the well for a few minutes revealed a true gusher: a flow rate of37,500 barrels per day. Considering the results from three other wells already completed, engineers figure that Taq Taq holds more than 2.7 billion barrels of high-quality crude and could produce as muchas200,000 bpd for ten years.
One small problem: Iraq's parliament still hasn't signed off on a federal oil law, putting the entire $500milliongamble in jeopardy. Jean-Claude Gandur, Addax's chief executive,is pushing ahead anyway. "It is absolutely unbelievable the quality of oilfields untapped in Iraq," he says. Gandur would prefer to have alawand an export license in place. But in a pinch he figures he can sell oil--up to 20,000 barrels a day--to a refinery he'll help build for the Kurds, or hawk it straight out of the ground. "Peace has no value to our assets."
Gandur knows his way around trouble. Most of his business is in restive Nigeria, where Addax produces 100,000bpd--overshadowed by only Shell, ExxonMobil (nyse: XOM - news - people ),Chevron (nyse:CVX - news - people ), Total and Agip. The company is also pursuing prospects in Cameroon and Gabon. Wherever it ventures,Addax does very well. Over the last 12 months it netted $300 million on revenue of $2.5 billion. Run out of Geneva, Switzerland, Addax is listed on the Toronto and London exchanges; Gandur's 24% stake is worth $1.5billion. His m.o.has long been buying assets on the cheap--and making nice with strongmen. "Jean-Claude is able to open the doors and negotiate on his feet," says Martin Molyneaux, an analyst at FirstEnergy (nyse: FE- news- people ) Capital, a Canadian investment bank in Calgary, Alta.and an Addax underwriter. "He is very good at interacting with people."People close to Sani Abacha, the late dictator of Nigeria, for example.Gandur has also been dubbed Commander of the National Order in Benin, has a diplomatic passport from Senegal,and for ten years was the honorary consul in Geneva for the civil-war-riven Republic of Congo.
The son of a Swiss pediatrician,Gandur, now 58, grew up in Alexandria, Egypt,where he learned Arabic, fell in love with history and began a life long devotion to Egyptian antiquities. He studied law and political science at the University of Lausanne. In 1976 he went to work at the Philipp Brothers trading house in Zug, Switzerland: "the best school in the world," he says. There he became a successor to infamous trader Marc Rich, who had left the company in 1973. Early on Gandur gravitated to francophone Africa and became manager of Philbros' African oil trading operations. After stints at rival trading houses, in 1987 he and three partners set up their own west African trading operation, Addax & Oryx Group, named after two members of the African antelope family.
Soon AOG began acquiring physical assets to backstop trading positions, picking up oil storage tanks, petroleum depots, liquefied petroleum gas and oilfields. The company even branched out into gold mines (Gandur is chairman of Toronto-listed Axmin).
http://www.miningweekly.com/article/car-ministers-in-push-to-reassure-investors-on-axmin-gold-project-2010-10-05
CAR officials in show of support for Axmin gold project
By: Liezel Hill 5th October 2010
TORONTO(miningweekly.com) – Senior government officials from the Central African Republic (CAR) met mining analysts and institutional investors inToronto on Tuesday, in an effort to help bolster the financialcommunity's view of junior Axmin and its Passendro gold project in theCAR.
Axmin received a 25-year mining licence for Passendro in August this year, and now has all the permits and approvals it needs to build the mine.
Under the terms of the licence, Axmin will pay the CAR government $11-million in three tranches and the government has received 26-million Axmin shares and 20-million warrants, instead of the10% free-carried interest in the project to which it was entitled.
The government has also maintained all the fiscal terms agreed to in a mining convention, or contract, signed with Axmin for the Passendro project in 2006.
These include a five-year tax holiday,exemption from duties and VAT on capital equipment, consumables andmining contract for the duration of the mine development and five years thereafter. The government royalty on the project was also held at 2,25%,as specified in the convention.
Speaking through a translator on Tuesday, CAR Minister for Mines lieutenant colonel Sylvain Ndoutingai said that the mining conventions between the government and private mining companies are structured to provide security for the foreign investors.
Governments can change, the mining law could be modified by the Parliament, but companies are protected by stability clauses in their conventions, he said.
He pointed to the fact that Axmin's licence includes terms agreed to in its 2006 mining convention, despite the establishment of a new national mining code in2009, he said.
Ndoutingai said that the Passendro project – which will be the first modern goldmine in the CAR - has the full support of the government.
He actually indicated that he intends to put pressure on Axmin to get the project moving as quickly as possible, and said that the State has no intention of selling the shares it received in the company.
The CAR has gold, diamonds, uranium and iron-ore,and the government wants to attract investors to explore for those and other metals and minerals, Ndoutingai said.
PRODUCTION IN TWO YEARS?
Axmin is busy updating and optimising its April 2008 bankable feasibility study, and plans to have the document ready by the end of the first quarter of 2011, although it will aim for an earlier date, CEO George Roach said in an interview on Tuesday. The company has revived the process towards arranging financing for the mine, and this week issued aninformation memorandum to a number of banks, he said.
Axmin is looking in particular at South African export credit opportunities, as well as entities like the World Bank's Multilateral Investment Guarantee Agency. “And the reason for that is that South Africa's Senet is leading the BFS, so a lot of equipment is going to come out of South Africa,” Roach said. “So if we can get export finance dealt with there - and the negotiations are already in progress - it's going to make everything so much easier.”
There is quite a lot of interest in the project, CFO Alex Dann said.“But the banks and the equity markets want to see the final project economics and the technical information,”he said.
In March 2009Axmin looked at a smaller project scenario,given the difficult financing environment at the time, but the company is reasonably certain that it will be building a three-million ton a year operation, as envisaged in its 2008 study, Roach said on Tuesday.
Annual gold production was forecast at 203 000 oz/y in the feasibility study.
If the company completes its updated study in the first quarter of2011, it would likely only start drawing down finance in the third quarter, Roach said.
The firm has agreed with the government to aim for first production within 24 months, although it can apply fore exemptions to the deadline.
“We'd like to be in production in two years, and that's what the State would like to see,” he said. “But it's tight.”
Shares in TSX Venture Exchange-listed Axmin dipped 8% on Tuesday, to 11,5 Canadian cents a share.
Edited by: Liezel Hill
Fact sheet:
http://www.axmininc.com/site/Investorsnbsp/FactSheet.aspx
http://clients.westminster-digital.co.uk/minesite/microsite/events/31/index.aspx
fast forward 2 clips
http://www.theaureport.com/cs/user/print/co/479?x-t=pub.view&id={id
"I’ve really been keen on AXMIN. It’s got probably three million ounces in the Central African Republic. AXMIN is extremely well-placed, I think. It has just over 200 million shares and trades about 80 cents. But given the number of ounces it’s got in the solid resource category in Central African Republic, as well as they’ve got unfolding resources in both Mali and Sierra Leone, it’s a fascinating African play."(11/29/07)
- JOHN EMBRY, SPROTT ASSET MANAGEMENT
"Going a little further afield, there's AXMIN (AXM.TSX.V). It just got annihilated. They have four million ounces in the Central African Republic. It was at $1.40 and is now down to $.15. You’re buying the people because they discovered the Geita Mine, now in production in Tanzania, which is one of the more successful mines in Africa. This is the best exploration team in Africa. They’ve got this project in the Central African Republic with a proven reserve and, then another one in Ghana and a third in the Sierra Leone, which they’re moving forward.The stock has been blasted, but they’ve got Audax Petroleum, one of the big Swiss oil companies, which owns 50% of this company, to back stop to any extent required. There's no financing risk; they have assets;and the best mine-finding team in Africa. You get all this for $30million."
- The Gold Report Interview with John Embry, Sprott Asset Management (09/12/08)
axm.v (axmin inc.) is the most undervalued soon to be intermediate gold producer and here is why:
-great management with established track records. The biggest shareholder with 30% are the same people behind Addax Petroleum which a year or two ago got sold to the Chinese for over $6 billion. Also with the recent merger with aim listed Afnat, they picked up the new CEO George Roach who has the African experience and abilities to take the company to the next level as an intermediate gold producer. Roach was one of founders of UraMin which got sold to Areva for $2.5 billion.
-asset base that can take them to 200,000 oz per year gold production with their first gold mine within 2 years (BFS already completed, just needs updating) and then on to 500 – 600,000 oz per year level in the subsequent years with their second and third gold mines.
