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[haydock] 20/7/2009 09:36

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NEW WAVES EMERGING
African gold miners consolidating - 75 stocks reviewed
Moto Goldmines in context: a glance at 75 listed stocks active in African gold exploration, development and production.

Author: Barry Sergeant
Posted: Friday , 17 Jul 2009

JOHANNESBURG -

Rival bids for Moto Goldmines, for its spectacular resource base of more than 20m ounces of gold in the far north eastern Democratic Republic of the Congo, signal the start of a fresh round of consolidation over the continent's glittering metal, mined since time immemorial.

The latest action sees an effective joint venture bid by Randgold Resources and AngloGold Ashanti for Moto Goldmines, valued at around USD 488m, and said by the bidders to be superior to the offer for Moto by Red Back which announced a friendly business combination on 1 June. However the battle pans out, this will mark the biggest African gold acquisition since early 2004, when AngloGold Ashanti completed its friendly USD 1.1bn merger with Ghana-based Ashanti Goldfields, including its Obuasi mine in that country, the biggest African gold deposit outside South Africa.

Africa's modern gold era started up in the early 1990s, when country after country initiated economic reforms, including privatisation of mines that had been taken over after the colonial era and, almost without exception, ruined. The new era was led from the front by companies such as South Africa-based Gold Fields, which took over the Tarkwa gold mine in Ghana, and its ageing underground system. However, exploration and development work on the property proved up a world class surface deposit system, and Tarkwa was developed into what probably now ranks as the biggest open cut gold mine on the continent.

Along with a number of other gold mines, Ghana has retained its position as the No 2 gold producer on the continent, in turn leading West Africa as the fastest growing gold production region on the continent. This is the home of the Birimian belt, a super-group of geological units formed about 2.1bn years ago, and hosting, of course, the legendary Obuasi gold mine, in commercial production for more than a century.

A decade before it merged with AngloGold, Ashanti Goldfields went public in 1994 by way of an IPO, listing its stock on the London Stock Exchange, as well as in Ghana. There was a measure of déjà vu about the move: Ashanti had first been listed on the London Stock Exchange in 1897. In 1968, the now erstwhile Lonrho, listed in London and Johannesburg, acquired Ashanti and took the entity private. The government of Ghana held a 55% stake in Obuasi from 1972, when a coup d'état led by Colonel Ignatius Acheampong toppled KA Busia's democratically elected regime. The state seized 55% of all mining companies, but Lonrho retained an equity stake in Obuasi and remained, by and large, in control of day-to-day operations.

At the time of the 1994 re-listing in London, the government privatised Ashanti

Goldfields by selling 25% of its holding, reducing its equity stake to 30%. Other African countries streamed in after Ghana, freeing up their economies, and creating friendly environments to attract private mining capital back towards the treasure troves of a continent endowed with spectacular resources wealth.

The one country exception was South Africa, the biggest and most established miner; after its first democratic elections in 1994, government policies have been increasingly aggressive towards miners, contributing, in part, to an ongoing overall contraction in the country's mining capital base.

For their part, South Africa's big three gold miners, AngloGold Ashanti, Gold Fields, and Harmony, all ranking as Tier I global gold names, have restructured in the past few years, downsized production, and continued to seek opportunities elsewhere. AngloGold Ashanti by now is less than half South African, and currently ranks as one of the most highly rated gold stocks in the world.

Africa has provided opportunities for plenty other gold miners; Barrick, the world's no 1 gold name by value and production, conducts substantial operations across the continent, particularly in Tanzania. Newmont, which years ago maintained a special relationship with the erstwhile Consolidated Goldfields, once parent company of Gold Fields, ranks as one of the biggest gold miners in Ghana.

Iamgold, a leading global Tier II gold name, gets bigger and bigger in West Africa; its most recent acquisition in the area was seen earlier this year, when it swallowed Orezone, mainly for Essakane in Burkina Faso.

