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Cardinal Resources aims for completed gold project DFS by September quarter

A PFS found that the project in Ghana could generate US$1.4 billion free cash flow before tax.
A Ghana map showing its capital Accra
OVERVIEW: CDV The Big Picture
Namdini is about 680 kilometres north of Ghana’s capital, Accra

Cardinal Resources Ltd (ASX:CDV) (TSE:CDV) has beefed up its board as it prepares a definitive feasibility study (DFS) for its flagship Namdini Gold Project in Ghana.

The West Perth-based company produced a pre-feasibility study (PFS) for the project in September 2018, finding it could produce a pre-tax US$1.4 billion free cash flow if it opted for a 9.5 million tonnes per annum throughput model.

Cardinal’s DFS is being funded through a US$25 million facility provided by globally-renowned resource investment outfit Sprott through Sprott Private Resource Lending.

READ: Cardinal Resources completes PFS for Namdini Gold Project in Ghana

Cardinal’s study demonstrated Namdini contained 4.76 million gold ounces from a maiden probable ore reserve estimate of 129.6 million tonnes at 1.14 g/t gold with a 0.5 g/t cut-off.

Speaking at the time, Cardinal managing director & CEO Archie Koimtsidis said the company had a compelling business case to move into the DFS phase for the throughput processing facility based on the optimum return on capital employed (ROCE).

He said: “The [definitive] feasibility study is fully-funded and will form the basis for the development of our Namdini project in Ghana with completion anticipated in Q3, 2019.

“The PFS study confirms the Namdini project as one of Ghana’s and Africa’s most promising undeveloped, large gold assets.

“The financial modelling of the project shows it to be technically sound and financially viable.”

The PFS used a US$1,105 an ounce gold price to provide a life-of-mine optimised pit converting 73% of the 6.5 million ounces of indicated mineral resource to probable reserves.

It estimated an 86% metallurgical recovery for the starter pit and 84% for the life-of-mine with ongoing optimisation test work.

A 38% post-tax internal rate of return (IRR) was generated through a US$1,250 gold price financial model.

The spot gold price was US$1,289.49 an ounce on Tuesday, January 15, 2019.

READ: Cardinal Resources assays shallow high-grade gold at Ndongo East

All-in sustaining costs (AISC) of US$599 per ounce were determined for the first 2.5 years, inclusive of a 1.8-year payback period.

The capital development cost for the 9.5 million tonne per annum throughput plant was US$414 million, down from US$426 million.

Ndongo East offers upside for Namdini

Drill results released since the Namdini PFS was published have continued to confirm the significance of a Ndongo East discovery, 24 kilometres south of Namdini.

Positive results reported in November 2018 included a 9-metre intersection grading 23.3 g/t from an initial 450-metre strike length of strong, shallow gold mineralisation which is open along strike and at depth.

Ndongo East has the potential to add further high‐grade gold ounces to Namdini’s maiden probable ore reserve of 4.76 million ounces.

Key figures sit on board

Cardinal MD Koimtsidis has been joined on the board of directors by a number of new faces.

Among these are mining veteran Trevor Schultz who joined the board this month as a non-executive director.

Schultz has more than 46 years mining industry experience and was responsible for construction of a 12-million tonnes per annum processing plant for Centamin PLC (LON:CEY) (TSE:CEE) (FRA:7CT) (OTCMKTS: CELTF) in Egypt.

The Centamin plant had a similar flowsheet to Namdini’s proposed flowsheet.

In more recent times, Schultz was chief operating officer at Ashanti Goldfields Corporation, now AngloGold Ashanti Limited (ASX:AGG) (NYSE: AU) (FRA:AODC) (JSE:ANG).

Schultz was a resident of Ghana for six years.

READ: Cardinal Resources adds mining veteran to board for gold production phase

Four months ago, Ken Thomas & Associates Inc project development and metallurgy president Dr Kenneth G Thomas joined the board as non-executive director.

The Canadian-based director has more than 46 years experience in the mining industry, with many years' involvement in project development.

READ: Cardinal Resources strengthens board with Kenneth Thomas appointment

Thomas is the immediate past president of the Canadian Institute of Mining, Metallurgy and Petroleum.

He was previously global managing director at Hatch Ltd, senior vice-president at Kinross Gold Corporation (NYSE:KGC) (TSX:K) (FRA:KIN2) (SWX:KG) and served in senior roles at Barrick Gold Corp (NYSE:GOLD) (TSE:ABX) (ETR:ABR) (BCBA:ABX)

Thomas was also chief operating officer for Crystallex International Corporation and worked for in Africa for 10 years with Anglo American plc (LON:AAL) (JSE:AGL) (JSE:AMS) (OTCMKTS:NGLOY).

MD Archie Koimtsidis has more than 20 years' experience in gold exploration, discovery, production, and refining in West Africa and South America.

Koimtsidis has been instrumental in acquiring Ghanaian projects for Cardinal.

The MD has a strong understanding of West African and Ghanaian resource projects and was deputy country manager of Ghana for PMI Gold Limited before joining Cardinal.

PMI was snapped up by Asanko Gold Inc (TSX:AKG) (NYSE MKT:AKG) in 2014.

Cardinal's non-executive chairman Kevin Tomlinson is a mining and finance executive of more than 31 years.

Tomlinson was an equity and corporate advisor as investment banking managing director at Westwind Partners/Stifel Nicolaus.

Ghanaian resident and alluvial mining operation principal Malik Easah is an executive director of the company.

Easah is developing permits in two Ghanaian gold belts and specialises in alluvial gold wash plants and recovery equipment manufacturing.

Cardinal non-executive director Michele Muscillo is a partner with HopgoodGanim Lawyers in Australia and has more than 16 years experience in capital markets transactions.

He is also a non-executive director with Aeris Resources Limited (ASX:AIS) and Xanadu Mines Limited (ASX:XAM) (TSE:XAM) (FRA:02X).

Tight share registry

Cardinal’s top 20 shareholders held 82.83% of the company’s shares while its top 20 option holders had 77.08% of its listed options on September 28, 2018.

The company’s three substantial shareholders were Bank of Nova Scotia and associates/affiliates, holding 9.77%, Corporate International Holdings BV (collectively the Gold Fields Group) with 8.80%, and Van Eck Associates Corporation and associates with 7.49%.

September 2018 quarterly results

Cardinal held $35.8 million in cash and cash equivalents on September 30, 2018, with its total assets judged at $38.8 million.

Its total liabilities were $36.4 million, with shareholders’ equity put at $2.4 million.

The company’s total liabilities and shareholders’ equity totalled $41 million.

Revenue in the exploration and development company was $14,693, with net loss for the September 2018 quarter sitting at $5.6 million.

The comprehensive loss for the period was $5.7 million, which translated to $1.50 a share.

There were more than 374 million common shares on issue at September 30.

Cardinal brought in $34 million in financing during the quarter, spending a corresponding $6.2 million on operating and investing activities.

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