-absurdly low market cap of only C$82 million. Assuming 1.2 billion shares outstanding post mine financing, the $200 million per year cash flow from their first mine at Passendro works out to 16 cents per share.They can reinvest this cash flow to bring their second and third goldmines online with very little further share dilution, thus increasing cash flow per share to around 40+ cents per share 5-6 years out. Share price is now only 12 cents.
Below is more info for your DD:
George Roach President and Chief Executive Officer
Mr.Roach, the former President and CEO of AfNat, has been involved in the mineral exploration industry in sub-Saharan Africa for many years. He has extensive experience in securing and establishing mineral exploration tenure and operations throughout Africa namely, Central African Republic, South Africa, Chad, Mali, Namibia, Zambia and Tanzania to a name a few.
Mr. Roach was a founding Director and Managing Director Africa for UraMin Inc., a uranium resource company with operations in Namibia, South Africa and Central African Republic. UraMin was sold for US$2.5 billion in 2007 to Areva. Mr. Roach maintains interests in G&B African Resources Ltd, a mineral exploration company and in African agricultural projects, including a sugar estate in CAR under development and spice trading and milling operations in South Africa.
major shareholder Jean-Claude Gandur of AOG:
http://www.forbes.com/forbes/2007/1015/099.html
Trouble Is My Business
Christopher Helman 10.15.07, 12:00 AM ET
Billionaire Jean-Claude Gandur has braved war and corruption to build an oil empire on the cheap.
Recently a huge explosion shook northern Iraq. Not the usual kind. This blazing fire and billowing black smoke came from a test drill at TaqTaq, an oil field 30 miles southwest of Irbil in the Kurdish region. With no pipeline or storage tanks in place, Addax Petroleum had little choice but to burn off the oil rather than let it soak into the rocky ground.Opening the well for a few minutes revealed a true gusher: a flow rate of37,500 barrels per day. Considering the results from three other wells already completed, engineers figure that Taq Taq holds more than 2.7 billion barrels of high-quality crude and could produce as muchas200,000 bpd for ten years.
One small problem: Iraq's parliament still hasn't signed off on a federal oil law, putting the entire $500milliongamble in jeopardy. Jean-Claude Gandur, Addax's chief executive,is pushing ahead anyway. "It is absolutely unbelievable the quality of oilfields untapped in Iraq," he says. Gandur would prefer to have alawand an export license in place. But in a pinch he figures he can sell oil--up to 20,000 barrels a day--to a refinery he'll help build for the Kurds, or hawk it straight out of the ground. "Peace has no value to our assets."
Gandur knows his way around trouble. Most of his business is in restive Nigeria, where Addax produces 100,000bpd--overshadowed by only Shell, ExxonMobil (nyse: XOM - news - people ),Chevron (nyse:CVX - news - people ), Total and Agip. The company is also pursuing prospects in Cameroon and Gabon. Wherever it ventures,Addax does very well. Over the last 12 months it netted $300 million on revenue of $2.5 billion. Run out of Geneva, Switzerland, Addax is listed on the Toronto and London exchanges; Gandur's 24% stake is worth $1.5billion. His m.o.has long been buying assets on the cheap--and making nice with strongmen. "Jean-Claude is able to open the doors and negotiate on his feet," says Martin Molyneaux, an analyst at FirstEnergy (nyse: FE- news- people ) Capital, a Canadian investment bank in Calgary, Alta.and an Addax underwriter. "He is very good at interacting with people."People close to Sani Abacha, the late dictator of Nigeria, for example.Gandur has also been dubbed Commander of the National Order in Benin, has a diplomatic passport from Senegal,and for ten years was the honorary consul in Geneva for the civil-war-riven Republic of Congo.
The son of a Swiss pediatrician,Gandur, now 58, grew up in Alexandria, Egypt,where he learned Arabic, fell in love with history and began a life long devotion to Egyptian antiquities. He studied law and political science at the University of Lausanne. In 1976 he went to work at the Philipp Brothers trading house in Zug, Switzerland: "the best school in the world," he says. There he became a successor to infamous trader Marc Rich, who had left the company in 1973. Early on Gandur gravitated to francophone Africa and became manager of Philbros' African oil trading operations. After stints at rival trading houses, in 1987 he and three partners set up their own west African trading operation, Addax & Oryx Group, named after two members of the African antelope family.
Soon AOG began acquiring physical assets to backstop trading positions, picking up oil storage tanks, petroleum depots, liquefied petroleum gas and oilfields. The company even branched out into gold mines (Gandur is chairman of Toronto-listed Axmin).
http://www.miningweekly.com/article/car-ministers-in-push-to-reassure-investors-on-axmin-gold-project-2010-10-05
CAR officials in show of support for Axmin gold project
By: Liezel Hill 5th October 2010
TORONTO(miningweekly.com) – Senior government officials from the Central African Republic (CAR) met mining analysts and institutional investors inToronto on Tuesday, in an effort to help bolster the financialcommunity's view of junior Axmin and its Passendro gold project in theCAR.
Axmin received a 25-year mining licence for Passendro in August this year, and now has all the permits and approvals it needs to build the mine.
Under the terms of the licence, Axmin will pay the CAR government $11-million in three tranches and the government has received 26-million Axmin shares and 20-million warrants, instead of the10% free-carried interest in the project to which it was entitled.
The government has also maintained all the fiscal terms agreed to in a mining convention, or contract, signed with Axmin for the Passendro project in 2006.
These include a five-year tax holiday,exemption from duties and VAT on capital equipment, consumables andmining contract for the duration of the mine development and five years thereafter. The government royalty on the project was also held at 2,25%,as specified in the convention.
Speaking through a translator on Tuesday, CAR Minister for Mines lieutenant colonel Sylvain Ndoutingai said that the mining conventions between the government and private mining companies are structured to provide security for the foreign investors.
Governments can change, the mining law could be modified by the Parliament, but companies are protected by stability clauses in their conventions, he said.
He pointed to the fact that Axmin's licence includes terms agreed to in its 2006 mining convention, despite the establishment of a new national mining code in2009, he said.
Ndoutingai said that the Passendro project – which will be the first modern goldmine in the CAR - has the full support of the government.
He actually indicated that he intends to put pressure on Axmin to get the project moving as quickly as possible, and said that the State has no intention of selling the shares it received in the company.
The CAR has gold, diamonds, uranium and iron-ore,and the government wants to attract investors to explore for those and other metals and minerals, Ndoutingai said.
PRODUCTION IN TWO YEARS?
Axmin is busy updating and optimising its April 2008 bankable feasibility study, and plans to have the document ready by the end of the first quarter of 2011, although it will aim for an earlier date, CEO George Roach said in an interview on Tuesday. The company has revived the process towards arranging financing for the mine, and this week issued aninformation memorandum to a number of banks, he said.
Axmin is looking in particular at South African export credit opportunities, as well as entities like the World Bank's Multilateral Investment Guarantee Agency. “And the reason for that is that South Africa's Senet is leading the BFS, so a lot of equipment is going to come out of South Africa,” Roach said. “So if we can get export finance dealt with there - and the negotiations are already in progress - it's going to make everything so much easier.”
There is quite a lot of interest in the project, CFO Alex Dann said.“But the banks and the equity markets want to see the final project economics and the technical information,”he said.
In March 2009Axmin looked at a smaller project scenario,given the difficult financing environment at the time, but the company is reasonably certain that it will be building a three-million ton a year operation, as envisaged in its 2008 study, Roach said on Tuesday.
Annual gold production was forecast at 203 000 oz/y in the feasibility study.
If the company completes its updated study in the first quarter of2011, it would likely only start drawing down finance in the third quarter, Roach said.
The firm has agreed with the government to aim for first production within 24 months, although it can apply fore exemptions to the deadline.
“We'd like to be in production in two years, and that's what the State would like to see,” he said. “But it's tight.”
Shares in TSX Venture Exchange-listed Axmin dipped 8% on Tuesday, to 11,5 Canadian cents a share.
