Lion Selection

The Big Boys In Tanzania Watch As Juniors Flirt With Each Other.


Minews missed seeing Klaus Eckhof, managing director of Spinifex, when he was in Europe recently as he made only a very quick visit to London and, rightly, spent a lot of time with shareholders in Germany and Switzerland. Spinifex is another member of that interesting little group involving Lion Selection and African Lion, Resolute and Gallery Gold. They are bound tight together by shareholdings, joint ventures and shared directors and they were all getting to know each other better better while visiting Paris and London in June. Lion Selection and African Lion together have a 34 per cent stake in Spinifex while Resolute is subscribing for 30 million shares and has a joint venture.

David Michael, a broker with Tolhurst Noall in Australia, visited Tanzania in June to see all the major projects owned by Spinifex. This is quite a step for an Australian broker as companies with activities in far flung parts of the world tend to be shunned in favour of trips to Kalgoorlie. He reckoned that the potential for the company is significant as the 15 million ounce Geita deposit owned by AngloGold and Ashanti and the 18 million ounce Bulyanhulu deposit owned by Barrick Gold are close by on the Lake Victoria goldfield. Nearology is one thing, action is another. So probably the most interesting aspect of Spinifex is the joint venture with Resolute on its Nyakafuruu gold project which is about 110 kilometres north west of the Golden Pride mine and guess who owns that.

In a report issued slightly earlier this yearTolhurst Noall made some interesting points about this joint venture between Resolute and Spinifex. They saw Resolute bringing cash, mining expertise and a mine producing 250,000 ounces to the table, while Spinifex contributes one of the last contiguous packages of quality exploration in Tanzania. They therefore think that a bid by Resolute for Spinifex is a pretty safe bet, especially as the two Lion funds could dump what amounts to a controlling interest in its lap at any time.

Being brokers, however, they want a bit more excitement than that so are suggesting that Barrick and Anglo might be spoilers for this cosy deal and point to Barrick’s acquisition of Sutton Resources, the company which discovered and developed Bulyanhulu, at a price equating to around A$70 per resource ounce. It is a good idea, but so far the resources at all of Spinifex’s four main Tanzanian properties together only add up to 2 million ounces of gold. This would hardly excite Anglo or Barrick enough for them to open one eye, let along two. But time is always on the side of the big companies and the combination of Resolute and Spinifex would make a much more tasty morsel.

In the meantime exploration is due to start at the Buckreef project as well as at Nyakafuru and these are seen by the brokers as signalling resource upgrades while the Rwamagaza shear zone is being examined more carefully. In fact they go further and suggest that Spinifex could double the resource inventory of these two advanced projects over the next two years and possibly bring one , or both of them into production. The latest quarterly results show they are on the right track as the company has announced that, based on findings to date, it expects to draw up a major programme for Buckreef / Rwamagaza within the next six to eight weeks, with the objective of doubling the existing resource base and commencing a pre-feasibility study by early 2003

Just as important, Spinifex Gold announced a package of initiatives during the last quarter that are designed to strengthen the Company's financial position, restructure its balance sheet and put it in a strong position to intensify its exploration and development programme for its Tanzanian properties. Upon successful conclusion of these plans, the company will have no debt and anticipates having cash reserves of approximately A$11 million. This can only add to its attraction as far as Resolute is concerned as Peter Sullivan, its managing director has some fairly ambitious plans for expansion. While he considers his options Spinifex might consider spending a few pennies on bringing its web site up to date so that investors and journos can get full information..