This week's focus on Moto in the DRC was sharpened when London-listed diversified African miner Camec announced that it may receive a bid to be taken over or to merge. The company's main asset, Mukondo Mountain, in Katanga Province, DRC, boasts what possibly ranks as the world's biggest and richest cobalt deposit, with plenty of copper as co-product. Katanga Province, which hosts some of the world's richest copper-cobalt deposits, is likely to in itself become an area of consolidation, following the slump, and then relatively good recovery from December 2008, in copper prices.

The DRC itself has provided something of a catalyst, by completing most processes in its mining revisitation programme. As companies, such as Moto, emerge from the process, potentially predatory companies such as Red Back are far more likely to make a move. The action can become busier, as seen with the entry this week of AngloGold Ashanti and Randgold Resources, and could become busier still.

Red Back might recruit a partner of its own to challenge the new predators; potential names include Golden Star, which previously held a stake in Moto, or even global Tier I gold names Newmont, and even Barrick, which previously held the Moto ground until the outbreak of another DRC war in 1998.

There could be any number of further permutations; after all, there are now at least 75 listed stocks that are active in African gold exploration, development and mining. Most of these names have a pure focus on gold; some others, such as First Quantum, produce gold as a substantial co product, one that has been exceptionally helpful from a pricing viewpoint during the troubled times most metals and commodities have faced since mid-2008.

By numbers, most of the listed companies are active in the West African region, where the aggregate market value of such listed companies is currently more than USD 9bn, led by Randgold Resources at USD 4.8bn, and Red Back at USD 2.0bn. A high percentage of African gold exploration, development and mining occurs in areas where gold is known to be.

As far back as 500 BC, Herodotus recorded how horse-drawn chariots crossed the Sahara via routes that were followed for millennia. There were two major routes, from Morocco and Egypt, which converged on the upper Niger River before branching into the goldfields of Senegal and Ghana. Egypt and Middle Asia had serious appetites for gold; it was gold that had built and sustained the magnificent ancient kingdoms of both Ghana and Mali.

As gold and other mining companies become better-established across the African continent, so it is that increasing budgets are likely to be allocated to sophisticated modern exploration technology, methodologies, and skilled personnel. By such standards, vast tracts of Africa remain significantly unexplored. It seems to be only a question of time as to when the first really big virgin gold strike is made.

[haydock] 20/7/2009 09:34

For those of us without a really good grasp of the overall situation.I think this article puts the situation in perpective.
It's a very good bullish plus as far as I can see, lots of companies & very early days in Ghana & Mali with a huge upside potential

[haydock] 20/7/2009 09:21

Selected West/Central African gold names


Producers
Stock
From
From
Value
Price on the up : nearer the top last week.
price
high*
low*
USD bn


Adamus Resources
AUD 0.40
-16.7%
300.0%
0.053


Source: market data; table compiled by Barry Sergeant

[haydock] 20/7/2009 09:07

Adamus (ADU), up A4 cents to A42 cents

Thats 100.000 xA$0.04c to GEX ?

[share_shark] 18/7/2009 13:55

There is so much, excellent research and posts here by kind folk,willing to share with all.

With all the tensions and politically changes taking place in Africa,it may, just pay us to watch the region,LIKE HAWKS,especially with a new US President,making clean sweeps and whose actions, which will, no doubt, create shock waves throughout the world.



Headlines to article are...........

Liberia: Dividends of Obama's Debuts to Africa- Liberia in Focus
TheLiberianTimes.com - New York,NY,USA
In addition, with the discovery of new oil wealth in Ghana it behooves America to make her presence felt in the wake of the scramble for oil. ...
See all stories on this topic

[stenick] 17/7/2009 11:06

Thanks 1waving if they persist,I shall ask FSA.

[1waving] 17/7/2009 10:11

Stenick --
Ask/report to the FSA

[stenick] 17/7/2009 09:46

Hi all, has anyone heard of Kingsley West Consulting, they have just phoned me offering investment oppertunities in companies at 'Institutional prices'.I have no knowledge of them and nor has Google so I was wondering if anybody has.
TIA.

