The Speculator: Two gold stocks in line for a boost

Investors in two Aussie gold stocks with advanced exploration projects in the west African republic of Ghana will be looking for a boost in their shares this week.

Both companies are presenting upbeat presentations to the Sydney Mining Club’s monthly lunch at Tattersalls Club tomorrow and both have traded down from their highs last week in line with a jittery market as profit-takers promptly took their clip.

Canadian broker bullish on Adamus Resources

One of the presenters is Adamus Resources <ADU.AX>, which has established an initial 2 million oz gold resource on the southern Ashanti gold belt in Ghana. Ghana was the first African country to be granted independence from Britain, in the late 1950s, and has a long and stable history of hosting foreign-owned gold miners.

Yesterday, Canadian broker Clarus Securities Inc, of the Toronto Stock Exchange, released an enthusiastic research report on Adamus after visiting the company’s gold project.

The broker rated Adamus as a “speculative buy” with an initial price target of $C0.95c (equivalent to $A1.02), and highlighted potential upside from a re-rating as a producer within an 18-month period.

That price target contrasts with trades early this week at 36 cents, up from a 12-month low of 10 cents, but well down from a 12-month high of 54 cents. Adamus has its 154.5 million shares listed on the ASX, the Toronto SX and the Frankfurt SX in Germany.

The company’s 2 million oz gold resource is contained in two prospects 9km apart, with around 85 percent in the measured and indicated categories.

The company is confident of increasing that to 1 million oz without additional drilling. Adamus has a 90 percent equity and the government of Ghana 10 percent.

Results of a bankable feasibility study will be presented at tomorrow’s talk fest. It envisages a treatment rate of 1.3 million tonnes of ore a year over a minimum mine life of 10 years.

Gold production of more than 100,000oz a year is expected in the earlier years, with an initial cash operating cost as low as $US360/oz. Estimated life-of-mine cash cost is expected to average $US495/oz.

Capital cost is estimated at $US87 million to bring the mine into production in 18 months, with the Adamus management understood to be looking at around 25 percent of that in new equity and the balance in debt finance.

The broker believes a payback estimate of 3.5 years is attractive enough to facilitate a financing structure, possibly by the third quarter of the current 2009 calendar year. The broker adds: “The credit crunch has negatively impacted the time to market for new gold production, putting a premium on near-term producers with significant exploration upside.”

That’s something Adamus has in large measure, with exploration ground extending over 644 sq km, on which six other targets have been so far defined in addition to the present project. Clarus Securities predicts Adamus will be “able to generate enough cash flow to facilitate aggressive exploration to boost its resource base beyond 5 million oz, to extend current mine life and fund potential plant expansions”.

Perseus Mining’s high hopes

Perseus Mining <PRU.AX> claims to hold one of the largest undeveloped gold projects in west Africa, with a feasibility study under way to exploit its 5.2 million oz Ayanfuri gold project in Ghana as a 200,000oz/year mining operation.

It’s early days yet, since most of the resource is still in the indicated or inferred category (4.02 million oz at a grade of 1.4g/t and another 1.26 million oz at a marginal 0.7g/t).

Perseus has also completed a scoping study on its 80 percent-owned Tengrela project, which straddles the adjoining west African States of Mali and the Ivory Coast. That may not appeal to more conservative investors for those countries do not enjoy the same relatively low-risk rating as Ghana.

Perseus shares have traded up from a 12-month low of 29 cents to a high of $1.54, and at 66 cents earlier this week the company’s 175.5 million shares carried a market capitalisation of $115.8 million.

Remaining cash at December 30 stood at $3.62 million so the punters can look forward to a further capital raising in the near term.

Key speakers at tomorrow’s talk fest will be the chief executive of the Ghana Mineral Commission, Benjamin Aryee, Adamus managing-director Mark Bojanjac and Perseus managing-director Mark Calderwood.

Robust Resources sets new high

Meanwhile, our closer-to-home gold punt, Robust Resources <ROL.AX>, ran to a new 12-month high of 33.5 cents at last week’s close after online comments in an open briefing from Ian Hicks, managing-director of Trafford Resources <TRF.AX>, which holds a 19.9 percent stake in Robust, with rights to take its holding to 26 percent.

Robust, added to the portfolio at 13 cents, has an active drilling program on its Lakuwahi volcanic caldera gold, silver and base metals project on Indonesia’s island of Romang, 500km north-west of Darwin.

Before its merger with BHP, Billiton drilled 14 holes on a small section of the caldera in the 1990s, 12 of which intersected mineralisation. The prospect was shed after the merger and Robust more recently picked it up.

Hicks pointed out that after completing another 10 holes, a total of 22 holes so far drilled on the property within a small area of 150m by 200m, had intersected previously reported mineralisation.

The company has confirmed it is extending its current diamond drill program of 2500m, to be completed by June, to another 5000m in the new financial year.

How the portfolio stands

Company	ASX code	Shares	Bought	Purchase price*	Value 31.03.2009
Viralytics	<VLA.AX>	50,000	31.12.2008	$0.040*	$0.037
Laserbond	<LBL.AX>	20,000	04.07.2008	$0.100*	$0.130
EMT Corp	<ETC.AX>	20,000	01.08.2008	$0.240*	$0.210
Citigold	<CTO.AX>	50,000	16.09.2008	$0.274*	$0.200
Robust resources	<ROL.AX>	50,000	13.02.2009	$0.130	$0.285
Quickstep	<QHL.AX>	20,000	16.03.2009	$0.165	$0.240

Total value of portfolio: $37,700
Cash at bank: $11,200
Total: $48,900
Portfolio change since 1.1.2009: +22.3 percent
All Ordinaries change since 1.1.2009: -3.47 percent

Portfolio notes

Disclosure: The author's family holds shares in Laserbond