Edited by: Liezel Hill
Fact sheet:
http://www.axmininc.com/site/Investorsnbsp/FactSheet.aspx
http://clients.westminster-digital.co.uk/minesite/microsite/events/31/index.aspx
fast forward 2 clips
http://www.theaureport.com/cs/user/print/co/479?x-t=pub.view&id={id
"I’ve really been keen on AXMIN. It’s got probably three million ounces in the Central African Republic. AXMIN is extremely well-placed, I think. It has just over 200 million shares and trades about 80 cents. But given the number of ounces it’s got in the solid resource category in Central African Republic, as well as they’ve got unfolding resources in both Mali and Sierra Leone, it’s a fascinating African play."(11/29/07)
- JOHN EMBRY, SPROTT ASSET MANAGEMENT
"Going a little further afield, there's AXMIN (AXM.TSX.V). It just got annihilated. They have four million ounces in the Central African Republic. It was at $1.40 and is now down to $.15. You’re buying the people because they discovered the Geita Mine, now in production in Tanzania, which is one of the more successful mines in Africa. This is the best exploration team in Africa. They’ve got this project in the Central African Republic with a proven reserve and, then another one in Ghana and a third in the Sierra Leone, which they’re moving forward.The stock has been blasted, but they’ve got Audax Petroleum, one of the big Swiss oil companies, which owns 50% of this company, to back stop to any extent required. There's no financing risk; they have assets;and the best mine-finding team in Africa. You get all this for $30million."
- The Gold Report Interview with John Embry, Sprott Asset Management (09/12/08)
OGC.to is a great buy and hold stock, especially if you managed to pick it up at lows of fall 2008. I was watching it but got scared off by its large debt.
I think axm.v (axmin inc.) is the most undervalued soon to be intermediate gold producer and here is why:
-great management with established track records. The biggest shareholder with 30% are the same people behind Addax Petroleum which a year or two ago got sold to the Chinese for over $6 billion. Also with the recent merger with aim listed Afnat, they picked up the new CEO George Roach who has the African experience and abilities to take the company to the next level as an intermediate gold producer. Roach was one of founders of UraMin which got sold to Areva for $2.5 billion.
-asset base that can take them to 200,000 oz per year gold production with their first gold mine within 2 years (BFS already completed, just needs updating) and then on to 500 – 600,000 oz per year level in the subsequent years with their second and third gold mines.
-absurdly low market cap of only C$75 million. Assuming 1.2 billion shares outstanding post mine financing, the $200 million per year cash flow from their first mine at Passendro works out to 16 cents per share. They can reinvest this cash flow to bring their second and third gold mines online with very little further share dilution, thus increasing cash flow per share to around 40+ cents per share 5-6 years out. Share price is now only 12 cents.
Below is more info for your DD:
George Roach President and Chief Executive Officer
Mr. Roach, the former President and CEO of AfNat, has been involved in the mineral exploration industry in sub-Saharan Africa for many years. He has extensive experience in securing and establishing mineral exploration tenure and operations throughout Africa namely, Central African Republic, South Africa, Chad, Mali, Namibia, Zambia and Tanzania to a name a few.
Mr. Roach was a founding Director and Managing Director Africa for UraMin Inc., a uranium resource company with operations in Namibia, South Africa and Central African Republic. UraMin was sold for US$2.5 billion in 2007 to Areva. Mr. Roach maintains interests in G&B African Resources Ltd, a mineral exploration company and in African agricultural projects, including a sugar estate in CAR under development and spice trading and milling operations in South Africa.
major shareholder Jean-Claude Gandur of AOG:
http://www.forbes.com/forbes/2007/1015/099.html
Trouble Is My Business
Christopher Helman 10.15.07, 12:00 AM ET
Billionaire Jean-Claude Gandur has braved war and corruption to build an oil empire on the cheap.
Recently a huge explosion shook northern Iraq. Not the usual kind. This blazing fire and billowing black smoke came from a test drill at Taq Taq, an oilfield 30 miles southwest of Irbil in the Kurdish region. With no pipeline or storage tanks in place, Addax Petroleum had little choice but to burn off the oil rather than let it soak into the rocky ground. Opening the well for a few minutes revealed a true gusher: a flow rate of 37,500 barrels per day. Considering the results from three other wells already completed, engineers figure that Taq Taq holds more than 2.7 billion barrels of high-quality crude and could produce as much as 200,000 bpd for ten years.
One small problem: Iraq's parliament still hasn't signed off on a federal oil law, putting the entire $500 million gamble in jeopardy. Jean-Claude Gandur, Addax's chief executive, is pushing ahead anyway. "It is absolutely unbelievable the quality of oilfields untapped in Iraq," he says. Gandur would prefer to have a law and an export license in place. But in a pinch he figures he can sell oil--up to 20,000 barrels a day--to a refinery he'll help build for the Kurds, or hawk it straight out of the ground. "Peace has no value to our assets."
Gandur knows his way around trouble. Most of his business is in restive Nigeria, where Addax produces 100,000 bpd--overshadowed by only Shell, ExxonMobil (nyse: XOM - news - people ), Chevron (nyse: CVX - news - people ), Total and Agip. The company is also pursuing prospects in Cameroon and Gabon. Wherever it ventures, Addax does very well. Over the last 12 months it netted $300 million on revenue of $2.5 billion. Run out of Geneva, Switzerland, Addax is listed on the Toronto and London exchanges; Gandur's 24% stake is worth $1.5 billion. His m.o. has long been buying assets on the cheap--and making nice with strongmen. "Jean-Claude is able to open the doors and negotiate on his feet," says Martin Molyneaux, an analyst at FirstEnergy (nyse: FE - news - people ) Capital, a Canadian investment bank in Calgary, Alta. and an Addax underwriter. "He is very good at interacting with people." People close to Sani Abacha, the late dictator of Nigeria, for example. Gandur has also been dubbed Commander of the National Order in Benin, has a diplomatic passport from Senegal, and for ten years was the honorary consul in Geneva for the civil-war-riven Republic of Congo.
The son of a Swiss pediatrician, Gandur, now 58, grew up in Alexandria, Egypt, where he learned Arabic, fell in love with history and began a lifelong devotion to Egyptian antiquities. He studied law and political science at the University of Lausanne. In 1976 he went to work at the Philipp Brothers trading house in Zug, Switzerland: "the best school in the world," he says. There he became a successor to infamous trader Marc Rich, who had left the company in 1973. Early on Gandur gravitated to francophone Africa and became manager of Philbros' African oil trading operations. After stints at rival trading houses, in 1987 he and three partners set up their own west African trading operation, Addax & Oryx Group, named after two members of the African antelope family.
Soon AOG began acquiring physical assets to backstop trading positions, picking up oil storage tanks, petroleum depots, liquefied petroleum gas and oilfields. The company even branched out into gold mines (Gandur is chairman of Toronto-listed Axmin). In 1996 Gandur made the salmon leap from the downstream activities of oil trading and marketing, which provide thin margins by moving huge volumes of other people's oil, into the upstream, which entails more risk and upfront investment but offers fatter returns. AOG inked its first production-sharing contract with the oil minister of Ivory Coast to overhaul the abandoned offshore Espoir oilfield. That was followed up in 1997 with concessions in offshore Benin.
Gandur came into the money a year later, in Nigeria, where U.S. oil company Ashland (nyse: ASH - news - people ) and the French major Total were in a 50/50 venture developing four offshore oil blocks. Ashland, in the process of refocusing its business on mining, made a deal to sell its interest to a small French operator. But the Nigerians, insisting change in ownership required government approval, threatened to repossess the assets. Ashland should have known better, jokes Gandur: "I think it was sabotage by some of the executives of Ashland because they wanted to keep it. Otherwise I don't understand why they messed up so much."
Their screwup; his payday. Addax explained to Dan Etete, then Nigeria's oil minister, that killing a contract with a U.S. company would be lousy p.r. and persuaded him to let Gandur negotiate with Ashland for the assets. Events played into his hands. OPEC had boosted output just months before the Asian financial crisis eroded demand for fuel; oil prices plunged from $20 to $12 a barrel. Gandur convinced Ashland and Total to sell the four blocks, with 8,000 bpd of production and 30 million barrels of reserves, for less than $50 million. After investing $1 billion, Addax now produces 100,000 bpd there.
Did charm alone win the day? In 2000 two former Addax & Oryx Group employees were convicted in Switzerland and fined for money laundering of embezzled funds tied to President Abacha. (Abacha, who died in office in 1998, is suspected of stealing more than $3 billion from Nigeria.) Etete is on trial in France on charges of money laundering and receiving kickbacks from Elf Aquitaine (now part of Total). A French trader and former Addax executive, Richard Granier-Deferre, is being tried as an accessory. Etete reportedly bought $19.5 million of luxury properties in France.
