Ive just had a re-read of the MOU we signed with Randgold. Here are some things that I’ve picked up that may have been overlooked.
First important paragraph “This MOU provides Birimian Gold with additional certainty, potential access to experienced operational personnel and increased flexibility in decision making when considering economic development options, which will enable the Company to rapidly and cost effectively advance its new gold discovery at Ntiola, within the Massigui Project.”
Response: BGS are looking to rapidly advance this project (there words not ours), so KJ is striving to get us into a cash generating business ASAP. Also, the fact that they mention ‘flexibility’ when considering economic development options, this has intrigued me. We know they have a great source of capital at their disposal, but perhaps a large stake might be purchased from Randgold into BGS, to give them dividend potential also, this would improve the economics of toll treating agreement as not only would they get profit share, but also a share in our profits... Our AGM is asking us to vote on an additional 10% capacity on top of the 15% standard… Are the ducks lining here??? Something to consider at least… it would be a great opportunity to sync our objectives together IMO and would be something I would be suggesting to Randgold if I was on the discussion tables at BGS.
Also, IMO, that paragraph suggests Ntoila central development first, as if to say, there could easily be enough ore there already, so my suggestion of having multiple pits going at once could definitely be on the cards which would lead to increased oz produced and the associated increased profits etc too. Reading further, a following statement supports this “This proximity to a major operating mine and the undertakings recorded in the current MOU with Morila SA provide the Company with significant opportunities to ensure low capital and operational costs can be achieved at any future mine development at Ntiola and within the broader Massigui Project.
Next important paragraph: “Birimian Gold Limited and Société des Mines de Morila SA, in conjunction with Randgold Resources Limited, have agreed the following terms as part of the non-binding Memorandum of Understanding; i. enter into a Toll Treatment Agreement, whereby economic gold bearing ore discovered on nearby tenements to the Morila Gold Mine may be processed at the Morila Treatment Plant subject to Morila SA and Birimian agreeing economic treatment terms and upon completion of a positive Feasibility Study.”
Response: Feasibility Study is a conditions precedent to the JV, so feasibility to be announced first, and if positive enough, JV second, so let’s watch out for this feasibility study, which is apparently well underway???
Next important paragraph “The treatment of existing stockpiles through the 4Mtpa Morila processing plant is currently scheduled to be completed in 2014, after which time the plant will be reconfigured to treat tailings”.
My response: So we have until the end of next year to prove up and define our orebodies, so that by calendar year 2015, we can possibly step in and start absorbing the productive capacity of the plant, remembering that tailings are only 0.44gpt… Id like to think that say 50% share of profits from our ore grading say 1.9gpt on average, could be more economical than Randgold having 100% of 0.44gpt… perhaps that is the draw card to prove up??
Having re read this tho, my gut feeling is saying Ntoila central to be exploited first, with a view to bringing other pits online ASAP but through organic growth. But come to think of it, a bridging loan could get us multiple pits online straight away… Maybe Randgold could be the source of the bridging loan too?? Perhaps after an equity interest??
Just some thoughts to consider and worth discussing on what is Hot Copper.
BGS Price at posting:
1.4¢ Sentiment: LT Buy Disclosure: Held
