ASX Micro Cap Hunting for Multi-Million Oz. African Gold Resources
PUBLISHED: 22-05-2019 11:01 a.m.
12 minute read
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The world’s fastest shark, reaching top speeds of over 70 km/h, is the shortfin Mako shark. Commonly found off the coast of Africa, the predator roams the open ocean in search of the best opportunities.
Like the Mako shark, today’s company is a rare find that is seeking to move quickly and secure its prey. It is currently in the process of raising $2.2 million that will be used to fast track its drilling program.
In this case, this onshore explorer is searching for large economic gold deposits in West Africa, in the highly prospective and under-explored terrains in Cote d'Ivoire, Burkina Faso and, potentially, other gold hosting countries in the region.
It has been an exhaustive search, but after combing through over 100 projects, utilising its decades of experience and a proven track record of gold discoveries, the exploration team narrowed its targets down to two projects in the gold-bearing West African Birimian Greenstone Belts which host more than 60 deposits of one-million plus ounces of gold, 35 of which are over 3 million ounces.
This highly experienced management team, recently worked together to discover Orbis Gold’s Natougou Gold Project (now the gold-producing Boungou Mine) in the world-class Birimian Gold Province. Orbis was acquired by the now billion capped, TSX-listed Semafo Inc. in a deal valued at US$139 million.
Given that accolade, and the fact its founders have worked in Africa since the 1990s, a lot is expected from its current venture, especially in a positive gold climate. Not to mention it has the backing of the $856 million capped Resolute Mining (ASX:RSG).
In particular, expectations are high for the company’s flagship Napié Project in Cote d'Ivoire. The Napié Project is a joint venture (JV) with the $562 million Perseus Mining (ASX: PRU) subsidiary, Occidental Gold.
That’s not to discount its second project, the Niou Project, nearby in Burkina Faso, where it recently made a greenfield gold discovery.
Having listed on the ASX just last year, this tightly held company (the top 10 shareholders hold 50% of the shareholding) has wasted no time in reporting significant widths and high-grade gold intersections in both projects. Results so far have been impressive, each project has plenty of “blue sky” for large high-grade deposits with only very limited drilling to date.
While it’s still early stages, there’s a great deal of potential on offer for a company being valued by the market at A$5.57 million.
Mako Gold Ltd.
Market Capitalisation: $5.57 million
Share Price: 8.7 cents
Here’s why I like MKG:
Mako Gold Limited (ASX:MKG) is an Australian based gold explorer originally founded in 2015 by Managing Director, Peter Ledwidge and his wife Ann Ledwidge, the company’s General Manager of Exploration, as well as Country Manager, Ibrahim Bondo and Chairman, Mark Elliott.
Mako listed on the ASX just over a year ago — in April 2018 — following an oversubscribed $6 million IPO, with a $2 million cornerstone investment secured from $856 million capped producer Resolute Mining Ltd (ASX:RSG).
The husband and wife team were critical part of the Orbis Gold team, which as mentioned earlier, made three gold discoveries in Burkina Faso, one of which (Natougou Gold Project / Boungou Mine) has been progressed through to production as a world class mine for the $1.3 billion capped Semafo Inc. (TSX:SMF).
After the Orbis takeover, the Ledwidges started Mako and brought with them highly experienced former members of the Orbis team, which helped to identify two highly prospective projects in West Africa – the Napié in Côte d’Ivoire and the Niou Project in Burkina Faso.
MKG is now rapidly advancing the Napié Project, while it recently made a greenfield gold discovery on the Niou Project.
The reason why this region of West Africa was so appealing...
West Africa’s Birimian greenstone belts
Cote d'Ivoire contains more Birimian greenstone belts than other West African countries, yet only 20Moz of gold resources have been found to date, making it an ideal location for future gold discoveries.
Burkina Faso is also an attractive investment destination with strong government support for mining, a modern mining code (2014) and gold resources of over 50 million ounces with 10 new gold mines constructed and operating in the last 12 years. This is a testament of a supportive mining friendly jurisdiction.
Now, before we get into the details of the projects, let’s first have a look at the company’s latest news and what it means for Mako moving forward.
Tightly held register
Mako is raising up to $2.2 million to advance its projects (a recent placement that raised $721,439 and upcoming rights issue). The enterprise value (EV) after both capital raises is $5.2 million, assuming full subscription and a 10 cent share price.
