I held ADU for along time but got bored out of it in the 60...

I held ADU for along time but got bored out of it in the 60 cents zone. Given the action in POG, the new management, drills on site; it may be time to look for an entry. This article was taken from minesite.com


September 13, 2007
Adamus Resources Gets Rigs By An Unconventional Route

By Our Man In Oz

“Six beers with Ron” is not (a) the name of an Australian pub somewhere near Kalgoorlie, nor is it (b) the name of a dreadful Australian musical, and neither is it (c) one of the requirements of the proposed Australian citizenship test for new migrants. It is, however, a lesson which mining investors, and mine managers, would do well to remember. Sinking six “Crownies” (Aussie slang for a Crown Lager) is what Mark Connelly did a couple of months ago with Ron Sayers, doyen of the Australian mineral drilling industry, and the man behind the listed Ausdrill. It was over the beers that Connelly convinced Sayers to make available two rigs for work on the Southern Ashanti project in Ghana which Adamus Resources has been slowly working up into a state fit for development. Without the rigs site work threatened to slow to a crawl. With them, and with other work in hand, Adamus is developing a head of steam that could make it one of the surprise packets of 2008.
Connelly is the freshly-appointed chief operating office at Adamus, part of the “new broom” which swept into power earlier this year after muttering were heard from major shareholders that events were not moving fast enough. No-one doubted that Adamus had found a lot of gold on its leases close to Ghana’s Atlantic coast. At last count, and Ron’s rigs should soon boost the numbers, the resource stood at 23 million tonnes of material grading 2.1 g/t gold for 1.6 million ounces. To most outside observers, that looked like a project ready for someone to press the green button marked go. But, previous management was unconvinced that it knew enough about the orebody, was worried about the ratio of resource to reserve ounces, and concerned about the refractory nature of some of the material which would require specialist treatment such as roasting, or the use of bacterial leaching.

Whatever happened in the past, events started to move quickly this year. A few weeks after Minesite last reported on Adamus (January 30), and noted then that the transition from explorer to producer can be “a painfully slow process”, the broom went whistling through mahogany row. Out went the old guard and in came Connelly, and a new managing director in Mark Bojanjac. Judging by their pictures in the latest corporate hand-outs they mean business. The only man with a smile is the chairman, John Hopkins. Everyone else on the expat side of the company looks like the Aussie cricket team after losing the ashes in 2005. The three local Ghanaians on the management team were obviously barracking for England.

By now, you should get the picture. Shareholders, and the money men at Macquarie Bank, have cracked the whip at Adamus and ordered the new team to get on with the job of building a business. Connelly, who spoke to Minesite on the edge of a mining conference in Perth, said brisk progress was being made. He is confident that Adamus can achieve the targets set by a feasibility study completed in the June quarter. That includes building a mine for US$79.5 million, capable of processing 1.3 million tonnes of ore a year, for the recovery of 100,000 ounces of gold a year, at an operating cash cost of US$345 an ounce. On that basis, the Southern Ashanti project pays back its capital in 2.8 years, and will run for at least seven years – with that number reflecting the proven ounces, rather than the bigger number of ounces in the resource category. Ron’s rigs will do wonders to convert resource ounces into reserves, and help Adamus find more gold, such as that encountered in recent drilling which returned 14 metres at 11.5 g/t, with a four section in the core assaying 26.5 g/t.

For Bojanjac, an accountant with extensive gold company experience, and Connelly, a career gold man with Newmont and Inmet, the challenge is to complete the work started by previous management. First priority is to finalise the government approvals process, which should be done by the end of year, or early 2008. While that’s afoot there’s the job of staffing up the company with professionals, and this is when Connelly introduces a really fascinating insight into the problems of running a small explore/producer in a boom. The peril of outside consultants.

“The company really hasn’t had a big team on board,” he said. “It relied very heavily on outside consultants. The problem with that is that some of the consultants, who are excellent people, were doing our work on a part-time basis. That’s how the company suffered some of its time slippage and eroded shareholder value. What we’ll do is get top, full-time people on board and drive the project into production.”

Another variation with the new team is that Adamus is likely to take control of the construction process. Connelly said contractors were “not hungry” for work because of the boom, and that meant management and other fees were high. “We’re pretty confident we can save US$8 million alone on fees,” he said. There is also likely to be a preference for using Ghanaian contractors rather the outside fabricators, and some interest in sourcing second hand processing equipment to keep costs low. Issues to be faced by Adamus as it hits the fast lane to a development commitment include resolving a lingering question mark over power availability. There’s no shortage of power generation thanks to a major hydro-electricity dam in the country, but the distribution is a problem with an estimated 30 per cent of power “stolen or lost” along the lines.

Managing the many issues inherited by the new team is what they get paid for. But, that lesson in how to win the heart and mind of an Aussie drilling contractor (“six beers with Ron”) is likely to repeat itself in a recruitment pitch Connelly tried out on Minesite. The mine camp, he said, will be “on the beach” – and what better way to convince expats stuck in a dusty hole somewhere “up country” to join Adamus than the sound of rolling surf, and a proven problem solving tech called ripping the tops off a few Crownies.