[1waving] 17/7/2009 08:30

Serp -- The same type of agreement as the previous Sankarani JV that takes GEX all the way safely was the whole point and the basis of the LOI for Komana -- Gold Fields were not happy at repeating the Sankarani agreement and baulked at their last meeting on the JV when GEX thought they had a deal, particularly when it came to the latter end of the deal, funding etc.

[serpicouk] 16/7/2009 23:16

It still doesn't quite add up to me. GF seemed happy enough to agree similar terms for Sankarani. Won't GEX shareholders potentially suffer more dilution by having to raise 100% of mine costs + 4 years worth of exploration costs Vs just 30% of mine costs and no exploration costs?

It wouldn't surprise me if HmC engineered the collapse after receiving the latest assay results...all bonanza grades and widths...But I'm ever the optimist! ;)

[share_shark] 16/7/2009 22:20

Serpico and 1 waving.

Many thanks for those explanations.

[1waving] 16/7/2009 22:15

Have heard reliably that just before the deal was announced as off the Gold Fields negotiators baulked at the original terms in the LOI which then threatened additional and unacceptable dilution for GEX shareholders at a later stage.

Hugh found those terms unacceptable and said no thank you.

The danger of further dilution down the road made it the right thing to do in my book for Hugh to turn GF down and walk away.

[bo doodak] 16/7/2009 22:09

Hi Serpico,
When I read the RNS and the minesite piece I felt they were phrased ambiguously (Minesite often do that - deliberately I think) which is why I felt it wasn't GEX.

Can't quite decide whether this is good or bad though

[serpicouk] 16/7/2009 21:47

Bo - We only have the RNS which doesn't give any details.

But the recent minesite article (posted only a couple of posts back - 5046) suggested GF wanted to remove the requirement that stipulated that they had to provide the pro-rata cap-ex attributable to GEX. It sounds like GF wanted to add in some clause that gave a proportional increase in Komana stake based on expenditure. GEX didn't want to be held over this barrel and so negotiations were terminated.

That's my understanding anyway.

[bo doodak] 16/7/2009 21:31

Guys, have a small holding here, do we have confirmation that it was Glencar that actively chose to terminate the talks rather than Gold Fields?

[share_shark] 16/7/2009 21:22

News that we already know of but any free PR is welcome.

[1waving] 16/7/2009 11:38

From the AGM Presentation:--

Bokoro
Two 6km long mineralised structures defined by RAB drilling
- best intersection 42m at 1.96g/t
- follow-up RC 27m at 1.9g/t
- resource delineation drilling next season
Sanioumale
Two targets on Sankarani Shear Zone - S. West and S. East
- best intersection last season was 22m at 1.6g/t at S. West
- resource delineation drilling next season
Fingouana
5.5km long anomalous zone on Sankarani Shear Zone
- best intersection in RAB drilllhole of 12m at 6g/t
- structural interpretation drilling at start of next field season
------------------------

Looks like Gold Fields is aiming for resource estimates at Bokoro/Fie and Sanioumale East & West with Fingouana also being advanced. Still think there are some drill results outstanding on the Sankarani area, Sindo in particular springs to mind. Plenty to come from Sankarani in the coming drill season. Their next quarterly report is out on 6th Aug so the couple of paragraphs they write on Sankarani may add to the above.



Last line on the last presentation slide:--

" New project on the way and more to come "

New project on the way ? -------- Singular !
More to come.

[1waving] 15/7/2009 22:07

Interesting take on gold from Dan Norcini at jsmineset --- Triangle forming



Good move up today for gold as the inverse of the dollar but open interest not really there.

[1waving] 15/7/2009 22:01

Serp
Thanks for the AGM presentation -- seems to have downloaded OK

[serpicouk] 15/7/2009 22:00

For those that like their TA. Interesting article with a couple of view points concerning POG:

[serpicouk] 15/7/2009 21:04

Not used a hosting site before...hope this works.: GEX 09 AGM

[share_shark] 15/7/2009 08:56

You cannot say I am not trying although I can be very trying at times,;-)