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Azumah Resources cornerstone investor adds to holdings at premium

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Azumah Resources (ASX:AZM) should trade firmer after existing shareholder Caitlyn Limited committed to invest an additional $1.2 million, reinforcing its commitment to assist Azumah advance its Wa Gold Project in Ghana, West Africa.

Funds will be provided via the issue of 30 million Azumah shares at $0.04 and together with Caitlyn’s existing shareholding of 20 million shares, will elevate it to become Azumah’s largest shareholder at 13%.

Azumah’s working capital will increase to over $4 million with the new funds being applied to complete a Feasibility Study scheduled for Q4 2014, and to drill several high-priority exploration targets.

The increased commitment by Caitlyn provides a strong endorsement for the Wa Gold Project and complements Azumah's other key investors and project participants, Ausdrill (ASX:ASL) and Macquarie Bank.

Caitlyn is controlled by Indian industrialist Mr Agnivesh Agarwal who is Chairman of United Arab Emirates-based gold refiner Fujairah Gold, a 100%-owned subsidiary of listed British mining house, Vedanta Resources (LON:VED).

A subscription agreement also provides Caitlyn with a frontline opportunity to participate in a project development funding package structured by Azumah.

If Caitlyn decides to not participate, it has agreed not to use its shareholding to block progress of the funding or any related corporate transaction.

An anti-dilution provision allows Caitlyn to maintain its 13% equity holding for the next 12 months and a standstill undertaking prevents Caitlyn exceeding a 19.99% holding for 3 years.

Azumah recently increased Ore Reserves and Mining Inventory to over 650,000 gold ounces, underpinning an initial seven year mine life for the proposed 100,000 ounce per year operation.

The project is already substantially de-risked with mining leases granted, grid power to site, easily accessible water, sealed roads and community support.

There is also the untapped prospectivity of Azumah’s 2,800 square kilometre licence holdings.

In late January, Azumah entered into an innovative alliance with Ausdrill whereby it will gain funding via a convertible note.

Ausdrill will invest $2 million in Azumah via a two year unsecured converting note which Ausdrill may convert into Azumah shares at $0.05.

At the time, Azumah was trading just above $0.03.

 

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