Most intereresting points: * ...on track to produce 100,000 ounces of gold from its Nzema project in Ghana in the first quarter of 2011. In practice we aim to produce at a faster rate than that." * "We know there is more free-milling surface oxide like we will mine initially. We will add to this, Bojanjac said. We also believe there is million-ounce plus potential...." * "We need to get some value into our shares and then go shopping."
July 21, 2010
Adamus Resources Will Be On The Lookout For Gold Deals Once Its Nzema Mine In Ghana Goes Into Production Next Year By Nadia Cavallaro
The gold mining landscape of West Africa is all set to change, according to Mark Bojanjac, the chief executive of Adamus Resources. The consolidation of the multitude of exploration juniors and mining companies approaching production on the ground out there only looks like a matter of time. We get a lot of ongoing interest from others wanting to merge with us, Bojanjac said. Its not hard to see why. Adamus remains on track to produce 100,000 ounces of gold from its Nzema project in Ghana in the first quarter of 2011. In practice we aim to produce at a faster rate than that. We will be adding ounces to the resource as we go, Bojanjac told Minesite.
The company is currently spending at a rate of between A$2 million and A$3 million per week in bringing the Nzema project into production. The total capital spend should eventually amount to around US$106 million. But if that seems a lot, it wont take long to clear the debt.
This should be paid off within two years at the current gold price, said Bojanjac. The large equipment items are ordered and the costs of those have been fixed in advance. The foundations are nearly complete for the plant at the Nzema mine, and the kit is arriving on site now.
Having investigated two other areas on its landholding, Adamus expects to add to the existing resource at Nzema fairly soon. We know there is more free-milling surface oxide like we will mine initially. We will add to this, Bojanjac said. We also believe there is million-ounce plus potential in some of our deeper fresh sulphides which require a different extraction process. The company is currently examining the economics of this material with detailed test work, he added. The results from early tests look promising. So far, the company has only explored 15 per cent of its 665 square kilometre landholding.
Once in production, Adamus will be in a strong position to merge with a gold junior, most likely one with exposure to West African projects, Bojanjac said. In the mid-term, once we get into production, we should see a share market re-rating. We need to get some value into our shares and then go shopping. With an operating team and immediate experience in successfully commissioning a mine we would be a fairly attractive party for earlier stage explorers to merge with.
And, although based in Perth, Adamus is at home in Ghana, according to Bojanjac. Ghana is the easiest African company to do business. Its a democratic country and the mineral title system is very similar to Australia, he said. The infrastructure is also impressive, he added, as is the opportunity. We go where the minerals are, and projects like this just arent available in Australia. They were mined twenty or more years ago, he added.
His view is a reflection of the increasing awareness among Australian companies of the potential of Africa. Its only in the last 10 to 15 years with Australian companies like of Redback and Resolute successfully mining in Africa that confidence has grown in the investment market for African projects, and funding is more readily available, he said. As a result of that improved confidence, Australian miners continue to flock to Africa in the hope of generating value from early-stage exploration projects.
Adamus also owns the Bollinger diamond project in the Kimberley region of Western Australia, but while gold is a stronger-performing commodity, Nzema will be the companys sole focus. Until Bollinger looks like offering a better return, Bojanjac is quite clear about what he wants to do with it. We will keep it where it is, he said.
Hes fairly confident about the prospects for gold looking ahead, although less enamoured with other commodities. I dont think the worlds economy is out of the woods yet, there are very real inflationary risks, he said. Gold has gone up in real terms and will go up further on inflation.
Costs have not risen at the same rate in more recent times. In that context its no surprise that companies like Adamus continue to look to gold.
ADU Price at posting:
48.6¢ Sentiment: LT Buy Disclosure: Held
