AZM - Azumah Resources

[shag]

i agree about the costs seemingly looking costly. like its africa and to me its relatively easy to set up yr process plants nowadays. like u buy most of it off of the shelf.
a truck 'n digger or two, yr cyanide plant and a few hired guns, which must b in oversupply in africa...or maybe hire a few tali's, they will be out of work soon hopefully. good explosive skills for doubling up as mining staff too....

 

[Sean K]

i agree about the costs seemingly looking costly. like its africa and to me its relatively easy to set up yr process plants nowadays. like u buy most of it off of the shelf.
a truck 'n digger or two, yr cyanide plant and a few hired guns, which must b in oversupply in africa...or maybe hire a few tali's, they will be out of work soon hopefully. good explosive skills for doubling up as mining staff too....

Yes, Opex looks expensive, no explation why. Might need to get on the phone for an answer. It's open pit to just over 100m, how hard can that be?

They really need another discovery close to the main camp IMO, or the Julie/Collette prospects need to come in at well over 300k oz au perhaps.

Been some unusual volume the past week, but maybe that's just POG running.

Have taken this chart off their presentation from yesterday which makes them look cheap to the others, still. Makes GRY look bloody expensive too.

That either means one of a few things:

1. AZM is overlooked and undervalued.
2. The market doesn't think AZM will shore up too many more ounces.
3. GRY is overvalued.
4. The market expects GRY to find significantly more ounces.
5. A combination of the above.

Roll your dice.

 

[ands]

What are they referring to when they say 'recoverable' (why isn't it all recoverable?)? Why is their such a great difference between the JORC oz and the oz's recoverable? Cheers.

 

[Sean K]

What are they referring to when they say 'recoverable' (why isn't it all recoverable?)? Why is their such a great difference between the JORC oz and the oz's recoverable? Cheers.

There does seem to be a very bit difference. The basis of it is that there will be many inferred ounces outside the pit design and they will then only recover 90% or so of the contained gold in the pit just due to the milling process. This is the situation for any gold deposit. So, what they really need to do is get to the stage of having close to 1m recoverable probably. Long way to go. As I said, I think they need another discovery.

 

[shag]

thanks mate
i was waiting for a comment post its slight sp signs of life this week
could just be that affro hole diggers pissup this week
presumably costing us tangible buks.
cheers and enjoy yr holiday again....
ps to get gold out, its usually a bond au to cn, then seperate and use carbon to get the au on its own
obviously the higher the design recovery rate means more dosh/costs. just a simple b/c ratio clac.
this also applies to mining/diggin the stuff up obviously.

 

[ands]

Could this be running on the back of a strong gold price, currently $994.05. Continues to post higher highs and higher lows over the last week with better volume.

 

[Sean K]

Could this be running on the back of a strong gold price, currently $994.05. Continues to post higher highs and higher lows over the last week with better volume.

Can only be POG, as they don't start a new drilling campaign until the end of the wet season.

Or, corporate interest.

After the average pre- pre- feasability study, I say POG run up.

 

[Sean K]

Quite an increase in volume the past couple of months when there was obviously no news coming up. Probably just POG related, but couldn't discount some corporate action in the future. Maybe someone taking a position? Pure speculation of course, although AZM has always stated that they would be looking for a partner down the track to take the project to production.

 

[Sean K]

Still unusual volume happening on AZM when they aren't doing anything and on the back of what looked to be a poor pre-pre-feasability study. Fundamentally still undervalued on the EV to ounces scale and trailing the likes of GRY terribly, who are running well ahead of the pack now. Can't ignore the price and volume though. On the long term chart coming up to the great wall of China between 15 and 20c. A sort of inverse H&S that if broken through might help, but on no news? They won't even be getting drilling results till at least towards the end on October.

 

[Sean K]

On the update/news front, zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

They were supposed to start a new drilling campaign around the end of Sep, but have failed to inform us if they did, or why they didn't and when they will. Crap effort really. How hard is it to keep the market informed!!!

On the chart front, has gone as any gold stock should the past few weeks, ie UP. Currently hitting 20c which is the Great Wall! and I doubt will be penatrated without a legion of Jason Bournes leading the charge. I wonder if I give Mat Damon a call he will help out?

Anyway, even though there is a ton of volume supporting the climb, I see this halting around here unless a couple of things occur.

1. Gold keeps running way past $1100
2. AZM announce a Julie JORC of over 300k
3. They actually start drilling again with some rampy comments
4. Someone makes an offer
5. Jason Bourne takes down the Great Wall.

H&S still in play.

 

[jman2007]

Wow incredible turn of events here,

Would have been a magnificent ride from 10.5-11c. Followers of this stock have unearthed a little gem here, not a big player in the region by any means but West Africa is THE World Hot Spot for gold discoveries at present.

 

[shag]

hi guys
plenty of volume still and post 20 presently.
one thing azm taught me was to jump onboard these west african miners, and not loose out by chasing them up.
i wasted month/s trying to fish out sellers at 8/9c.
it would just about pay to visit the place and get the word on the ground.
tho i remember fat profits came back from one of their african junkets and issued a part sell on a certain east african miner, only for it to near double again soon after due to resource upgrades.
cheers

 

[Sean K]

Just poked it's head through 20c, but with gold coming off a bit might be short lived.

BGF recently did a tour of the West Africans and produced a research note. Detail on AZM:

Azumah Resources (AZM) BGF Valuation $0.29

First Prodʼn 2012, Scoping Completed, Pre-feas. Q2 2010

• At first glance one might think that AZM is smaller play
than the others, but there is nothing in the geology to
suggest that it wonʼt have 1-2 mill. oz as a minimum.