Resolute Mining (ASX: RSG) currently holds 19.45% of the company’s shares and is contributing a further circa $168,000 in the placement for a 19.9% total holding. Resolute has also made a firm commitment to keep its 19.9% through the rights issue. This is a strong endorsement as RSG have mines in Mali, Ghana and Australia. Resolute has a strategy of backing well credentialed management teams on prospective ground. Resolute is disciplined in the strategic investments it makes and has invested in Mako because of the potential it sees in Peter and Ann to find another orebody which may be a future Resolute mine.
With the funds raised, Mako will drill on both its projects, where significant widths and high-grade gold has been intersected. Drilling is planned on Napié and Niou following the capital raise.
Encouragingly, after Resolute, Peter and Ann Ledwidge are the next largest shareholders, while the top 10 control 50% of all shares on issue.
Here’s an interview with Peter Ledwidge at the 2019 RIU Resources Round-Up conference in May.
And here is the company’s presentation from the conference:
So what is all the fuss about?
Napié Project, Côte d’Ivoire
Mako Gold’s flagship Napié Project is located in north-central Côte d’Ivoire within the Daloa greenstone belt.
Mako is earning up to a 75% interest in the project under a farm-in and joint venture (JV) agreement with Occidental Gold — a subsidiary of West African gold miner Perseus Mining Ltd (TSX/ASX:PRU).
Like Resolute, Perseus has extensive experience in operating producing mines in Africa.
Under the agreement, Mako can earn a 51% interest by spending US$1.5M over three years. By the end of the current quarter, Mako expect to have reached that first milestone in just over one year, moving fast like its namesake, the Mako shark. Mako can earn up to 75% once it has completed a definitive feasibility study (DFS).
The company is fast-tracking exploration, having successfully completed reverse circulation (RC) drilling to follow-up on its maiden drilling program.
The latest round of drilling intersected multiple zones with significant widths and grades of gold mineralisation with individual 1m assays up to 29.89g/t Au (hole NARC066) and separately widths up to 28m at 4.86g/t Au (hole NARC057). Plus, a re-interpretation of airborne geophysics on priority areas identified a 17+ kilometre shear coincident with soil geochem trend. The best drill holes to date are located along the 17 kilometre interpreted shear.
Drilling intersected multiple mineralised zones including 28m at 4.86g/t gold
Mako recently completed a 2550m RC drill program on the project’s Tchaga and Gogbala prospects. The drill program follows the positive results received from the 2018 maiden drilling program which returned wide, high-grade gold intersections.
Select Mako drilling results along shears are seen below:
- 8m at 8.53g/t Au from 31m - hole NARC001
- 25m at 3.43g/t Au from 53m - hole NARC017
- 28m at 4.86g/t Au from 83m - hole NARC57
- 17m at 2.43g/t Au from 86m - holeNARC055
- 12m at 5.39g/t Au from 11m - hole NARC035
- 1m at 215.53g/t Au from 109.3m - hole NADD004
Napié Project - planned drilling
Mako is planning a drill program to infill and test the strike extent of the broad zones of gold mineralisation identified to date, and has used the new geophysical reinterpretation to target drill holes.
Thus far, drill results on both the Tchaga and Gogbala prospects have been positive.
The upcoming drilling program will concentrate on the area proximal to the mineralised shear on the Tchaga and Gogbala prospects as well as regionally test the undrilled areas along the interpreted shear between the two prospects.
Planned infill drilling along 1.4km of shear
At the Tchaga Prospect, significant gold mineralisation was returned over a 500m strike length. Mako has planned drilling in the current quarter to test a strike length of 1.4 kilometres.
Here’s a map of the Tchaga project including recent drill results and the planned infill drilling area.
Here is a cross section showing multiple zones of broad gold mineralisation over 115m width:
Visual identification of mineralised zones
Distinct alteration halo, quartz veining and strong shearing is a marker for gold-mineralisation.
Mako is planning to test gold mineralisation over nine kilometres of shear between and including the Tchaga and Gogbala Prospects. Gold mineralisation is currently outlined over two kilometres on the Gogbala Prospect, as can be seen in the below image.
The flagship project is one that could offer enormous upside, however its second project also has significant advantages.
Niou Project – Burkina Faso
Mako’s second West African gold project, the Niou Project, is in central Burkina Faso, 50km north of the capital, Ouagadougou. The permit has a national bitumen road crossing it, making access easy. Mako secured the Niou permit in 2016 from a Burkina vendor and has a three-year option to acquire 100% ownership. One option payment remains to be paid before Makoexercises the option.
