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Is big money finally ready to flow towards West African gold juniors?

Is big money finally ready to flow towards West African gold juniors?
The gold explorers are coming

So, can we mark 9th October as the date the mining markets really turned for the better?

Such dates are at best arbitrary, since anyone who looks at share price graphs knows that we’re more than a year past cyclical lows, but since the nadir in January 2016 it’s been hard to get any feeling that a full-blown recovery is actually getting any nearer.

Early 2017 saw a couple of new listings in London and a spate of activity in Canada as the gold price and mining in general found support in the utterings and policies of Donald Trump.

But as the year has gone on, new money into the sector at the smaller end has been a trickle rather than a flow, old stalwarts like Peter Hambro have got the elbow, but signs of fresh new energy are hard to discern.

They are there though, if you look closely enough.

The relatively young team at Altus Strategies (LON:ALS) got their company away onto market back in August, having completed a £600,000 pre-IPO raise in April. Altus is now doing a £3 mln deal to acquire a West African asset portfolio via an all-stock takeover of Legend Gold (CVE:LGN).

And these assets aren’t too far away from a suite of properties now owned by Cora Gold, which managed to list on London’s Aim market on 9th October.

Two new listings with West African gold projects, arriving to market capitalised at around the £10 mln mark within the space of a month of each other. Co-incidence?

Neither of these will be the last West African gold company to list within a short period. Toro Gold, a privately-held gold miner with a project in Senegal, is also on the way, expected onto the main board in London early next year.

But if there are similarities, there are also differences. Altus has yet to educate London investors as to how its management of exploration risk through a portfolio approach and JV partnering  actually works in practice.

It raised £1.1 mln in August at 10p per share, and the price has now slipped to just under 8.4p, despite news of the acquisition, some high gold grades from Cameroon and copper grades from Morocco.

Cora’s raise, though, was a notch up at £3.45 mln and seems altogether have been easier to put together. The company was supported by Hummingbird Resources (LON:HUM) and backed by people associated with LionOre, a company that got sold to Russian interests in a multi-billion dollar deal a few years back.

Also on the Cora register is Lord Farmer, the man behind Red Kite, the billion dollar hedge fund built around Mr Farmer’s long-standing career in commodities and metals trading.

Sprott is behind Altus, and has supported the company at each round since 2012, just after the last boom died out. But Red Kite has come in to Cora, it might be argued, ahead of the next boom.

Which brings us back to Toro. Toro has been in an interesting position throughout the years of the mining market downturn. Its Mako project, discovered, incidentally, by the people now running Cora, has always had the makings of a mine, and always had the financial support to make it so.

In part, that’s because as a former Barclays Capital man, Toro chief Martin Horgan has networks into all the right places. He knows how to put fundraisings together, how to cornerstone them properly, and how to ensure best bang for buck.

Although it was talked about time and again, no kind of stock market listing could be made to make sense for Toro between the time the company was first put together at the end of the last boom and now. Private money always stepped up, and could be husbanded while Horgan and his team got on a built value.

Now, there’s a mine at Mako that will shortly pour its first gold. That means the value’s there for all to see and shareholders are unlikely to get hurt during long periods of economic evaluation and development.

Accordingly, with the risk much smaller, the Toro raise is likely to be much greater, albeit that the likes of Sprott, RCF and African Lion are already in.

And so, could it be that we are beginning to see a pattern of junior mining recovery emerging properly. Instead of the bits and pieces of earlier in the year, we now have a clear direction of travel.

Fundraisings are getting bigger, projects are more advanced, and increasingly serious players are putting up cash. 

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