Mining Minerals & Metals Share Discussion Threads

[willyworm2] 25/3/2009 14:14

thanks chaps (assuming you are chaps....)

[1waving] 25/3/2009 14:11

Willy -- there could be several million ounces at Komana alone, let alone the other Mali licenses.

We would be looking at open pit initially with annual production of at least 250,000 oz. there is a lot of drilling to be done and plenty of results yet to be announced also. I would say in a year there will be a major resource update that would give us a better idea of overall potential.

[deka1] 25/3/2009 13:53

willy hi open pit shell to start with , then depends whats deeper down, the drilling will tell us over the next couple years, 400k ton per annum plant and mining fleet , today cost around 80mil usd i guess

[willyworm2] 25/3/2009 13:47

thanks 1w, any idea what size mine we could be looking at?

[deka1] 25/3/2009 13:43

yes 1w, i agree 4 years its possible,

[1waving] 25/3/2009 13:18

Willyworm2 -- today's trades/SP movement sums it up at the moment.
Juniors are being valued according to current or near term cashflow rather than assets in the ground. In more stable times the assets in the ground would have a greater influence when more fundamental values are adopted. The real question is when will valuations return to a historic norm -- who knows ?

As for 3-4 years time we should have good production so value will out, as they say, in Glencar by then -- but on what basis that is derived is down to the market at the time. Maybe we'll have got through the market moving to extremes by then. With assets in the ground being undervalued, over time that should give additional leverage to the share price for when and if we return to more historic norms and fundamental valuation. The price of gold is also a very major factor.

Whichever way it works out we can now say that Glencar is on a very sound financial footing for 4 years, when production should have come in anyway.

[bongo bwana] 25/3/2009 13:07

There's been a stand off between MM's and investors.

Maybe the yanks will do us a favour but somehow i doubt it today.

[bartender18] 25/3/2009 12:53

Strange, there has not been a trade for hours

[willyworm2] 25/3/2009 12:41

1w thanks for that but lets cut to the chase, where do you think the share price will be in 3-4 years? Stupid game I know - who would have said 3-4 eyars ago that we would be 5p now and that up 66%! - but on a slow day....

[pecker1] 25/3/2009 12:15

seagreen,

As Mali lacks infrastructure, goldminers have to build it themselves, generate their own power etc. This increases the capex and operating costs above that in countries where the infrastructure is already in place. Presentations by Mark Bristow of RRS are an excellent source on the realities of mining in poorer African countries and it's why they tend to set a 2m+ oz threshold for development with gold under $1,000.

So I'm pleased that GEX has sorted out its financing for the medium term and the deal is probablly the best that could have been done in present circumstances, so well done Hugh McC. I suspect that drilling at Komana tailed off in December to conserve cash as no point in paying for it if a JV partner will put up the cash. Hopefully, we will get an updated drilling and resource report now the deal has been done. Perhaps the newsflow will now switch to Solona and other prospects as Goldfields take charge of Komana, though no doubt Hugh will try to encourage them to publish results.

[1waving] 25/3/2009 12:11

Komana is now sorted all the way to production - there will be a mine there, it's a matter of time rather than if.

"Drilling Programme
It is expected that, upon completion of the JVA, an intensive drilling campaign will be commenced with the objective of completing substantial infill drilling, testing the Komana East and West deposits along strike and at depth, and also testing other exploration targets along the main Sankarani shear zone within the Komana licence."

Note the 'intensive drilling campaign'. The drill programme at Komana may start before the JVA is fully completed shows a willingness by Gold Fields to crack on with Komana. I can see several reasons for this.

1. Gold Fields need to replace reserves and production quickly and is committed to development in the region.

2. Komana is at the heart of the Sankarani shear zone with 23kms of that zone running through it.

3. The Farasaba license area has deposits being developed such as Kabaya South. These deposits may not be economic enough to justify a mine on their own but with Komana close by, ore could be mined at say Kabaya, particularly high grade pods, and processed at Komana.

