Short Term Trading Week Starting: 5th Sept, page-516

To the gold bugs in STT,
What do you think of the $250M gold IPO for Toro Gold's Mako Mine?

Gold veteran Mark Connelly is preparing a $250 million-plus float of the privately held Toro Gold in what could be one of the biggest new listings on the ASX this year.
Mr Connelly, who led African gold success stories Papillon Resources and Adamus Resources, has already secured $US170m ($223m) in debt and equity funding to build Toro’s Mako mine in Senegal.
He has formed a committee to explore an ASX listing that would provide an opportunity for some of the group’s private equity backers to sell down their holdings.
Toro would represent one of the few gold development plays on the market at a time when investor interest in the space is high.
The company recently started site works at Mako, kicking off a construction process that should see the first gold produced in the first half of 2018.
Mr Connelly told The Australian the company would make a decision on the listing in the weeks ahead after testing the mood of the market at the upcoming Denver Gold Forum in Colorado.
“We’ve set up a committee on the board (to investigate a listing) and we’re moving forward,” he said.
“To this point we’ve been busy funding it and finalising major contracts, mining licences, etc. We’ve got clear air now and the window’s open, and you’ve got to act when there’s an interest.”
Toro, which is chaired by Mr Connelly, has been working in Senegal since 2011.
Since discovering the Mako deposit, it has attracted funding from private equity groups including Sydney- and Perth-based Resource Capital Funds and London’s Tembo Capital and a debt package from Sydney’s Taurus Funds Management.
The Mako mine is expected to produce around 140,000 ounces of gold a year over its first three years of production at an all-in sustaining cost of about $US900 an ounce. Mr Connelly said the eventual valuation of a future IPO of Toro was still up in the air, but based on the value of other ASX gold plays it should have a market capitalisation of at least $250m.
Whereas Toro has a 1 million ounce reserve and 2 million ounce resource, West Australian development play Dacian Gold has a 3 million ounce resource and a market cap of just under $500m. Toronto-listed Roxgold, which is about to start production at the 99,500-ounce-a-year Yaramoko mine in Burkina Faso, is capitalised at more than $C600m ($609m).
“We don’t have to list but for some of the shareholders it’s a more desirable outcome,” Mr Connelly said. “And I think it’s a good product that the market would like to see.”
Australia’s gold stocks have enjoyed a strong run over the past 18 months on the back of a solid gold price, a weaker Australian dollar and meaningful cost deflation.
But the sector has shown some signs of fatigue over the past month, with few new gold stories coming to market to catch investor attention.
Mr Connelly’s Papillon and its Fekola project in Mali was acquired by Canada’s B2Gold in a $615m deal in mid-2014. Prior to that, he led gold junior Adamus into its merger with Canadian company Endeavour Mining to form a $US600m West African gold play.
Toro’s Mako mine will be the second gold development in Senegal, following the Sabodala operation built by Melbourne’s Mineral Deposits.