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.