Gold Discovery made in January 2019
In January Mako announced a gold discovery at the project from a 1210m maiden RC drilling program. The drilling intersected multiple zones with significant widths and grades of gold mineralisation, with individual 1m assays up to 53.80g/t gold (Au) in hole NURC006 and separately widths up to 24m at 2.73g/t Au NURC007.
Here are some select drilling results:
- 15m at 2.30g/t Au from 60m - hole NURC001
- 8m at 1.76g/t Au from 50m - hole NURC004
- 5m at 3.46g/t Au from 73m - hole NURC006
- 3m at 18.91g/t Au from 97m - hole NURC006
- 24m at 2.73g/t Au from 18m - hole NURC007
- 21m at 1.97g/t Au from 46m - hole NURC007
- 21m at 1.22g/t Au from 79m - hole NURC007
Gold-bearing drill holes were located on a seven kilometre gold soil anomaly along a major fault/shear zone.
Geological mapping and planned drilling
Mako geologists have recently completed a geological mapping program on the Niou project in preparation for an upcoming drilling program. The object of the mapping and rock chip sampling program is to infill data in order to better understand geological controls on gold mineralisation.
This will help finalise plans for upcoming drilling and to generate new exploration targets.
The focus of the mapping is along the seven kilometre-long soil anomaly (blue line on map below).
The planned drilling program will follow up on previously announced results of the maiden drilling program which returned individual 1m assays up to 53.80g/t Au (hole NURC006) and separately widths up to 24m at 2.73g/t Au (hole NURC007).
The program will prioritise an area (shown in a red rectangle) within the main two kilometre-long by one kilometre-wide artisanal gold mining site (shown in white in the following image).
New artisanal gold mining in area of planned drilling
During the recent geological mapping program, Mako geologists observed increased artisanal gold mining activity within the interpreted high priority shear zone.
The planned reverse circulation (RC) and diamond drilling (DD) program will target extensions from the best gold intersections in NURC005, NURC006 and NURC007 from the recent maiden drilling program.
The target area, within the 2km-long by 1km-wide artisanal gold mining site, is interpreted from geophysics, geological mapping and drilling as a SW to NE trending, broad zone of shearing. Shear zones such as these commonly host economic gold deposits. The purpose of the upcoming drilling program is to test the highest priority mineralised shear zone (shaded in red in the image below).
Drilling will test the shear zone over a width of more than 300m and a strike length of 400m.
The new artisanal mining site is 100m east of NURC005 which was drilled during the maiden drilling program. The upcoming drill program will test below this new artisanal mining site.
All of this work, comes at a very good time...
A resurgent gold price
One thing we are yet to touch on is the resurgent gold price.
Given uncertain economic times, gold has always been seen as a safe haven and this is no more evident than what is currently happening in gold markets today.
While the US dollar gold price has been shuffling along in the region of US$1200-1300 for years now, the Aussie dollar gold price continues its rise. Gold ended last week at US$1285, or A$1,864 – not far off record highs — at least in Australian dollars.
The difference between the two is the foreign exchange rate, with the AUD sharply depreciating against the USD in recent months. The Aussie dollar is now back below US$0.70 – a low not seen in more than three years.
A low Australian dollar equates to a much better gold price for Australian producers and with the continued widening of the gap between a strong gold price and a weak Australian dollar, rarely has there been a better time for Australian gold miners with the precious metal currently fetching approximately A$1870 based on the current rate of US$0.695.
Yet there are a number of global economic and political factors that suggest gold (in both US and Aussie dollars) is set to rise, including further lowering of interest rates and the ongoing US-China trade war.
Mako not only looks to have landed itself two highly prospective projects, but should things go its way, it is also likely to capitalise on current macro trends.
Planned work program could provide price catalyst
Mako is rapidly advancing exploration of its portfolio of highly prospective projects and will undertake further drilling at both Napié and Niou in the current June quarter.
Given the calibre of exploration results to date, the return of high-grade assays could prove to be a share price catalyst.
Maiden drilling at the Niou Project in Burkina Faso returned wide gold intersects with high-grade intervals. The planned drilling in the interpreted shear is to test width and strike of mineralised zones.
Mako’s flagship Napié Project in Côte d’Ivoire, is seeing the fast-tracking of exploration, to meet targets and up its interest in the project. It has successfully completed reverse circulation (RC) drilling to follow-up on maiden drilling program. This involved only very limited drilling but delivered very good results.
These two strategically selected projects, backed by an experienced team of experts and supported by a number of successful larger players in the space, could lead to broader market recognition any day now.
Capped at $5.5 million, Mako is an early stage gold play offering some huge upside for switched on early gold investors.