AusQuest going for gold in lucrative West Africa Barry FitzGerald April 19, 2010 Two big players are expanding their exploration portfolios, while another is making the switch to mineral exploration.
CASHED-UP explorer AusQuest (ASX: AQD) has managed to put some pep into its share price by expanding its exploration portfolio to include a gold property in Burkina Faso, West Africa.
Punters know that a well-positioned West African gold property can be a ticket for dramatic sharemarket re-ratings, given the region's ability to yield multimillion-ounce resources, seemingly in the blink of an eye.
Advertisement: Story continues below AusQuest's move into West Africa is by way of a deal on a property in Burkina Faso with Canada's Etruscan Resources, a group that has had to tidy up things in response to some lingering impacts of the global financial crisis.
AusQuest can earn up to an 80 per cent interest in the property, which covers about 670 square kilometres of the Banfora greenstone belt, by spending $7 million over six years. People on top of the West African gold rush tell Garimpeiro that the land package has the right sort of credentials.
Soil sampling by Etruscan has previously outlined large areas that returned anomalous gold results. In addition, rock chip sampling has returned gold values from 1 gram a tonne gold up to 64 g/tonne gold.
We will know soon enough if that promise gets translated into results to get excited about as AusQuest plans to start a 10,000-metre drilling program as soon as it can secure a drill rig.
What is known at this stage is that AusQuest is more than capable of funding the West African push. At last count it was holding $22 million in cash against a market capitalisation of $38 million (17c a share on Friday).
The cash is there thanks to the $26 million at 40c a share that American iron ore and coal producer Cliffs Natural Resources pumped into AusQuest in November 2008, giving it 30 per cent of the company.
Cliffs' interest in AusQuest obviously pre-dates the West African push. Manganese, iron ore, nickel, gold and base metals in Western Australia, and a base metals play in the Northern Territory, remain on AusQuest's books, with the manganese hunt one to watch in 2010.
Take out the group's cash, and the market cap is not really challenging, particularly if drilling programs at the manganese projects (Stanley and Table Hill) confirm the early promise. But if you had to bet which of the projects was going to get AusQuest back to the 40c a share paid by Cliffs in 2008, you'd be putting your money on the West African gold play.
AQD Price at posting:
14.5¢ Sentiment: Buy Disclosure: Held
