January 24, 2012
Azumah’s Plans For A High Margin West African Gold Operation Stimulate Serious Interest In North America
By Our Man in Oz
Any doubts about the market’s appetite for gold were swept away in Canada this week when a small Australian-based explorer with a big African project on its books was bowled over in a stampede of cash-waving investors. Azumah Resources went to the market with a request for C$20 million priced at C40 cents a share. Despite being relatively unknown, and rarely traded on the Toronto stock exchange, Azumah got its money in three days, and was left with enough requests in the unfilled file to take in another 15 per cent, or C$3 million, as permitted under the short-form prospectus. And that option is something chief executive Stephen Stone said he was still considering when Minesite caught him at Toronto airport waiting to catch a plane to Africa.
“We were pretty pleased with the market’s response to the capital raising”, Stephen said. “We haven’t been well known in the North American market, so these new shares will create an opportunity for Canadian and American investors to get a taste of what we’re doing.” And what is Azumah going to do with an extra C$20 (or C$23) million?
“All of the fresh funds will go into the drilling program we have under way at our Wa project in Ghana, and provide us with the confidence to start pre-construction work at site, and place orders for long-lead items of equipment.”
Stephen said the Canadian-focussed capital raising would help create a deeper and more interested market for Azumah as the company enters a period of strong news flow. “Over the next few months you’ll see a steady release of information on the work at Wa”, he said. “Drilling results are flowing in as part of the 250,000 metre program we started last year. We’re moving towards a decision on the appointment of project design and construction management engineers. An updated mineral resource estimate is schedule for release early next month, followed by a maiden feasibility reserve in March, and a finalised feasibility study.”
A hectic schedule, indeed, which explains why Stephen was flying out to Africa at the weekend. Or does it..? “Well, I’m not heading directly to site,” he said somewhat sheepishly. “I’m off to climb Mt Kilimanjaro.”
“Why?” - is the silly question from Minesite’s Man in Oz, because he’s already guessed the answer as the question is asked. “It’s one of those things you’ve got to do before you die.” Well, in that case the best of British (or Aussie) luck, and wave hello to the world from Minesite when you get to the top.
Chit-chat aside, the Kilimanjaro jaunt for Stephen is a well-earned break, if you call trekking up a 5,895 metre volcano a holiday, now that he’s driven Azumah to the point where it is within sight of starting a very profitable gold mine. If all goes well first gold can be expected from Wa in late 2013. It will be produced at an annualised rate of around 100,000 ounces and at a cash cost of less than US$600 an ounce, which at the latest gold price implies a gross margin of more than US$1,000 per ounce. Little wonder the Canadians and their southern cousins rushed to get a slice of Azumah at the current C40 cents, (or A40 cents on the ASX).
As it is currently understood (and drilling is ongoing), the Wa project in north-west Ghana will require a capital investment of around US$135 million. First year ore will grade 2.7 grams per tonne and will be fed into a central processing plant capable of handling between one million and 1.4 million tonnes a year. The ore head grade will vary over the early years between 2.1 grams per tonne up to that 2.7 grams per tonne, while the currently envisaged life expectancy is highly likely to extend beyond the currently pencilled in six years. “That life of mine figure is likely to increase once we re-optimise pit-shell design and feed more drilling results into the planning process”, said Stephen.
The latest drilling results from Wa indicate that a reasonable resource upgrade figure can be expected in February. Recent assays have run as high as 15.6 grams per tonne over six metres, from a depth of 53 metres at the Bepkong South structure, and 16 metres at 2.34 grams per tonne from a depth of 23 metres at the Aduane structure. Those names from the latest drilling offer a clue that Wa is not a single orebody. It is a series of structures centred on the Kunche, Bepkong and Julie structures. However, reconnaissance exploration and aircore drilling have revealed a series of additional structures which will require deeper and more detailed drill testing.
In effect, Wa has entered a phase which might easily be called “the end of the beginning”, a point no doubt noted by the new North American investors who Stephen said include a number high net worth individuals as well as institutions. “This raising takes our share register to about 60 per cent institutional”, he said.
As for the man himself it is to be hoped that his trek up Kilimanjaro is in the same end-of-beginning category and not the other way round – which it might be if he tries to beat the climbing record of five hours, 38 minutes and 40 seconds. Whatever the outcome all the best from Minesite for the climb and for continued success at Wa.
Source >>
www.minesite.com
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