REBgold: Three reasons why this gold play really sparkles

TSX-listed REBgold (CVE:RBG) has three attributes that mark it out from the crowd.

The first is a cutting edge metal extraction technology that has the potential to transform hitherto uneconomic projects into money makers.

A passing glance at the shareholder register reveals the second advantage it has over the pack.

REB has three blue-chip investors in Baker Steel Capital Managers, Pinetree Capital and Yamana Gold with deep pockets and a reputation for backing management financially when required.

“This is a huge competitive advantage as we can look to punch above our weight,” said chairman Mark Burridge.

We are somewhat different to the average small-cap junior in that we do have backers who will follow their money if we find the right project.”

Meanwhile, the third attribute is its project opportunity pipeline, including a joint-venture in Finland.

In Finland the company believes it has a “tiger by the tail”.

“What we have uncovered so far looks like the tip of an iceberg,” said Burridge.

“We have only drilled down to a depth of 90 metres and along a strike length of 800 metres, yet historical drilling, geophysics and geochemistry clearly show that the mineralisation continues at depth and along over three kilometres of strike.”

Beyond its projects in Finland, the company is actively working on a number of other opportunities.

In doing so, one of tis competitive advantages is to be able to bring to the table proprietary BACOX bioleaching technology, which allows the company to recover precious metal from rock that is difficult and expensive to process normally.

Using naturally occurring bacteria that are harmless to humans and the world at large, it is able to achieve in just six days what it might take 20 years for Mother Nature herself to achieve.

“We do not see (BACOX) as an end in itself,” Burridge added. “It simply gives us something else in the armoury.”

It also allows the company to consider taking refractory projects that might scare off the run-of-the-mill explorer.

And BACOX has the potential to bring in cashflow if required. “That’s our secret weapon that we can turn on. We can do work (on other companies’ projects) and get paid for it.

“We turned that particular tap off a year ago because we wanted to focus all our time and attention to our own opportunities.

“But we can easily turn that tap back on to cover running costs if the going gets tough.”

A recent placing means the group has around US$1 million in the bank, which means REB has enough cash to finance the next round of drilling and to “keep the lights on”.

And that’s the point. The company has its sights set on becoming a cash generating gold producer, not a technology company.

It is well on its way to achieving this aim following its joint venture with Belvedere Resources.

Under the terms of the deal, REB can earn 50 per cent of the Rantasalmi and Kiimala projects in Finland in return for spending US$6 million exploring and developing them. 

And it could end up owning up to 80 per cent once a feasibility study has been produced.

The decision to move first into Finland was a very deliberate, strategic one.

It is one of the best jurisdictions in the world in terms of infrastructure and the equitable, transparent legal framework that supports the industry.

And it is also host to a number of refractory gold deposits amenable to the cutting edge BACOX technology.

“Finland is a great place to be a miner,” said Burridge.  “It is relatively underexplored and assets are being advanced there. If we have a presence in the country more assets will possibly come to us.”

The properties currently have a resource base of around 600,000 ounces.

All the recent drilling has focused on Osikonmäki East – one of three deposits uncovered within the Rantasalmi claims.

Two of the deposits – the aforementioned Osikonmäki East and Osikonmäki West - lie at either end of the three kilometre long Osikonmäki shear zone, which remains open and unexplored in both directions along strike, and down dip.

The company completed a 6,000 metre drill programme last year, which will be followed by a further 2,000 metres.

Some of the results from Osikonmäki East have been very encouraging, including six metres at 11.1 grams of gold per tonne, 14.2 metres at 9.1 grams and 11.6m metres at 6.8 grams.

“I think we could easily end up doing 10,000 metres of drilling this year if we continue to get the drilling results we have seen recently, subject to funding of course,” said Burridge.

An updated resource statement could come as early as the second quarter, the REB chairman revealed, though the group may wait and release it alongside a scoping study planned for the final quarter of 2012.

Finland is the first opportunity from its pipeline, and REB would like to have “three or so assets”.

The company is actively pursuing five potential projects with production, or near production potential and plans to acquire minority stakes in projects that might benefit from the BACOX technology.

“Canada is interesting and a couple of jurisdictions in South America,” said Burridge.

“Chile is mining friendly and there are some opportunities in Central America.

“We are looking at assets we can pick up for around $5-20 an ounce (in the ground), that have a real chance of making it to production,” said Burridge.

“In two to three years time we hope to have one asset in production and two to three other asset interest, with a combined few million ounces on them.”