Asante Gold's (CVE:ASE) (TSX-V:ASE) chief executive Douglas MacQuarrie is nothing if not confident in the prospects of his company, proven in the fact that he has increased his position to over 22 percent since the initial public offering.
The company is two months away from some big news in the week of December 16, when a decision on an arbitration is due that will spell the fate of a deal to acquire half of the 2 percent NSR royalty Goknet Mining Company holds on PMI Gold's (TSE:PMV) (TSX:PMV) Obotan gold project in Ghana.
In late March, Asante said that Goknet, the royalty holder, had not yet received the necessary consent for the deal, and that it had referred the matter to binding arbitration. In November last year, Asante announced it would buy a 1 percent royalty from Goknet for $22.5 million in stock.
"We're feeling incredibly optimistic that Goknet will win the arbitration, and that we'll be back on track to rolling the royalty into the company," says MacQuarrie.
Incredibly optimistic indeed. Since the IPO in February 2012 at 50 cents, in which the CEO purchased half a million units, he has since acquired another 2.2 million shares at various prices, with his total interest now equaling 22.3 percent, meaning he is steadfast in his belief that the Obotan royalty will pay off.
"It's a super deal that is expected to bring $4 million a year of income to the company," asserts the chief.
"[Gold royalty companies] are the sweetest spot in the market. You make your investment and you don't have to put any more money up. Sit back, and collect your royalties assuming it's the right royalty. As your company gets bigger, you diversify the royalty exposure so the cash flow is secure."
He says the combination of low overhead, with income and full exposure to the upside of exploration success is a winner. "It hits a lot of buttons in a market that is risk averse," adds MacQuarrie.
Based on the Obotan project feasibility study published by PMI Gold, the mine is expected to produce a total of 2.26 million ounces of gold over a 11.5 year open pit mine life starting in the first half of 2015. The gold mineralization is known to extend to depth under the proposed main pit and additional mine life/royalty payments are anticipated.
Aside from the potential money-making royalty, Asante also holds a 100% interest in the Fahiakoba property - a 22.07 square km prospecting license located on strike with and between Perseus Mining’s 6.6 million ounce Edikan Mine and AngloGold Ashanti’s 60 million ounce Obuasi Mine.
But until the Canadian venture market picks up, MacQuarrie says it makes "zero sense" to dilute the company for a financing it "doesn't need to do", preferring to wait for the royalty transaction to close and for market conditions to improve. "At 50 cents, we would love to do a financing and get on the acquisition trail," he concludes.