Nigeria continues to be a contentious but profitable play for Gandur. In March 2006 Addax signed production-sharing contracts on three blocks in an offshore area shared by Nigeria and tiny São Tome. Its partner is ERHC Energy, a publicly traded company headquartered in Houston but controlled by Nigerian businessman Emeka Offor, a close associate of former Nigerian president Olusegun Obasanjo (Offor says otherwise). Offor and ERHC reportedly got a sweetheart deal on its blocks, despite limited operating experience and insufficient access to the necessary capital. "We are good friends," Gandur says of Offor. "We have checked him out through several channels." The pals cut another deal last November, Addax partnering with Offor's little-known company called Starcrest to develop Nigerian offshore block 291, a very promising prospect in the same geologic trend as Chevron's giant Agbami field and Shell's Bonga. Addax paid Starcrest $35 million for a 72.5% stake, forking over $55 million to Nigeria as a signature bonus and pledging another $75 million in development costs.
When the deal was announced, the Nigerian media exploded with allegations of corruption. The block had been previously awarded to Transcorp, which, according to Addax Chief Financial Officer Michael Ebsary, hadn't come up with either the money or the required international partner within 90 days, as stipulated by Nigerian authorities. Critics claimed Starcrest got the block only through cronyism. The Nigerian feds have been investigating, and in August the press reported that new President Umar Musa Yar'Adua was considering the revocation of some recently granted licenses. Gandur says his request to meet the president in person was recently turned down.
Shareholders of ERHC, meanwhile, are wondering why Offor didn't steer the block 291 deal their way. In August Offor resigned his ERHC chairmanship. "Nigeria has not in the past been particularly good at enforcing rules on oil companies with political ties," says Ebsary. "Now they are really trying to apply the rules." Still, he adds, "In these parts of the world you are invariably going to be dealing with people connected to someone powerful in the ruling elite. That's just the way it is."
In that respect Addax shareholders have little to worry about. Gandur is buddies with powerful Nigerian Oil Minister Edmund Dakouru, having negotiated deals with him for 20 years. Also helping to smooth things out is Addax board member Afolabi Oladele, who handled relations with oil majors for the Nigerian National Petroleum Co. in the 1990s and receives $9,000 a month from Addax for consulting work. Gandur has also recruited Brian Anderson, formerly Shell's leading guy in Nigeria, and James Pearce, who ran Chevron's deepwater operations there.
Gandur is making friends lower down the social scale, as well. Addax hires community representatives from regional tribes and has spent $10 million in the past decade building roads, schools and water projects. The rule in Nigeria, Iraq or anywhere Addax goes is to "make sure the chief of the village knows what you do next," Gandur explains. "Don't move the rig without him knowing." The strategy has worked pretty well, so far. In contrast with Shell--Nigerian civil unrest has disrupted one-quarter of its output for the past 18 months--Addax has had no outages, but several contractors have been taken hostage, and last February one was killed trying to escape.
Security is increasingly in the fore of Gandur's mind, especially as his empire and fortune have grown large enough to make him a target. In Iraq the Taq Taq field is protected by U.S. security outfit Vance, which hires peshmerga, armed Kurdish fighters. The Kurdish Regional Government has a huge incentive to protect both Gandur and his investments. After Saddam's fall the KRG began to assert its rights to the oil in the territory under its control; in 2004 it signed a deal with Genel Enerji, a division of Turkey's Cukorova Group, to explore Taq Taq.
http://www.miningweekly.com/article/car-ministers-in-push-to-reassure-investors-on-axmin-gold-project-2010-10-05
CAR officials in show of support for Axmin gold project
By: Liezel Hill
5th October 2010
TEXT SIZE
TORONTO (miningweekly.com) – Senior government officials from the Central African Republic (CAR) met mining analysts and institutional investors in Toronto on Tuesday, in an effort to help bolster the financial community's view of junior Axmin and its Passendro gold project in the CAR.
Axmin received a 25-year mining licence for Passendro in August this year, and now has all the permits and approvals it needs to build the mine.
Under the terms of the licence, Axmin will pay the CAR government $11-million in three tranches and the government has received 26-million Axmin shares and 20-million warrants, instead of the 10% free-carried interest in the project to which it was entitled.
The government has also maintained all the fiscal terms agreed to in a mining convention, or contract, signed with Axmin for the Passendro project in 2006.
These include a five-year tax holiday, exemption from duties and VAT on capital equipment, consumables and mining contract for the duration of the mine development and five years thereafter. The government royalty on the project was also held at 2,25%, as specified in the convention.
Speaking through a translator on Tuesday, CAR Minister for Mines lieutenant colonel Sylvain Ndoutingai said that the mining conventions between the government and private mining companies are structured to provide security for the foreign investors.
Governments can change, the mining law could be modified by the Parliament, but companies are protected by stability clauses in their conventions, he said.
He pointed to the fact that Axmin's licence includes terms agreed to in its 2006 mining convention, despite the establishment of a new national mining code in 2009, he said.
Ndoutingai said that the Passendro project – which will be the first modern gold mine in the CAR - has the full support of the government.
He actually indicated that he intends to put pressure on Axmin to get the project moving as quickly as possible, and said that the State has no intention of selling the shares it received in the company.
The CAR has gold, diamonds, uranium and iron-ore, and the government wants to attract investors to explore for those and other metals and minerals, Ndoutingai said.
PRODUCTION IN TWO YEARS?
Axmin is busy updating and optimising its April 2008 bankable feasibility study, and plans to have the document ready by the end of the first quarter of 2011, although it will aim for an earlier date, CEO George Roach said in an interview on Tuesday.
The company has revived the process towards arranging financing for the mine, and this week issued an information memorandum to a number of banks, he said.
Axmin is looking in particular at South African export credit opportunities, as well as entities like the World Bank's Multilateral Investment Guarantee Agency.
“And the reason for that is that South Africa's Senet is leading the BFS, so a lot of equipment is going to come out of South Africa,” Roach said.
“So if we can get export finance dealt with there - and the negotiations are already in progress - it's going to make everything so much easier.”
There is quite a lot of interest in the project, CFO Alex Dann said. “But the banks and the equity markets want to see the final project economics and the technical information,” he said.
In March 2009 Axmin looked at a smaller project scenario, given the difficult financing environment at the time, but the company is reasonably certain that it will be building a three-million ton a year operation, as envisaged in its 2008 study, Roach said on Tuesday.
Annual gold production was forecast at 203 000 oz/y in the feasibility study.
If the company completes its updated study in the first quarter of 2011, it would likely only start drawing down finance in the third quarter, Roach said.
The firm has agreed with the government to aim for first production within 24 months, although it can apply for exemptions to the deadline.
“We'd like to be in production in two years, and that's what the State would like to see,” he said. “But it's tight.”
Shares in TSX Venture Exchange-listed Axmin dipped 8% on Tuesday, to 11,5 Canadian cents a share.
Edited by: Liezel Hill
Fact sheet:
http://www.axmininc.com/site/Investorsnbsp/FactSheet.aspx
http://clients.westminster-digital.co.uk/minesite/microsite/events/31/index.aspx
fast forward 2 clips
http://www.theaureport.com/cs/user/print/co/479?x-t=pub.view&id={id
"I’ve really been keen on AXMIN. It’s got probably three million ounces in the Central African Republic. AXMIN is extremely well-placed, I think. It has just over 200 million shares and trades about 80 cents. But given the number of ounces it’s got in the solid resource category in Central African Republic, as well as they’ve got unfolding resources in both Mali and Sierra Leone, it’s a fascinating African play." (11/29/07)
- JOHN EMBRY, SPROTT ASSET MANAGEMENT
"Going a little further afield, there's AXMIN (AXM.TSX.V). It just got annihilated. They have four million ounces in the Central African Republic. It was at $1.40 and is now down to $.15. You’re buying the people because they discovered the Geita Mine, now in production in Tanzania, which is one of the more successful mines in Africa. This is the best exploration team in Africa. They’ve got this project in the Central African Republic with a proven reserve and, then another one in Ghana and a third in the Sierra Leone, which they’re moving forward. The stock has been blasted, but they’ve got Audax Petroleum, one of the big Swiss oil companies, which owns 50% of this company, to back stop to any extent required. There's no financing risk; they have assets; and the best mine-finding team in Africa. You get all this for $30 million."
- The Gold Report Interview with John Embry, Sprott Asset Management (09/12/08)
MXOM looks scammy to me. They are trying to pretend that their tiny 18,000 oz per year mine is the building block for an intermediate 100,000 oz per year producer. Why go for a pretender when you can find the real deal out there, ie. a company with a clear path to 100,000 oz NOW and not hidden behind smoke and mirrors ? One example would be Axmin.
