In the lead is the Oena Mine in the Western Cape of South Africa. Here, Bluedust, Tango’s new contractor, started operations in mid-November with the mobilisation of equipment to site, including trucks, excavators and BVX sorters. There was a brief hiatus over Christmas, but work has since restarted and the pace is accelerating.
It’s an attractive arrangement for Tango because it incurs none of the costs associated with the actual mining, but the company does enjoy a share of all revenue from both gravels and tailings.
Meanwhile, to the north in Angola, Tango has signed an agreement with a local co-operative to allow access to an 84 square kilometre concession for the exploitation of diamonds at the Txapemba Project. Tango has charge of all capital expenditure and operations. The company has already mobilised to site, hired Angolan workers and is now expecting to start initial production within a couple of weeks.
And the ramp-up should be pretty quick.
“We expect to be in full scale production by the end of the first quarter,” says Samer Khalaf, Tango’s chief executive.
“We expect first sales from diamonds by the first quarter of 2018, and we’re comfortable that we’ll be seeing cash flow from both Oena and Txapemba at that point.”
It’s this dynamic that lies behind the recent upward momentum in Tango’s share price. The shares hit C$0.05 for the first time in more than six months in the fourth week of January, helped along by the efforts of a newly-appointed market maker.
But there could be more to come.
Tango is a company that’s always been supported by existing coal production contracts, which were renewed early in 2017. The company was responsible for throughput across three operations amounting to 6.43mln tonnes of coal in the period January to November 2017, and Khalaf is bullish about the underlying strength in this business.
“I’m quite bullish about the turnaround in coal prices and conditions in the coal sector,” he says.
“We’re looking at more opportunities in the coal sector in South Africa, either for acquisition or management contracts.
Supported by a recently placed C$500,000 convertible note, Tango is in quite a comfortable position as far as its balance sheet is concerned.
There’s the buffer of the convertible, the cash from the coal contracts and the up-coming revenue from the diamond mines.
All told, this adds up to a positive outlook for a company that had to endure much of 2017 with diamond production on hiatus.
“Obviously that was unfortunate,” says Khalaf. “But it had to be done. We were able to engage a much larger, more capable contractor, we were able to get better terms, and do a profit-sharing deal for the sale of diamonds.”
And it’s here, at Oena, that the excitement for 2018 is really likely to be generated.
“We’re very excited about Oena’s prospects moving forward,” says Khalaf.
“But we’re also looking at transactions and at deals that offer economies of scale.”
The precedent has been set by Tango’s recent move into Botswana, where it will hunt for more diamonds around known occurrences in gravels on a new 75%-owned project called Middlepits, once the deal closes.
But watch for more developments - one way or another, it will be an exciting year.