AS well as chairing this West African gold play, Middlemass owns a 7 per cent stake and so has more skin in the game than a Hell's Angels accredited tattooist.
Another reason for taking a punt on the Mail-based developer is that chief butterfly Mark Connelly has form in tackling the whiles of the Dark Continent. As Adamus Resources chief, he kick-started Adamus's Nzema mine in Ghana and then put together the merger with the TSX-listed Endeavour Mining.
Papillon this week upgraded the size of the resource at its Fekola project to 5.15 million ounces. The next stage is a definitive feasibility study to prove the merits of an open-cut mine, producing 300,000 ounces of the precious stuff annually over a nine-year mine life, for a capital cost of $US300 million ($328m). Connelly cites a mineable grade of 2.7-2.8 grams a tonne, with a $US600/oz cash cost and an "all in" cost of $US725/oz.
Assuming a $US1000/oz average gold price, the mine is forecast to generate $US130m of free cash flow, rising to $US190m at $US1300/oz (bullion currently sells for $US1360/oz).
Connelly says that having raised $53m in March, Papillon is well funded to the DFS stage.
Here's hoping this Papillon floats like a butterfly and doesn't sting investors like a bee, as too many other gold plays have done of late. Spec buy.