>Do you have any presentation or research reports on YNG.to? It does look interesting, especially trading at 30% below PP.<
Here are 3 items from my files:
Old presentation by Queenstake CEO who got sacked due to poor performance:
2004 presentation to Richmond Club by Chris Davies:
http://23418.vws.magma.ca/Luncheon/Queenstake_files/Default.htm
===========================
Institutional Holdingsas of8/8/07:
Sprott Asset ... 11.4M $17,765,477 +31% 6.8% Low
Sentry Select ... 9.6M $14,963,403 +26% 5.8% Low
Goodman & ... 3.2M $5,555,093 +9% 1.9% Low
Dickson (Graham C) 2.1M $3,073,535 +6% 1.3% Low
PEH Wertpapier AG 2.0M $4,995,483 +5% 1.2% High
Hesperian ... 1.9M $2,954,214 +5% 1.1% Moderate
Chafee (Robert E) 1.3M $1,821,272 +3% 0.8% Moderate
UTA Asset ... 1.2M $2,891,639 +3% 0.7% Low
Pate Capital ... 1.0M $1,553,160 +3% 0.6% Moderate
David W. Tice & ... 666.7K $1,035,441 +2% 0.4% Low
=====================================
Queenstake and YGC Resources Ltd. To Merge
TranscriptRecorded on February 14 th , 2007 in Whitehorse, Yukon Territory
Graham Dickson, President & CEO of YGC Resources Ltd.
Hello my name is Graham Dickson and I am president of YGC Resources Ltd. Welcome to this webcast. At this point I would like to thank you all for the many questions you have sent in and I will try to address as many of them as I can.
We have been fortunate enough to receive questions from both YGC’s shareholders as well as Queenstake’s shareholders.
Firstly I’m going to give you some of my views of the situation and by doing so will answer many of the questions that have been posed.
I am very proud of the dedication and hard work that seems to be the norm for my Board
of Directors who represent the shareholders of the Company. One of the first actions they
took in the spring of 2005 was to help form and approve a strategic plan for the Company’s growth. This strategic plan was centered on the concept of growth by
acquisition. In particular the acquisition of late stage exploration, development or production properties.
The concept behind this strategy was that it would make best use of the skills and experience of the people associated with the Company. These people having taken many
projects through from exploration, development, start up and on into production.
In fact as a result of this strategic plan YGC made an offer on a producing property as early as August 2005. In between then and now YGC has looked at over twenty properties and companies and made a further offer in June 2006 on another property very close to production.
This offer to Queenstake then is part of a well thought out strategy and the result of due diligence on the part of your Board, their officers and our consultants.
The fact that we should make such and offer on a property that is presently seen as underperforming by the market should come as no surprise, in fact the opposite. I suggest
to you that it is exactly what our shareholders should expect from us.
We are here to use our skills and expertise on behalf of our shareholders to create greater shareholder value. Yes this merger will involve a great deal of hard work on our part but
we did not consider sitting back and relaxing as the Ketza River project moves ever more surely towards production. We are here to do exactly what we have done and that is
utilize our skills and experience to create greater shareholder value.
The Jerritt Canyon Mine is a property that has real strategic value. It has a 4,500 tpd dry grind circuit, a 6,000 tpd roasting circuit followed by a Carbon – in – Leach circuit. It
also has a 5,000 tpd wet grind circuit followed by a CarboninPulp circuit.
It has a 300 sq km property position in the best part of the gold producing territory in the USA. It has a well experienced labour force in an area that is supportive of the mining industry.
The above assets if fully utilized would have a value many, many times greater than the value assigned to them by the market; the market value is the value that YGC is paying
for them.
It will be our job to make the market realize the true value of these assets and when we do so it will therefore be for the benefit of the combined shareholders of YGC and of
Queenstake in a merged Company we expect to call YukonNevada
Gold Company. I like the name and I give credit for it to Dusty Nicol.
The present management of Queenstake whilst not proving themselves in the area of operational management have proven that they have the ability, with limited funds, to continue to find gold ounces at the Jerritt Canyon property at a low cost. There they have proven once again their competence and skills in the area of gold exploration is very well
thought of.
It will be our job to provide this reinvigorated exploration team with Dusty Nicol as their leader with adequate funding to enable them to produce the reserves that will allow this
mine to operate efficiently and profitably for many years to come.
In the mean time the project of ensuring the profitability of the present operation has already been started with a cooperative effort and I am certain will continue along these
lines until the merger has taken place.
The benefits of this course of action I hope are evident to both sets of shareholders.
As well as the expertise and funding to carry out the above course of action YGC also brings to the table is own exciting properties in the Yukon. Three of which I will talk a
little bit about here. The Ketza River Mine property, the Shamrock property and the Silver Valley property.
We are scheduling the Ketza River Mine property to begin production in late 2008. We are presently taking the property through its permitting stage. This past producer has the
advantage of significant site infrastructure already in place. It was in operation in the late eighties for three years and produced 100,000 ounces from a head grade at the mill of 10.4 g/tonne. We have been drilling for the last twenty one months and are awaiting the results from a National Instrument 43101 report that is finally in preparation. This is a property that we own 100% and there is no Royalty or Net Smelter Return payable to any
other party on this property.
The Shamrock zone which adjoins the Ketza River property is a four square kilometer goldinsoil
anomaly that extends for a further four kilometers on our property. It is a disseminated gold system that we have only started to explore. Although we have likely only examined one thousandth of its potential we already have 430,000 ounces in a National Instrument 43101 report. Clearly this has the potential to be a multi million ounce deposit. We also own 100% of this property and there is also no Royalty or Net
Smelter Return payable to any other party on this property.
The Silver Valley property is one we have recently acquired it is close to the other properties only 8 kilometers away to the East and is an exciting Silver Lead Gold deposit.
I know the words I have just spoken have dealt with many of the questions asked by the shareholders of both companies. Perhaps the answers are not as detailed as you would
wish but that will have to wait until the deal is consummated. I will now address some other questions not covered by what I have just said. One question that seems to be on many minds concerns the possible phasing out of the
Jerritt Canyon operations. My answer to that is this is not being considered at this time as we know the operation can be restored to profitability.
Does the merger require shareholder approval? Yes it does.
When will the merger happen? A definitive agreement will be signed after the allowedtime for due diligence has expired. A shareholder meeting for both companies will then have to approve the merger.
When will there be a shareholder meeting? How will shareholders know about the meeting? Notice will be given of the time and place of the meeting in accordance
with the legal requirements.
How many votes are needed to have the merger go through? Two thirds of those voting at the meeting will have to approve the merger.
Why are both stock prices falling? Because initially the market did not understand the
deal and does not understand the synergy.
Why doesn’t Newmont buy the Jerritt Canyon mine? It does not fit within their operating parameters.
Does Newmont have any ownership of YGC? Not that I am aware of.
YGC Resources Ltd.
#540 688 West Hastings Street, Vancouver, B.C. V6B 1P1 tel: (604) 688 9427 fax: (604) 688 9426 email:
>Doesn't seem like you can put together a gold mine with good grades,good management and the right amount of funding. <
I own quite a bit of CMM but I like YNG.TO better, which I own more of and seems to fit your above criteria.
YNG is the result of YGC merging/taking over Queenstake. They are aiming to produce 400,000 oz per year in 2-3 years time. 300,000 oz per year from Jerrit Canyon @ under $400 oz and 140,000 from the new Ketza river mine in Yukon @ under $300 oz.
With SP at $1.30, market cap is currently $200 million and they have around $65 million in cash after their recent PP financing at $1.80. They are going to invest some of the cash into turning around the Jerritt canyon operation and increasing its mine life by drilling for more reserves.
Couple of dated writeups on YGC from 2006 (these were premerger so they don't talk about the Jerrit Canyon mine):
Monday, September 25th, 2006 at 11:03 pm
YGC Resources - High Potential Gold Play
By goldguru
YGC Resources has to be one of the most underestimated gold miners on the market. They fly under the radar of many goldbugs, due to a lack of effective public relations. But the management of YGC has a core competency in producing gold, not producing slick marketing campaigns. This is good news for anyone reading this article and getting in before the resource update shines a light on the value and potential of this little Canadian miner.
YGC Resources is focused on the discovery and development of gold ore deposits in North America. The company holds a diverse portfolio of gold, silver, zinc and copper properties in the Yukon Territory and British Columbia in Canada and in Arizona in the United States. The primary focus is the exploration of its 100%-owned Ketza River property, which consists of 308 mineral claims and leases, a gold mill from past operations and all associated equipment.