• The decision to conduct a scoping, and now a prefeasibility
study, at an early stage should be seen as a
measure of the cautious nature of the management. Some
companies run by geologists would rather drill on
indefinitely and worry about project assessment when it is
fully drilled out. Others, like AZM, appreciate that constant
exploration can be very dilutionary on shareholders, so it
would like to consider the options of a more modest
production rate initially, growing the company out of
positive cash flow. It is a matter of philosophy.

• It is notable that AZM has not achieved much traction in
the market place, leaving its shares selling at half half the
price the project suggests they should be selling at. This
may be attributed to a lesser emphasis on stock promotion
than with some other companies.

• There has also been a concern that AZM might enter into
a dilutionary merger with Castle Minerals, which shares a
common director and some common foundation
shareholders. We understand this idea has been knocked
on the head. Once this has been fully understood by the
market, we would expect a re-rating upwards.

• Another perceived weakness has been the minimalist
management team. We understand that there will be board
and management appointments soon that will address
these concerns, broadening the skill sets available.

Interestingly, all the companies have valuations in the $60-70/oz range, with the exception of Azumah, which is only $32/oz. We can see no objective reason for such a discount continuing.

(note the author of the document owns AZM)

 

[Sean K]

Just poked it's head through 20c, but with gold coming off a bit might be short lived.

Looks like it's finally getting a re-rating. Going to open up at about 27c which is very unusual. Going to reach that H&S target mentioned earlier. Especially when they aren't even digging holes at the moment. I'm not sure we can blame the BGF report. Maybe. And POG..

Taking profits at 15 cents looks to have been a cunning move. Nice one kennas.

 

[swm79]

This was reported in The Australian's "Pure Speculation" section yesterday... might have something to add to the BGF reports kenna

african goldies getting a lot of the spotlight recently

Gold run in Africa

WHICH brings us to a story we have been harping on about -- gold in West Africa. In brief, unlike Western Australia, Ghana and its neighbours are rich in new discoveries either with, or potential for, well over a million ounces each, and high grades into the bargain.

The buzz over the Margaret River shiraz at brokers' lunches is apparently that Gryphon Minerals (GRY) is the one to watch. The shares have had a good run after last month's announcement of a 1.1million-ounce resource in Burkina Faso but clearly there is expectation for more. One geologist we know who has walked over much of the ground in West Africa had a call from an investor friend in Idaho asking his opinion of Gryphon, so the word is around.

Meanwhile, Warwick Grigor at BGF Equities has just returned from Ghana and Burkina Faso and is even more pumped up about the companies he visited. Apart from Gryphon, these were Perseus Mining (PRU) which he still sees as the prime target for a takeover with its 5m ounces, Adamus Resources (ADU), Ampella Mining (AMX) and Azumah Resources (AZM).

He makes the point that all the companies are valued between $60 and $70 an ounce -- except Azumah with is valued at only $32/oz. "We can see no objective reason for such a discount continuing," he told clients.

He knocks on the head market talk that Azumah would consider a dilutionary merger with Castle Minerals (CDT), another Ghana play, and he thinks Azumah has the potential to work up as much as 2 million ounces at its project.

Apart from Gryphon and Ampella, there is another gold explorer in Burkina Faso, Blackthorn Resources (BTR). This company is still tarred to some extent by being seen as primarily a zinc company -- its Perkoa project is mothballed until prices are better -- but it is making progress with its gold tenements surrounding Perkoa, and confident that it will have an economic resource. We know there's gold there because local artisanal miners are pulling it out of shallow workings on BTR's ground.

Investors are getting their heads around this West African story. For proof of that, look no further than Bassari Resources (BSR). Its Senegal project lies on the same Birimian gold belt -- that is, the same type of rocks -- that host the big Ghanaian and Burkina Faso gold finds.

Bassari hasn't progressed all that far, but all it needed to do during the week was announce it was starting drilling. The punters could put two and two together -- that this ground lies not too far from other discoveries that now total 40 million ounces.

 

[ands]

A High of 31c on the highest volume ever! $40 million market cap @ current 26c - must be getting close to fair value. Need those drilling results to come through to keep this momentum.

 

[matty193]

Looks like Jason Bourne may have smashed through that wall for you today, Kennas. And was given a speeding ticket for his efforts!

 

[Sean K]

Yes, was a good push through, I'm really surprised that it went through on no news. And the volume was extremely unusal. Could be just day traders jumping on junior gold bandwagon and AZM being mentioned in the media as the cheapest goldie assisted. But, it's the cheapest for a reason imo and deserves to be running at a lower valuation than some of the others. Still needs exploration success to eventually mine anything.

I'm not overly pleased with yesterdays candle. Was chassed way too hard early, and now we have a bunch of holders sitting on an immediate loss. If they're traders, they might be out, or it won't take much for them to cut losses and dump on the next open. Would have much rathered see a smaller white candle for longer term health.

 

[Sean K]

This drilling campaign was supposed to start in September so a little disappointed they didn't keep the market informed on things. They could have just given a quick update to say a rig was on its way or something. Anyway, they're about to start a new campaign, and what a campaign! 41,000m of drilling. Sounds like a lot for a spec junior.

Proposed drilling at the green stars on the map. Interesting they've selected Kunche West and this newly named 'Aduane' Prospect for quite a lot of attention. Looking for that new discovery they need. Fingers crossed.

 

[ands]

I was considering bailing after this had run so fast in such a short space of time (if I have learnt anything from the GFC it is to take profits). But this massive drilling program shows they are serious, it has certainly renewed my interest.

Hopefully it encourages other investors to jump on as well. As you said Kennas, if they had continually updated investors as things progressed it would keep that interest in AZM alive. And people like me wouldn't have considered getting out in the first place.