AZM - Azumah Resources

[Sean K]

There's a couple of factors at play I think.

1. POG stalled
2. Global uncertainty raising doubts on ability to raise capital for development
3. No major upgrades or new discoveries around Wa
4. Slow to progress feasibility studies to development
5. Suspect investments in Castle and Endeavour losing focus on the ball
7. Going through the normal discovery to production price cycle trough

etc

I remember when this company was banging on and on about how cheap they were using a MC to oz in the ground metrix. I think we'd find that they went off the scale at some point and became very expensive.

Perhaps add 8. moving back in line with peer valuations.

Most valuations of this are at about $0.70. Check pg 22 of their 12 Mar presentation.

 

[Chargin8]

Thanks for that detailed reply, food for thought.

There's a couple of factors at play I think.

1. POG stalled
2. Global uncertainty raising doubts on ability to raise capital for development
3. No major upgrades or new discoveries around Wa
4. Slow to progress feasibility studies to development
5. Suspect investments in Castle and Endeavour losing focus on the ball
7. Going through the normal discovery to production price cycle trough

etc

I remember when this company was banging on and on about how cheap they were using a MC to oz in the ground metrix. I think we'd find that they went off the scale at some point and became very expensive.

Perhaps add 8. moving back in line with peer valuations.

Most valuations of this are at about $0.70. Check pg 22 of their 12 Mar presentation.

 

[Chasero]

Wow AZM has really fallen off a cliff. Ive been in and out of this stock for a couple of years and have done quite well. Lately Ive been buying into the big dips trying to average a buy I made at 40 cents to a lower price. But it just keeps going down heh.
All the news Ive heard about them has been positive so IMO its very over sold. Gold is stagnating a bit but that shouldnt have pushed the price down to this level.

do they need a capital raising soon?

$9m spent in 2011. $8m left in cash at bank...

Means they may run out of cash by 30 June 2012 if they spend 9m??

Don't know what else is causing the sp to drop other than markets being scared of a CR due to NST and RED recent C/R??

 

[Chargin8]

looks like a good buy to me now at current 26.5c
Who knows, tomorrow it might be 25c!

 

[Chargin8]

Haha, or today! at 25c.
No I havent bought any yet...

looks like a good buy to me now at current 26.5c
Who knows, tomorrow it might be 25c!

 

[Sean K]

Thanks for that detailed reply, food for thought.

The other two things to note is all the trouble brewing all around Africa including W Africa.

I'd also put some more emphasis on the feasibility study issue and how delayed it is and why. It was supposed to be out in late 2010 I think. They announced around then that then there'd be some production costs announced in Jan 11. Then, it was supposed to be out mid year. We're still waiting for a feasibility study. Of concern to me would be the cost per ounce. A few years ago around $400 an ounce was good. Now companies are pulling out $1000 an ounce numbers. Costs have skyrocketed and more difficult deposits mineable due to POG running to $2000. What happens when/if it drops back again...

From Dec 2010:

I was a somewhat bullish supporter of AZM back around 10c but as the multiples kept climbing up with not much advance in the total in ground gold and no more significant discoveries, I'm more concerned. They seem to be going into turtle mode on the feasibility studies to development. Still 2 years away? If they can't race to BFS, DFS, on the current POG, then they will probably come a cropper imo.

Wa Gold Project Feasibility Study Rapidly Advancing

 Feasibility Study on 70,000ozpa-plus project on-track for delivery early next year
 Final capital and operating costs available mid-January 2011
 First production set for early 2013
 Definitive level metallurgical test work close to completion and site engineering investigations substantially completed
 Plant and infrastructure being designed to accommodate production expansions in line with expected resources growth
 Ghana government to upgrade local power infrastructure negating need for stand-alone power generation and meaning reduced capital and operating costs
 Strong flow of drilling results over coming months from aggressive exploration programs aimed at increasing current 1.2Moz resource base

 

[TrendGAIN]

The down trend has been pretty consistent, but has accelerated in the last two months. AZM has stretched far away from its mean and Friday could mark the beginning of a snap back. It needs to get back above the $0.36 mark to have a chance at an uptrend. Interestingly, the OBV (when looked at a bit longer-term) indicates that buying and selling volume has been consistent and flat through the down trend, suggesting that price action reflects inactive buyers as opposed to active sellers.

 

[Althom]

Feasibility study was due mid 2010 - what's the holdup?

 

[Sean K]

Feasibility study was due mid 2010 - what's the holdup?

There was never any decent justification. I think they were just trying to shore up more M&I resources but my sceptics hat says the production cost per ounce in their cropping was pushing the envelope. Could also be the general market conditions for funding development and they've just been delaying for the right moment. Or, just not well managed or communicated to the market.

Maybe they're just 'mining the market'.

 

[Sean K]

Azumah Nelson must be quite embarrassed by this week effort to get off the deck. The company has no one to blame but themselves even with POG coming off and credit and sentiment drying up.