YGC has an estimated 1.8 million ounces of gold resources and is expected to be bring the Ketza River property back in production in 2008. They have the cash necessary to move towards production, having recently closed $8.25 million in a private placement. This has been followed by a series of announcements detailing promising drill results. An updated resource estimate will be carried out as part of the pre-feasibility study due for completion by the end of December 2006. We expect these results to surprise even the most optimistic predictions and send the share price rocketing. The Yukon government recently assigned a project coordinator to assist in advancing the project through the assessment and regulatory stages, towards the ultimate goal of production.
A production decision is expected by the end of March 2007. YGC is looking at the potential of a 2,000 tonne per day open pit mine. We see little chance of the company not moving toward production and expect the mine to be operational by mid to late 2008.
Management is highly competent, led by President Graham Dickson, who has over 20 years of experience in the mining industry and has brought nearly 20 mines into production. YGC Director Don MacDonald also serves as Senior VP & CFO of NovaGold Resources Inc. and has over 20 years of experience in the mining industry. He has been directly involved in the operation or development of ten mines in North and South America with four different mining companies. This degree of experience is hard to come by in the mining industry, which makes YGC all the more attractive.
YGC may seem expensive at current prices ($1.59 CDN). It has already doubled since the beginning of 2006 and while the HUI corrected 18% in the last 3 weeks, YGC’s share price has increased by 18% in the same time period. But we are of the opinion that $1.59 will look cheap by the end of the year and be viewed as ridiculously inexpensive after the results of the pre-feasibility study.
At $1.59 per share with 56.5 million shares outstanding, the approximate market cap of YGC Resources is only $90 million. With 1.8 million ounces of gold and using industry norms, the company should be valued somewhere closer to $180 million. Many are predicting that the pre-feasibility study could increase the estimated resources to over 3 million ounces. So even using current reserve estimates, YGC’s share price could easily double from here. If the pre-fesability study comes back with a significant upside revision, YGC could provide one of the best returns of any miner during this bull market. Given the series of private placements that took place this year, YGC is also very well funded and has the cash necessary to move to production without any significant share dilution in the near future. With all of this upside potential and little risk, YGC is a no-brainer that should be a part of any gold investor’s portfolio.
Bob Moriarty writeup on YGC Resources
I'm going to start first by talking about the Ketza River Mine because it is the heart of the story. I call it a mine whereas YGC Resources calls it a project and kinda infers there are two different portions. All of their problem is communication and it was a mine so it is a mine.
Over the past 20 or so years, different companies have sunk over $50 million dollars into the Ketza River Mine located about 110 miles NE of Whitehorse. Between 1987 and 1990, Canamax produced over 100,000 ounces of gold averaging about 10 grams. Canamax put up a $25,000 bond and was given permission to mine an oxide layer of gold located between both an upper layer of sulfide ore and a lower layer of sulfide ore. I had never heard of oxide ore being found between layers of sulfide ores, normally an oxide ore is what was a sulfide ore body weathered down by water and air. But in this case, there was an underground river which ran through a sulfide body and turned it into an oxide. The good news is that oxide ore causes less problems with the environment and the bad news is that when you run out of oxide ore, the bond required to mine sulfide ore tends to be higher because of the increased costs of mining where acid may be an issue.
In this case, the Powers That Be demanded a $2 million dollar bond for Canamax to mine the gold sulfide ore. The company wasn't happy about having to put up that much money. The company shut down the mine and mill to show how much power they had (which is almost always a bad idea when dealing with any government agency.) Before they could win this test of wills, problems in other areas of the company caused financial issues and Canamax lost the property.
A fellow named Graham Dickson had built the 680 TPD plant. After the property bounced around the industry for a bit, he picked up a 100% interest in 1994. After sitting patiently for the price of gold to recover, Graham, now President and CEO of YGC, put the company into high gear in May of 2005. In all of the literature, the company refers to two properties, the Ketza River Mine or Ketza Manto Zone and the Shamrock Zone but to everyone other than a geologist, both properties will feed the Ketza River Mine. It's a mine, it is not a couple of exploration targets.
Because of 43-101, management can't say they are going back into production, only that they are going to make a production decision by March 31, of 2007. But the mine has already produced 100,000 ounces of gold from 10 gpt ore in the past, they have a 43-101 resource of over 1.8 million ounces in all categories. A new 43-101 resource is due out this month and it obviously will be higher. Over on Stockhouse, someone who at least sounds like he knows what he is talking about has looked at all the drill core results and has estimated the new resource will be in the 3.2 million ounce range. With those kind of numbers, you can guarantee the big boys will be soon sniffing around.
If I had upwards of two million ounces of gold and a mill and the gold was either near or at the surface and it ran 5-10 gpt, it wouldn't take me until next March to make a decision. It wouldn't take me past the time it takes you to read this sentence to make a production decision and regardless of what management puts in writing, I can assure you they are planning production.
I met Graham in Whitehorse in late August. Together with a major German shareholder, Werner Ulman, we flew out to the Ketza River Mine on a stunning Yukon autumn day. As we approached the property, I could see iron stained gossans off in the distance. That's a very good sign of a giant system.
Since gossans are such a good indication of iron rich systems, any interested reader should go to this link to read up on how valuable the information can be from a gossan. I wasn't aware of it before reading that piece but the largest open pit mine in North America, Bingham Canyon, was discovered because of the iron staining from a gossan. Since gold and silver are often associated with iron, a gossan is a good sign.
When I visit a property, I want to get some feel for the size potential. Many times, in fact, most times, that just isn't possible because the mineralization may only outcrop at surface. But we were seeing gossans a long ways away from the Ketza River Mine itself. This is one giant deposit and they aren't going to run out of gold any time soon. They pretty much could do drilling just based on visual indications.
A popular business model in mining is to maximize the mine. That is, produce all you can, as fast as you can and leave. I don't find that model as attractive as that of rationalizing a mine and creating a cash cow which will produce minerals at a profit for a long long time. Think of the gold and silver mines in Mexico and South America which have produced wealth for many generations. Many of the old family fortunes in the US and Canada came from generational mines.
Graham Dickson thinks long term. He is a production guy so he doesn't even think of a project without planning on how he can go into production. With the Ketza Mine, he can create the perfect size operation, to get a reasonable cost of operation but not put the mine out of production in five years by overproducing. I think that model makes heap of sense and those are the kinds of operations I want to see. Once your plant and equipment is paid for, your costs really drop down. I am baffled as to why mining companies don't work harder to make mines profitable. Isn't that the whole point?
Here are some of the goals and time lines.
New 43-101 based on the over $7 million drilling over the last year by September of 2006.
PRE-feasibility completed by December 31, 2006.
Production decision by March 31, 2007.
Mine and Mill in operation by late 2008.
Begin acquisition of another late stage property by 2007.
Unknown small gold producer Avnel gold listed on the toronto exchange (AVK.TO) is producing around 25,000 oz per year from their gold mine in Mali. But the total resources are 1.25 million oz and continuing to grow as they drill more, so there is a lot of upside potential in their gold production. And their drilling is finding more high grade gold, so I think the resources can go up to 2 million oz in the next year or so. Two insiders (a fund and the chairman) control 40% of the shares outstanding. If you look at their presentation on their website, they talk of expanding to 150,000-200,000 oz per year in the future:
http://www.avnelgold.com/investor_relations/presentations/presentations.html
All this for a US$25 million Market cap. This seems cheap not only on the basis of the current 25,000 oz per year gold production, but especially more so if you take into account their plans to grow into being an intermediate producer over the next few years. A 150,000 oz per year producer in Mali (which is pretty stable and investor friendly) should be worth US$500 million market cap. Assuming they have to double the shares outstanding to finance their expansion, that still leaves open a 10 fold share price appreciation potential.
http://www.avnelgold.com/about_us/about.html
Avnel Gold Mining Limited owns and operates the Kalana Exploitation Permit in Mali through its 80% owned Malian subsidiary, SOMIKA. Avnel completed an IPO in June 2005 and is listed on the Toronto Stock Exchange (Ticker: AVK). Avnel completed a Private Placement in November 2005 raising gross C$7.9 million.
In October 2006 Avnel has acquired the Exploration Permit for the Fougadian Permit located directly south of the Kalana Permit. The permit covers an area of 150 square kilometers.
Kalana Mine
The Kalana Exploitation Permit covers an area of 387 sq. kilometerson which the Kalana
Kalana Gold Mine - location in Mali
Mine is located. The Kalana Mine was produced approximately 80,000 ounces in the period 1985-1991. SOMIKA re-commissioned the mine and plant facilities in 2003 and gold production commenced in 2004.