4. Sanioumale is in a similar position of developing deposits such as Sanioumale West A + B, Fingouana and Sindo. If they are not economic on their own, processing at Komana is a sound option as for Farasaba.

5. I expect Solona to produce decent deposits particularly at Badogo-Malikili and Niechilela which have turned up good grades already. Faliko has gold mineralisation over 1,000m strike also. Solona may justify a mine and processing plant on it's own but the option for processing at Komana will be there.

I believe that Komana will be moved on very rapidly as it is at the heart of the shear zone and would expect a very major resource upgrade within a year, full feasibility within 2 and production within 3 years.


Solona has very good potential on it's own and Glencar now has funding through the placing and option agreement for at least 4 years here. That is precious in this environment.

Solona has had three strikes confirmed, with all results at open pittable depths.
Badogo-Malikili with both RC and RAB drilling and results such as 8m at 2.6 grams/tonne and 2m at 25.2 grams/tonne, and the bonanza grade of 4 metres at 154.7 grams/tonne.

Niechilela RAB drilled and producing many sections over 3g/t over a strike of 1,200 metres, SARB096 intersecting 4 metres at 9.28 grams/tonne, with significant mineralisation encountered in fifteen holes and open along strike and at depth.

At Faliko disseminated gold mineralization has been located in an extensive alteration zone over a strike length of 1,000 metres. The gold mineralisation is open both along strike and at depth with significant mineralisation having been encountered in four holes.

Like the look of Badogo-Malikili in particular and Niechilela. Looks like there will be a fair amount of resource ounces to come from these deposits. I suspect Glencar will transfer their drilling across to Solona pretty sharpish and with funding now in place will crack on here for the rest of the drill season.

All 5 Mali license areas really are now set up to benefit Glencar with this announcement.

With possible JV's at Ghana and Uganda in the pipeline also GEX can have a strong focus on Solona and possibly look at other license areas. Considering the known and potential resource ounces across the Mali licenses we have a major earner on it's way.

Bring on those outstanding drill results from all 5 license areas !!!!!

[spaceparallax] 25/3/2009 10:44

Good sweeping news, although I'm a little disappointed that GF are managing to squeeze as much as 65% of Komana out of GEX.

Anyway, looks like the future is very secure and no doubt we'll see the share price continue to progress.

[seagreen] 25/3/2009 10:30

Would be interesting to know what the potential production costs are market cap is still only £11m and if we did hit 2mil/oz that would be pretty fandabidozy....still fascinated at PDG's market cap which is circa £30m which whilst may have silver as well we still are none the wiser of its costs etc

Need to speak to my gold analyst chum I just placed....we need some comparison of all these gold mines as the ones with finance are looking seriously undervalued now....

[bongo bwana] 25/3/2009 10:18

Deka - would you like to come and work here ????

I like the snappy concise summary.

Agreed on all counts.

[bongo bwana] 25/3/2009 09:44

Davy's 6.8p valuation does not appear to include Sankarani.

The markets subdued reaction to this superb announcement serves to confirm the judgement of HMc CEO of GEX, does it not!

[seagreen] 25/3/2009 09:39

Enough said...

The see-through valuation for Glencar is 6.8p per share (based on existing data at Komana and the first refusal at Solona only).

For Glencar shareholders, the fear of ongoing dilution has been removed and management is free to concentrate on building value. Komana is the third gold accumulation discovered by Glencar in West Africa. There is a good possibility that it will not be the last.

[bongo bwana] 25/3/2009 09:38

We are all part of a great team here - helping each other to make a few £££ from time to time. We have our own organisational tapestry going and its the joint effort that helps to cover nearly all the angles.

[robbi123] 25/3/2009 09:33

Oracle - very impressive indeed, thanks for the broker note. Im sure TW will post an update on his site later! Things are looking up for GEX!

[bongo bwana] 25/3/2009 09:17

Check out the iii site - its there.

ADVFN can be a bit off at times.

[bongo bwana] 25/3/2009 08:52

Look at the corporate impact of this deal - its a VERY clever piece of future proofing tapestry.

Well done to HMc and colleagues.