www.cluffgold.com
Cluff Gold is a gold developer-producer with assets in West Africa. The Company generates cash flow from its two producing assets, Kalsaka in Burkino Faso and Angovia in Côte d’Ivoire, which together produce a total of 100,000 ounces of gold per annum.
The Company strives to become a mid-tier producer through the development of its wholly-owned Baomahun project in Sierra Leone, which is expected to contribute an additional 157,000 ounces of gold per annum, with significant exploration potential along strike. With its experience of bringing new mines into production, the Company aims to further increase its production profile with its highly prospective exploration work at all three projects
West Africa gold juniors ripe for consolidation, suggests broker
Cluff Gold (LON:CLF, TSE:CFG), Aureus Mining (LON:AUE, TSE:AUE) and Avocet Mining (LON:AVM) are among the best bets in the emerging gold hot spot of West Africa, broker Oriel believes.
The broker, which has just visited the region, said West Africa is an under-explored gold region that is highly prospective for the discovery of multi-million ounce gold deposits.
Its countries of preference are Burkina Faso and Liberia, which have political stability as well as favourable permitting processes, fiscal regimes and an ease of doing business.
Liberia especially is a “post conflict success story” following the democratic re-election of President Ellen Johnson Sirleaf with one of the most attractive fiscal regimes in the West African region, said the broker.
It added that Cluff represented the greatest valuation upside potential of the West African gold stocks under coverage. It trades on 0.68 times NAV of 126p/sh (205p/sh or P/NAV 0.42 times on spot gold).
The next major drivers for Cluff will be the award of environmental permitting and the completion of feasibility studies for the Baomahun project in Sierra Leone in the first half of this year.
The company has already committed US$16 million for early infrastructure work including site access rehabilitation, exploration camp upgrades and plant site earthworks to enable construction to start in late 2012. First production is targeted for 2014.
“We expect a re-rating of the stock as the market gains confidence in the company’s ability to develop Sierra Leone’s first commercial gold mine,” said Oriel.
Aureus Mining is on a similar timetable to Cluff and is nearing completion of feasibility studies at its New Liberty project in Liberia.
Aureus is targeting plant commissioning in late 2013 and first gold early 2014.
It trades on P/NAV of 0.74x or 0.52x on spot gold and its value should also increase as construction activities commence at the New Liberty gold project over the next six months.
Oriel’s top West Afrcian gold pick is Avocet Mining (target price 289p or 404p on spot gold).
It has cash of over US100 million and Oriel says this is sufficient to continue to pay an attractive dividend and maintain organic growth ambitions that could add 80,000 ounces per year by 2013.
Overall, an increasingly important feature for investors in West Africa gold companies is also likely to be the possibility of M&A.
Oriel says the area has become crowded with junior developers which gives an opportunity for consolidation and it expects all three to be a part of this.
“The companies are well placed to participate in regional consolidation to create geo-diversified, mid-tier gold companies with value accretive production growth,” it said.
Last year’s pull back in the value of junior gold equities has also presented an attractive entry point for an acquisition by predators looking to gain exposure to near production assets in West Africa, it adds.
Oriel also highlighted two ASX-listed developers; Gryphon Minerals (ASX:GRY) and Ampella Mining (ASX:AMX), as having attractive exploration upside potential.
