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Azumah Resources Ltd: THE INVESTMENT CASE

Azumah Resources’ Ghana joint venture leveraged for transition to gold producer

The company is working with Ibaera Capital to develop its project and bring it into production.
Azumah Resources’ Ghana joint venture leveraged for transition to gold producer
The Wa Gold Project is in far northwest Ghana along the border with Burkina Faso

Azumah Resources Limited (ASX:AZM) is developing a portfolio of gold exploration assets in Ghana, having recently announced a total JORC resource of 2.496 million ounces across its Wa Gold Project’s 12 deposits.

Within this resource is an ore reserve of 9.1 million tonnes at 2.14 g/t gold for 624,000 ounces.

The company has progressively grown the resource by exploring its 2,400-square-kilometre licence holdings over large areas of prospective Birimian terrain, the rocks that host most of West Africa’s gold mines.

Along with a revised feasibility study and financial metrics, Azumah plans to continue drilling and growing the Wa resource and is fully funded to a development decision in the September quarter of 2019.

READ: Azumah Resources increases gold JORC resource to 2.5 million ounces

Azumah has three main deposits at Kunche and Bepkong adjacent to the border with Burkina Faso, as well as Julie which is about 80 kilometres to the east.

The company is on track to report both a mineral resource upgrade and an interim ore reserve upgrade at the end of 2018, as well as the results of a comprehensive technical and costs review currently underway.

Azumah managing director Steven Stone said last month: “With capital and operating costs already heading in the right direction, our main focus is to increase ore reserves.

“With many new and established targets to test during the remainder of 2018 and into 2019, we are optimistic in that regard.

“Drilling will recommence shortly after the annual break for seasonal rains.

“The Ghana Government is extremely keen to see the first gold mine established in the Upper West region and is actively supporting the project on several fronts.”


READ: Azumah Resources finds way to lower costs, increase output at gold project

A feasibility study undertaken in 2015 pointed to a seven-year mine life for the Wa project with annual gold production of about 90,000 ounces.

Feedstock would be sourced from open pit mining with ore treated through a nominal 1.2 million tonnes per year carbon-in-leach (CIL) processing plant.

The plant would be adjacent to the Kunche deposit, enabling it to treat Julie primary and transitional ore prior to road haul to the processing plant.

Last year Azumah entered into an earn-in agreement with Perth-based private equity group Ibaera Capital GP Limited, which aimed to deliver a revised feasibility study to support the funding and development of the initially-proposed 90,000-ounce a year operation.

Stone told Proactive Investors’ Stocktube channel: “The purpose of the joint venture is to increase the reserves from the current level to a level where they will underpin the financing and development of the project.”

The fully-updated feasibility study is expected to be complete in the September quarter of next year.


READ: Azumah Resources identifies major new gold target in aerial survey at Wa project

The earn-in agreement with Ibaera allowed the private development company to obtain up to 47.5% interest in Azumah following two stages of expenditure worth about $17 million.

Ibaera also made four appointments to Azumah’s management team.

The private equity-funded mineral investment and development company is backed by international investment funds and invests in emerging copper, nickel, zinc and gold projects from exploration and early development.

Founded in 2012 by executives from the development teams at Fortescue Metals Group (ASX:FMG) and WMC Resources Limited, Ibaera provides in-field expertise and manages projects from exploration through to construction.

Ibaera has 12 geologists and engineers who are collectively and individually recognised for their contribution to the discovery and development of world-class mining ventures.

READ: Azumah Resources’ high-grade hits likely to add to Ghana project’s gold bounty

Azumah’s exploration strategy has been driven by its need to boost resources to increase its reserve base from 624,000 ounces to about 1 million ounces.

This would serve to underpin a development decision and improve funding capability, in particular through an effective reduction in the development capital per reserve ounce.

This is where the company’s collaborative approach with Ibaera should come to the fore.

Not only will the group provide Azumah with a better chance of growing reserves, but its access to capital markets should also be an advantage in terms of ongoing funding.

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