Fundamentals, page-196

Interesting read, thanks to Josh Chiat at * today, re companies that are heavily investing in Guinea. Given the $ backing they've received, they & their backers evidently see the massive potential value in investing in Guinea, despite the challenges .

Chasing African gold

Further on the horizon is Siguiri Gold Corp, which is opening its IPO in July. Boasting tenements just down the road from AngloGold’s 220,000ozpa Siguiri gold mine in Guinea, the upstart African gold explorer is chasing $8-10m through lead manager CPS Capital by early August.

Its board is led by executive chairman Michael Minosora, whose long history in the resources industry includes a period as CFO in the hothouse of early Fortescue (ASX:FMG) alongside Andrew Forrest, as well as a stint in Guinea building a major bauxite export operation.

Siguiri is chasing the sort of shallow, oxide hosted gold typical of virgin West African deposits, a characteristic that typically makes them easier to mine and generate cash flow in the early days than the deeper fresh rock and sulphide deposits found in more mature gold jurisdictions like WA.

The company was originally formed by COO Dan James and executive director Michael Mulvey, who boast a long history of operating in the Guinean business world.

Minosora said Siguiri planned to use $1.4 million from the raising to purchase its own diamond drill rig ahead of a 30-40,000m drilling blitz to take the junior to a maiden resource stage.

Around $9m has already been spent on the ground dating back to 2020, incorporating 33,000m of drilling and the location of the project in relation to the SAG mine was a key attraction for the company.

“The history of these particular permits is that back in the 1960s, there was some exploration done on it by a Russian group,” he said.

“We really don’t know much more detail than that on these permits but what brought the company to this area was, first and foremost, the SAG mine being next door.

“Next, there’s quite a lot of artisanal workers historically and to some extent today, working on the areas and the artisanals are people from the local villages that are looking for gold.

“It’s a pretty cool way of doing sampling by just seeing what the locals do.”

Like all African explorers, once it hits the market the company could potentially face what has been infamously dubbed the African Discount, which sees resources of the same scale as other jurisdictions trade at a lower valuation because of the jurisdictional risk Western investors see in West Africa.

Minosora said it was important not to view Africa as a single country, noting that Guinea had proven more predictable than neighbouring jurisdictions like Mali and Burkina Faso.

All eyes are currently on the country’s resources scene, with one of the continent’s biggest recent gold discoveries being made by ASX-listed Predictive Discovery (ASXDI) at the 5Moz Bankan project, and Rio Tinto (ASX:RIO) currently negotiating with the Guinean Government and multiple Chinese partners to develop the transformative Simandou iron ore mine.

“I think over time, people will start accepting that not all countries in Africa are the same, and you can’t have one blanket discount to deal with it,” Minosora said.

“A couple of companies that are focused in Guinea, include Predictive Discovery and Robex Resources, which is a Canadian-listed company – both raised in the maybe two month pretty substantial money.

“Robex closed an offer for C$126 million maybe a month ago. They went out for C$50 million and came back with C$126 million.

“Predictive has raised two tranches in the last nine months from memory, and they did $50 million in May and they did $40 million last October. So the market’s definitely got an appetite for quality gold assets in Guinea.”

The hunt for a discovery near Siguiri comes at an interesting time, with cheaper oxide material for the 26 year old mine being displaced by harder transitional and fresh ore and all in sustaining costs rising to the vicinity of US$2000/oz.

A major oxide discovery at Siguiri Gold’s ground would likely be of interest to the South African giant, and a number of small ASX explorers operating in West Africa have been taken out at a premium over the past decade, the latest Tietto Minerals.

But Siguiri’s ambition is to outline a larger gold resource in the order of 2Moz that could justify a project of the scale of 200,000ozpa or above, similar in nature to Tietto’s Abujar in Cote d’Ivoire or the Sanbrado mine, which made West African Resources (ASX:WAF).