The Kalana Mine has a Mineral Resource base of 1,000,000 ounces ( Measured and Indicated Category) and 252,000 ounces (Inferred Category), estimated in accordance with Canadian IMM Standards and National Instrument 43-101 . The main components are:
* Underground veins (Measured and Indicated) : 936,000 tonnes at 14.2g/t containing 747,000 ounces
* Open Pit (Indicated): 872,000 tonnes at 7.12g/t containing 200,000 ounces
* Open Pit (Inferred): 1,840,000 tonnes at 2.82g/t containing 167,000 ounces
The Measured and Indicated Resources have been converted in to Underground Proven and Probable Mineral Reserves of 428,000 ounces contained in 936,000 tonnes at a grade of 14.2 g/t, between 100m and 300 metres below surface. Snowden concluded there is reasonable potential to define additional reserves from indicated and inferred resources through continued mine development and exploratory drilling
The Kalana Mine produced 7,396 ounces and 14,923 ounces respectively in 2004 and 2005. Production increased in 2005 as head grade increased to 15.5g/t and gold recovery increased to 86%. Avnel is currently deepening No 2 shaft to access ore reserves located between 100m and 300m below surface. Ore production will reach mill capacity of 60,000 tonnes per annum in 2008. During 2006 and 2007 gold production is planned to increase as new ore reserves are opened up by development. The gravity plant is recovering approximately 86% of the gold showing the free gold nature of the Kalana quartz veins. Avnel currently plans to increase gold production an average of 26,000 ounces per annum at a cash cost of approximately $275 per ounce for the first 8 years of the mine life.
Kalana Exploration
SOMIKA has the right for 30 years to explore and develop mines on the Kalana Exploitation Permit. The objective of the exploration is to discover additional large gold deposits, including disseminated replacement type hosted by sedimentary rocks, Morilla or Sadiola analogues, or multiple Au-quartz vein systems as mined at the Kalana Mine.
The area is highly prospective and the Phase 1 and 2 geochemical soil sampling program completed in 2004/5 identified at least 9 significant gold-in-soil anomalies on the 10 grids areas sampled.
The Phase 3 program consisted of a RC and RAB drilling program located on the anomaly identified on grid 8, where the Djirila Hill is located. Some of the drill holes have intersected high grade mineralization in a new gold discovery. Best results include 45.9 g/t over 4m and 73.6 g/t over 2m.
The Phase 4 program consisted of 2,100 metres of diamond drill completed in quarter 1 2006. The results confirmed the high grade intersections from the RC drilling. Best results include 11.14g/t over 24m, 12.55g/t over 19m, 4.8g/t over 10m, 3.04g/t over 7m, 19.3g/t over 2m, 14.57g/t over 3m. This mineralised zone has now been traced by diamond core drilling along a NNE strike for more than 225m where it has been found to have a vertical to steep easterly dip. The width of the mineralised zone varies from 3 to 50 metres and appears to be associated with a NNE-trending corridor of faulting and silica-sulphide emplacement. The zone of artisanal workings stretches another 150m beyond the present drill program.
Avnel has completed a 2,543m RC program in quarter 2, 2006 to follow up the diamond drill program completed in quarter 1, 2006. The results show that the mineralization at Djirila Main continues up dip towards surface.
Drill Targets
The mineralized zone is open below 100m. Best results include: 15.8g/t over 2m from 53-55m, and 10.1g/t over 1m from 59-60m in RC-28; 2.1g/t over 2m from 24-26m and 4.7g/t over 2m from 96-98m in RC-29; 2.2g/t over 1m from 17-18m and 4.6g/t over 1m from 100-101m in RC-31; 4.4g/t over 1m from 88-89m and 4.4g/t over 1m from 96-97m in RC-32; 9.7g/t over 3m from 84-87m and 2.0g/t over 1m from 94-95m in RC-33.
Growth Strategy
Avnel intends to identify other gold resources on the property and to add these to the 1.25 million ounces at the Kalana Mine. A strategic development plan can then be implemented to allow the company to grow its production profile within 5 years. Excess cash flow from the Kalana Mine will be used to expedite the exploration and development activity, and to fund corporate cost.
You should also take a look at Century mining CMM.V which is my biggest holding. It is currently producing around 100,000 oz per year. My expectation is for CMM to hit a production run rate of 200,000 oz per year at around $300 per oz average cost, by year end 2007. Just on that basis alone CMM is cheap at the low $1+ SP level it is at now, when compared to other producers. The production growth from the current 100,000 oz per year level to 200,000 is from bringing online the underground mining at Lamaque and the ramp up to 80,000 from mining the veins at San Juan. Also as you can see there is a lot of blue sky upside at San Juan from the early stage Golden Champune, Erica, and Santa Clarita prospects, any one of which could be a company maker on its own:
Upbeat Prospects for Century Mining Corp.
Submitted by: Andrew K. Burger
Introduction
Prospects are looking decidedly upbeat for Blaine, Washington-based Century Mining Corp (CDNX: CMM.V). Based on its recent acquisition of the San Juan Mine property in the southern Peruvian department of Arequipa and the results of its capital investment and cost cutting efforts at the Sigma-Lamaque gold mine in Quebec, the company expects to report its first net profit later this year, according to Century’s Tom Thomsen.
Century’s financial condition is improving. It forced holders of C$10 million worth of convertible debentures to convert to equity, eliminating interest expenses and significantly reducing its long-term debt, which now stands at C$12 million. Related financing costs were fully expensed at the end of the second quarter, which will improve profitability for the remainder of 2006.
The company’s working and investment capital position is also improved, thanks to a recent, self-arranged C$25 million private placement of equity with non-detachable warrants. Issued at a price of C$1.25, Century plans to use a portion of the money to upgrade the San Juan Mine’s infrastructure, as well as to finance exploration, testing and development of promising prospects. More than 35 mineralized structures have been identified on the property, of which only two have been extensively mined, Century management announced in late June.
South American Gold
Peru and the small community of some 5,000 people living near the San Juan Mine approximately 80 kilometers inland from the mouth of the Ocoña River and the rural city of Camana have a long history of mining, and Century has been encouraging local independent miners to contract with them. Some sixty local miners have agreed to sell all the ore they mine at the company’s on-site mill according to a sliding schedule of payouts based on grade and tonnage.
Having acquired all but four percent ownership of the mine and all mineral rights for the property in late June for the equivalent of around US$7 of gold per ounce, Century management will upgrade and add to the mine’s existing infrastructure and processing capacity.
“We’re currently processing 150 tons, but we’re going begin our upgrade shortly, Thomsen reported. Century expects to invest C$10 million in doing so and has set a goal to process 5-10,000 tons of ore this year, 30,000 next year and 80,000 the year after.
The company is undertaking an extensive surface and underground sampling and drilling project to bring the 18,000 hectare San Juan Mine property’s historical resources of around 1.23 million ounces of gold up to date in accordance with Canada’s National Instrument 43-101 disclosure standard. Announced publicly on June 26, the program is expected to take several months.
Research indicates that ore on the property’s Golden Champune prospect could be processed using heap leaching. “Average recovery and processing costs for heap leaching of gold ore runs in the US$125-$130/oz. range,” Thomsen noted and Century expects that recovery costs at the Peru mine may well come in below that average. “Barrick spent $360 million in northern Peru on a property that’s yielding some 550,000 ounces of gold at a cost of $125/oz. We believe that this [the Golden Champune section of the property] has similar potential,” he added.
Further research into the San Juan Mine’s archives has uncovered historical and more recent indications of recoverable amounts of gold, as well as copper and molybdenum, on other sections of the property.
What management believes to be reliable historical indications are that a second prospect named Santa Clarita has potentially sizable tonnage of recoverable gold in concentrations ranging from 0.5 to 4.0 grams of gold per ton of ore. Indications are that Erica, a third prospect, may hold a sizeable copper-gold porphyry deposit that contains associated, economically recoverable quantities of molybdenum.
Century has purchased a 43-101 compliant report of the Santa Clarita and Erica sections of the property from another mining company that had been bidding against Century for the San Juan Mine.
Purchasing the 43-101 compliant report not only saves Century the time and expense of producing the report itself, it turns these sections of the property into an unexpected asset that could be used to finance further exploration and development,” Thomsen noted. “It’s incredibly valuable.”
Share Prospects
Century’s business strategy is to leverage its mining engineering and business management expertise and its access to capital to identify and purchase existing gold mining properties with proven reserves and a production history that, for any of a variety of reasons, are undervalued.
