There aren’t many junior gold mining companies moving with dynamic force in the market today, but a case could be made that Goldcrest Resources (ISDX:GCRP) is one.
The company has just secured additional assets, expanded its management team, increased its resource base, and is now looking to graduate to AIM.
Given that the plan is to have this all done during the course of the next six months, it should be quite some ride.
But how is it achieving this in a market that’s widely thought to be moribund for junior gold companies?
The answer is that while liquidity has dried up and assets have been changing hands at cheaper and cheaper valuations – one company’s capitulation is another’s opportunity.
This dynamic has allowed the combined talents of the directors of Goldcrest and privately-owned Taoudeni Resources to come together with a suite of smaller projects that when combined create a business of significant scale.
In a deal announced on 19th January, Goldcrest is acquiring Taoudeni and has immediately appointed several key Taoudeni directors to its board.
The Taoudeni acquisition brought with it the Asheba gold project, located in Ghana that on the basis of previous work is estimated to contain at least 176,000 ounces of gold.
That’s a good start.
But the key point is that Asheba is contiguous to ground already secured by Goldcrest - the Akoko gold project.
Akoko contains an established JORC-compliant mineral resource estimate of 92,800 ounces of gold at an average grade of 1.9 grams per tonne, also offering significant exploration upside potential.
Combined, that’s already closing in on 300,000 ounces of gold, and the company is confident that more ounces will be forthcoming once the re-evaluation of historical data is completed and again when the drills are set to work.
What makes the Goldcrest proposition even more compelling is the proximity of the Asheba-Akoko project to a number of existing operations, including Endeavour Mining’s (TSX:EDV) producing Nzema gold mine.
Followers of Endeavour will be aware that Nzema is one of their principle assets but, like all mines, it’s not without its weaknesses.
Already, Nzema is buying in a lot of the ore that goes through the plant, and it is expected to continue doing this going forward.
That’s where Goldcrest comes in. The additional mineralised ore that it hopes to be able to bring to the table could well end up going through the plant at Nzema or a similar local operation, allowing Goldcrest to generate near-term cash flow at a low capital cost. .
So, in a way, it’s win-win. If the Company expands the resource at Asheba-Akoko it could form a standalone operation and will be away to the races anyway. But if it doesn’t there are potential customers for its ore sitting right there on the doorstep.
That’s a proposition that looks compelling whatever the wider market conditions.
Potential backers will know that there’s a resource update in the pipeline and that there’s already two different potential development scenarios shaping up for the near to medium-term.