Given all that’s going on in the world right now, you’d think the papers would be paying little attention to ‘Saudi playboy’ Turki Bin Abdullah. Yet, the stories about this chap and the fleet of gold supercars he’s brought to London are getting more and more prominent. In the latest development, The Times tells us that Mr Bin Abdullah has been hoovering up parking tickets all over Knightsbridge. Apparently he can afford it. Luckily, my own fleet of gold luxury and performance cars doesn’t have this problem; I don't live in Knightsbridge and therefore have both a driveway and a garage.
However, I am endeavouring to behave in a similarly obnoxious fashion. I've been revving up my 1979 Ford Capri S aggressively outside the local Co-op and flicking a couple of fingers up at the ‘Twenty’s Plenty’ sign further down the same road (albeit staying within the old 30mph limit). My beloved Capri is going in for its MOT tomorrow, so fingers crossed.
All gold bugs should want to take a meeting with Matt Gill, CEO of White Rock Minerals†† (WRM AU). White Rock’s cornerstone asset is the 100%-owned Mt Carrington Project in NSW, where shallow Indicated and Inferred mineral resources totalling 338,000oz gold and 23.5Moz silver have been defined. Let us know if you’d like to see him.
COMPANIES
Metminco*†
ASX:MNC | A¢0.55 | US$11.6m | Speculative Buy
Completion of A$1m Capital Raising
Metminco has announced the completion of a placing of 250m shares at A¢0.4/share by SP Angel and RFC Ambrian to raise a total of A$1.0m. Trading of 210m shares is expected to commence on the ASX/AIM on 5 April, with the balance of 40m shares expected to begin trading on 8 April. The company has stated that use of proceeds, following the completion of the Quinchia Gold Portfolio acquisition (on target for end-May 2016), will be towards: the completion of a feasibility study for the flagship Miraflores Project; plant infrastructure; and working capital. For further details please see Metminco – Agreement to Acquire the Quinchia Gold Portfolio, 7 March 2016.
Binding Heads of Agreement with RMB to acquire 100% of the Quinchia Gold Portfolio — The portfolio comprises 15 mining concessions in Colombia, with a 2.8Moz resource at 0.65 g/t (at a 0.27 g/t cut-off) across the near-feasibility stage Miraflores Project and the Dosquebradas deposit. An initial equity consideration of 50m MNC ordinary shares has been paid by Metminco to RMB. Meanwhile, the cash consideration payable to RMB within one year of signing totals just an estimated A$0.5m, with a further two payments of A$1m due in May 2017 and 2018, minimising up-front capital commitments. The total pre-production cash consideration sums to A$7.5m due over a maximum of four years, with a final A$7m NSR-based payment contingent on the project being brought to production and achieving positive cashflow.
Near-term development potential at Miraflores — Prior owner Seafield had reached near-completion stage on a feasibility study on the project, with the latest Technical Report numbers outlining a 42,000oz pa 12-year LoM operation with already attractive AISC of US$682/oz, capital intensity of US$164/oz, and post-tax NPV8 of US$47m at a US$1,200/oz gold price. The company sees scope for NPV optimisation due to the recent reductions in mining and capital costs seen across the industry, combined with a planned boost to production to increase the IRR. A work programme will be undertaken over the coming months to incorporate these planned savings and their impact on feasibility study parameters, with the finalised study currently anticipated by 1Q17.
Prospective large-scale exploration target at Tesorito — Despite the early-stage nature of the Tesorito target, 800m to the SE of Miraflores, the company sees it as the highest-priority exploration play within the Quinchia Portfolio. Of the three holes drilled so far, all have encountered consistent mineralisation and alteration, with the highlight being TS-DH-02’s intercept of 384m at 1.0 g/t Au starting from surface. The company believes Tesorito has the potential to represent a substantial gold-copper porphyry system, typical of the host structural trend (the Mid-Cauca porphyry belt), which already houses giant deposits such as AngloGold’s 33Moz La Colosa and Gran Colombia’s 14.5Moz Marmato.
Post-acquisition outlook — Given that the company remains in negotiations to secure a strategic partner to alleviate the capex commitment to reach the PFS and DFS stages at the large-scale Los Calatos Project (estimated at US$15m and US$25m respectively), and the access rights dispute at Mollacas remaining ongoing, we believe the Quinchia Gold Portfolio represents a near-term fundable development opportunity in the current improving gold price environment. Following the closing of the transaction, we anticipate two streams of near-term newsflow from Quinchia, involving feasibility study re-optimisation work at Miraflores running parallel with exploration results from Tesorito. Both of these have the potential to act as catalysts for MNC share price appreciation.
ASX:BSE | A$0.06 | US$34m | Buy | TP : A$0.17
Successful Completion of Retail Entitlement Offer
Base Resources has announced the completion of the retail component of the entitlement offer to raise gross proceeds of ~A$10m at A$0.06/share. The offer closed on 24 March 2016, with eligible retail shareholders subscribing for approximately 13.5m shares to raise A$0.8m, and a further A$1m being raised through the fully subscribed retail shortfall bookbuild. This follows the A$8.3m accelerated institutional 1 for 3.35 component of the entitlement offer, also at A$0.06, whereby 137.5m new Base ordinary shares were issued. Settlement of the Retail Entitlement Offer is anticipated to take place on 6 April 2016, with the new BSE shares to commence trading two days later. Following on from the success of the offer, we retain our Buy recommendation, with a revised target price of A$0.17/share.