IMO if they had have concentrated on just getting the current resources into production instead of buying into other crap and focussed on further exploration they'd be in a much better position. As it is, if POG doesn't stay high they could turn into dust.

 

[Althom]

Yep, pretty sad effort all round.

 

[Sean K]

Yep, pretty sad effort all round.

Not sure if you're being sarcastic or not.

Since the peak in 2010 their MC has gone from about 240m to 60m or so.

I suppose in 5 years they've taken their MC from just a few million so depends on perspective.

Will they actually make a mine?

Last presentation said FS due Q2, 4 days away.

...but they said that about 2 years ago too...

But wait! Further delays! LOL

Report out on 19 June says:

A maiden Mineral Reserve statement is due early in Q3 2012 and the Feasibility Study for the first stage of the Wa Gold Project will be completed in the weeks to follow.

OMFG! Can they just quit announcing any dates...

 

[Althom]

No, no sarcasm intended. FS was due 1st Qtr 2011 initially, now 3rd Qtr 2012 and resources have only gone up due to decrease in cutoff grade.
With difficulties in getting funding now c.f last year you have to wonder if they've missed the boat.

 

[Sean K]

No, no sarcasm intended. FS was due 1st Qtr 2011 initially, now 3rd Qtr 2012 and resources have only gone up due to decrease in cutoff grade.
With difficulties in getting funding now c.f last year you have to wonder if they've missed the boat.

Will depend on QE3, 4, 5, 6 etc. If the world keeps printing and borrowing then POG will keep going. From what we're seeing in Europe though, I'm not sure. There seems to be a demand for austerity and control of spending, not printing. The US isn't there, but if that crazy idea of spending what you've saved catches on, then POG could be cactus.

 

[Sean K]

Interesting ann today with some deep drill results at Julie indicating that it's at least double the depth. Not sure if that means double the resource in the upcoming upgrade but could be. Could mean it's a standalone operation and they won't have to truck the ore a long way to Kunche. Maybe the planets are starting to align.

What I do not want, and neither should you, is that they put the next FS on hold to cater for the additional ounces. They have enough at Kunche to go to DFS and start development really, with clear expectation that the life of mine will be extended due to these upgrades.

Get on with it Parso!

 

[Althom]

2.5 years of drilling on top of the work handed over by Crew resources for ~400kozs indicated and ~260kozs inferred so reserve max 300-350kozs - needs to at least triple for a standalone operation. Not enough there now to build and pay off, let alone the fact that there's no water or power out there.

Parso? - Steve Parsons is at Gryphone Minerals not Azumah.

 

[Sean K]

2.5 years of drilling on top of the work handed over by Crew resources for ~400kozs indicated and ~260kozs inferred so reserve max 300-350kozs - needs to at least triple for a standalone operation. Not enough there now to build and pay off, let alone the fact that there's no water or power out there.

Parso? - Steve Parsons is at Gryphone Minerals not Azumah.

Yep, and, yep. Power and water? Pfft, who needs power and water?

 

[Sean K]

2nd Qtr Activities report out recently and confirmation that the DFS for Stage 1 will be out in the 3rd Qtr.

Azumah's Definitive Feasibility Study (‘DFS’) on Stage One of a phased development of the Wa Gold Project is due for completion in Q3 and is based on construction of a +1.0 million tonne per annum gravity and carbon-in-leach (“CIL”) plant producing 80,000oz-100,000oz Au per annum.
Management is concentrating on progressing high value-adding and de-risking activities, including:
● delivery in the next few weeks of a maiden Mineral Reserve to underpin a Stage One development decision;
● completion of the DFS soon after, and
● securing of key project development licences and approvals.

Planned activity in the September 2012 Quarter
During the Quarter ended 30th September 2012, Azumah expects to:
 Report maiden Mineral Reserves for the Wa Gold Project;
 Complete a Feasibility Study for the Wa Gold Project;
 Lodge a NI 43-101 Report regarding the maiden Mineral Reserves;
 Commence an update of Mineral Resources (scheduled for completion in Q4) based on new results from drilling at Kunche, Bepkong, Aduane and Julie;
 Complete infill drilling at the Julie deposit;
 Commence and complete drilling to extend Julie mineralisation to a target depth of 150m vertically below surface;
 Report a succession of drilling results from several exploration programmes either recently completed, in progress or planned;
 Maintain its overall, well focused exploration activities aimed at delineating additional mineralisation with a high- probability of increasing Mineral Resources and Mineral Reserves; and
 Continue to advance project permitting and approvals.

By end of September.

I'm waiting with baited breath.

 

[Sean K]

FS out and stock caned.

Looks as expected to me.

Maybe operating costs above what some others expected.

Market don't like it that's for sure!

 

[Althom]

<30% conversion of resource to reserve - something seriously wrong there!