Resource investment company Armadale Capital () is fully funded for the next stage of development at Mpokoto, its flagship gold project in the DRC, it said on Monday.
The group recently published a scoping study for Mpokoto indicating a US$33mln net present value based on a gold price of US$1,250 per ounce.
Armadale acquired the right to an 80% interest in Mpokoto in August last year.
“It is a very robust project at low gold prices,” chief executive Justin Lewis told Proactive Investors.
“We think it is very attractive because it is low cost and easily deliverable and this is without optimising any of the costs.”
Stage two of the scoping study is underway and should be complete in six weeks, while a drilling programme will follow aimed at boosting the existing 507,000 ounces of gold mineral resource.
Lewis expects work to get underway in “June or July” with the programme covering around 3,000 metres.
The aspiration is to boost its resource number around 700,000 ounces as well as getting some of those gold ounces into the higher confidence indicated category from inferred.
“We are not talking about huge expenditure, perhaps half a million dollars,” he added.
Armadale posted losses of £3.15mln (£866,000) in 2013, most of which related to South African coal briquette associate MRI and that also included a heavy impairment charge.
Cash as the end of December was £889,000, while Armadale raised £525,000 through a placing in March.
Peter Marks, Armadale’s chairman, said: “2013 was a transformational year for Armadale, which resulted in the company’s transition to an established investment company.
“We remain focused on the development of the Mpokoto gold project in the Democratic Republic of the Congo. The results of the recent scoping study have shown it to be capable of delivering very strong financial returns for a limited capital commitment."
House broker finnCap added impairments against that MRI’s carrying value were £1.62mln with a further provision on a loan secured against MRI shares of £773,000.
The broker added the news on MRI is improving however, with the commission of its coal fines processing and briquetting operation at Vaalkrantz and first sales with Keaton Energy.
FinnCap expects MRI to re-pay a £1mln loan to Armadale within the next 18 months. Meanwhile, progress at Mpokoto has been rapid with 2015 the target for first production.
Shares were 0.09p today, valuing the business at just US$5mln, a fraction of the Mpokoto net present value.