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Crusader Resources receives “overwhelming” response ahead of London listingASX:CAS

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09:30 23 Feb 2018

Crusader Resources is on the way to AIM, supported by an impressive 2.4mln ounce gold resource

Borborema's enterprise value per ounce of gold in the ground is an attractive US$6.00 

It’s perhaps no surprise that Marcus Engelbrecht has popped up at Crusader Resources (), given his attempts last year to lever the company’s assets into Stratex International.

“When I left Stratex I got a call from the chairman of Crusader,” explains Engelbrecht.

“He really appreciated my vision and asked me whether I would be prepared to come on board. He’s also the major shareholder.”

READ: Crusader Resources to lift cash for gold strategy

Engelbrecht, though he doesn’t put it this way himself, didn’t need asking twice.

After all, he spent much of last year convincing investors in the UK of the merits of Crusader’s 2.4mln ounce Borborema gold project in Brazil.

He knows it pretty well by now, and has a clear enough idea of its worth – much more than the A$22mln that Crusader is currently capitalised at on the ASX.

Inside that resource is a reserve of 1.6mln ounces, based on over 95,000 metres of drilling, and netting that figure out give the very attractive enterprise valuation figure per ounce of just over US$6.00.

A bulk sample is currently undergoing testing in Perth, the results of which will bolster a feasibility study that’s already been published.

“This is a project we can take through to a decision to mine really quickly,” says Engelbrecht. “We’re fully licensed. We got that last year.”

So why is Crusader currently so underappreciated?

One reason is grade. At Borborema, in spite of the sizeable resource, the grade is relatively low, at 1.1 grams per tonne, which doesn’t sit particularly well next to some of the more spectacular gold project closer to home to the company’s listing in Australia.

On the other hand, the orebody is very homogenous and is close to infrastructure, qualities which are by no means guaranteed in Australian gold projects.

The other reason is cash.

When Engelbrecht joined at the end of last year, the company raised A$3.3mln. But there needs to be more.

“The company needs to be recapitalised,” says Engelbrecht. “We intend to dual list the company and raise between £10mln and £15mln.”

London’s AIM is the secondary market of choice, given Engelbrecht’s UK corporate experience and the interest he has already drummed up for Borborema when he wanted to put it into Stratex.

That plan was defeated only by the thinnest of margins, and by a faction that presented legitimate concerns about dilution, but no readily understandable alternative for growth.

But if Borborema could have worked for London investors inside Stratex, it could also work as a standalone inside Crusader.

The investment case for the asset remains the same.

The total capital expenditure required to get the mine up and running has been estimated at US$93mln. The net present value set at US$180mln, with the internal rate of return ringing in at 31%, assuming US$1,300 gold.

The plan is to mine at a rate of 70,000 ounces per year at a cash cost of US$724 per ounce and all-in costs of around US$900.

So there’s margin to be had already, and more may yet be brought to the table

“Part of the work we’ll be doing this year will be looking at optimisation,” says Engelbrecht.

All of which has got the institutions interested to say the least. The International Finance Corporation is already on the register, and more may be set to join.

“We’ve had a number of meetings,” says Engelbrecht. “It’s been overwhelming.”

As a result, ducks are already being put in a row. One UK director set to be appointed has been instrumental in raising of the order of US$750mln in the past, while Mike Jones, the experienced ex-analyst from Canaccord has already joined.

“Our shareholder meeting overwhelmingly supported all that we wanted to do,” says Engelbrecht.

“We want to expand the investor base in London. Getting onto Aim is a good step for us.”

 
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