Developments at the San Juan property are leading it into a growing amount of exploration, as well as production, work, however. “We’re a production-oriented company. We didn’t expect to spend so much money on exploration and drilling, but we’re not averse to doing so if it’s in our interests,” Thomsen explained.
Investing in Century shares at this point in time, he said, “You get the best of both worlds: the potential of greater than expected returns on new discoveries and you’re protected by the number of ounces we have on the books. Our shares should be trading in the $5-$6 range just because of that.”
Why aren’t they? Well, for a number of reasons, according to Thomsen, the main one being that the company has yet to turn a net profit, in large part due to the challenges of turning around operations at the Sigma-Lamaque mine in Quebec.
Century appears to have the situation there well in hand, however. Sigma-Lamaque produced its first operating profit this past quarter. “We’re now running a C$20-$25 million annual profit [operating] and we continue to reduce costs,” Thomsen noted.
Between the San Juan and Sigma-Lamaque properties, Century expects to produce some 100,000 ounces of gold this year at an average cost of between $325 and $350, with the potential for costs in Peru to be considerably lower, Thomsen said.
Another reason for Century’s shares being undervalued has been overhanging supply of shares due to cheap, recently converted warrants. “We forced conversion of C$25 million of convertible debentures with purchase rights of C$0.35-C$0.40/share,” Thomsen said. However, almost all have been converted to equity, which means that they will have no further dilution on Century’s shares, he added.
Century does have private equity and warrants outstanding as a result of its most recent, C$25 million, private placement. The warrants have an exercise price of C$2.00 and a two-year voluntary, as well as a forced, conversion clause, both of which begin September 28. The shares have a mandatory four month holding period, which means that the earliest they might be offered on the secondary market would be September 28.
Century’s share price ran up sharply earlier this year, hitting an all-time high of C$1.89 in March when news of the San Juan acquisition began circulating. The company’s shares have been in something of a holding pattern since, trading in the C$1.35-1.80 range while investors await news of developments in Peru and Quebec,” Thomsen said.
They shouldn’t have long to wait. Century expects to file its 43-101 report for the San Juan Mine in a few months and publicly release updates regarding development plans and progress before the end of the third quarter. And management remains bullish on the company’s and broader gold market’s longer term prospects as well. “We don’t have a hedge position at all; all our production is being sold at spot prices. There are two reasons to hedge production: If you see stagnant or declining market conditions or if you need cash, which we did earlier to finance operations. But we’re not in that position at the moment.”
Andrew Burger is a freelance journalist and writer who also teaches EFL. He is currently living and working in Saudi Arabia. He acquired the formal education he is now thankful for in the New York City public school system and the University of Colorado, Boulder.
Anyone know how U.S. residents can by shares in Cluff Gold which is listed on the London AIM exchange ?
House of biotech blues (From Bill Fleckenstein on MSN)
Now for Nastech Pharmaceutical (NSTK, news, msgs) and the many questions I received from my daily readers about the Food and Drug Administration's rejection of calcitonin -- and what to do about what to do. (Editor's note: Because of the news, the stock opened Thursday down nearly 27% but closed with a 15.7% decline.) Let me say this: As always, it's difficult to make blanket statements. But if one has a full position, there's not much one can do. If one has room to average down, then that makes sense.
However, I think the concept of "full position" (something I haven't discussed previously) is one that people need to consider. In any investment, you have to know how much you wish to own. Generally, it's not wise to go above that amount, especially when the position is going against you.
That said, this rule can be violated when you have a bona fide, rock-solid margin of safety (though the latter can sometimes prove illusory.) Unfortunately, with intellectual property, manufacturing capabilities and future earning streams as the assets for a young company like Nastech, it's difficult to have the kind of margin of safety one would need to have in order to override whatever one thought his positional limit was. Regrettably, I am unable to add to my position, as it is full. (Though I want to buy some LEAPS -- they got away from me on Thursday.) (Discipline is something that one must have in this business. I know -- I learned the hard way.) But if I did not have a full position, I would have been buying with both hands this morning.
As to what happened and what it all means, as I was endeavoring to put my thoughts down, I received a great synopsis on Nastech written by a Ragen MacKenzie analyst named Taunya Sell. Her write-up was forwarded to me by my sister, who is a retail broker at the firm. (My sister was quite a good analyst/portfolio manager herself, before having babies and shifting gears to the retail brokerage business.) So, rather than reinventing the wheel, I am going to include an analyst summary in the Contrarian, for what I believe to be the first time ever in the years that I've been writing my column.
A CFA reports on the FDA and Nastech
"Company Update. Nastech Pharmaceutical (NASDAQ -- NSTK -- $12.35, Buy) Price Target: $22.00 -- $25.00. This morning, Nastech announced that the Company has received notification from the FDA that the ANDA (Abbreviated New Drug Application) for its intranasal salmon-calcitonin product is not approvable at this time. The FDA was concerned about the potential for immunogenicity resulting from a possible interaction between chlorobutanol (a preservative in the formulation) and salmon-calcitonin. It would appear that this could be a theoretical concern, as Nastech did not observe any allergic reactions in the clinical trials the Company performed.
"Firstly and importantly, we believe there is little risk to the Company's other products in development related to this news. Immunogenicity studies are performed on all of Nastech's other products (which use the 505(b)(2) FDA approval pathway), which should tease out the potential for allergic reactions or other related problems. In the event that a formulation caused an undesirable side effect in early clinical studies, Nastech could and would likely change the formulation.
"In our view, this negative news results mostly from ambiguity on the part of the FDA and does not stem from anything related to Nastech's clinical work or program development. To expand on this, there are two pathways for the FDA approval of an already marketed product -- ANDA and 505(b)(2). With an ANDA, the clinical studies can only test for bioequivalence, so other studies, including immunogenicity studies, cannot be done. With a 505(b)(2) pathway, other clinical studies can be performed.
"In February 2004, the FDA accepted Nastech's ANDA for its intranasal salmon-calcitonin product. In our opinion, if the FDA had wanted additional studies to be done, it would have been preferable that the agency not accept the ANDA and instead suggest Nastech pursue the 505(b)(2) pathway for the approval of this product, which would allow for additional clinical testing.
"While this news is disappointing in terms of the loss of near-term revenue potential that Nastech might have garnered from its intranasal calcitonin product, we attributed no value for this product in our model. In our view, the real value in the Company comes from utilizing Nastech's intranasal drug delivery platform in other marketed drugs, with the most important near-term revenue opportunity coming from Nastech's PTH program that is partnered with Procter & Gamble.
"Valuation: We would consider the current market weakness a buying opportunity. There is no change to our rating or price target. Our price target of $22 -- $25 assumes the stock will reflect $2 -- $5 of value for the Company's nasal insulin program over the course of our investment horizon, in addition to our value for what we believe PTH could be worth for shareholders a short time before it is approved for the U.S. market, based on our discounted cash flow model.
"Risks: If side effects, efficacy issues, or regulatory roadblocks prevented PTH from being approved for the U.S. market, we believe the stock price would be severely affected, hindering the stock from reaching our price objective. Importantly, if any serious side effects showed up in Nastech's proprietary drug delivery system, we would expect the stock to be severely negatively impacted, since this is the cornerstone of all of Nastech's clinical and preclinical programs."
I think her comments say it all -- both eloquently and succinctly -- and should answer most everyone's questions.
http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/TheBearMarketIsBack.aspx
It is a bad idea to put all your eggs into a single penny miner, especially one with all its assets in Kazakhstan and also that is controlled by an entity (thistle) with its own agenda that is not necessarily aligned with that of the minority shareholders.
PS. I own EGX but it is one of many juniors that I own.
Hopes of lasting peace have also been dented after Taylor was said to have attached conditions to accepting an offer of asylum in Nigeria after his scheduled resignation next Monday.
Officials in Nigeria said Taylor wanted a U.N.-backed court in Sierra Leone to drop a war crimes indictment against him for an alleged role in a brutal civil war. His lawyers have asked the World Court to quash the indictment.
http://biz.yahoo.com/rm/030806/liberia_11.html
I think Defiance mining at Canadian 35 cents/share is a better buy. They have a similar size gold project to that of Red Back in Mauritania. Defiance is fully funded thru feasibility and has only 73 million shares VS. Red Back's 120 million shares outstanding. Defiance's mine in Mauritania is also aiming for around 130,000 oz per year, but under $200 cash cost.
<As usuual my fav vehicles for this ride will be GSS, CUSIF.ob and BENGB.ob>
Yes you and your numerous aliases who pretend not to know each other!