AusQuest going for gold in lucrative West Africa BARRY...

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.

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 (17 a share on Friday).

The cash is there thanks to the $26 million at 40 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 40 a share paid by Cliffs in 2008, you'd be putting your money on the West African gold play.

WEST African gold exploration by ASX-listed companies is not the only game in town.

That has been demonstrated amply in recent weeks by Doray Minerals (ASX: DRM) at its Andy Well gold project north of Meekatharra in Western Australia.

Then there was Resolute Mining's (ASX: RSG) big gold hit at its Mount Wright project, 40 kilometres north-west of Ravenswood in north Queensland.

Resolute's gold hit served to refocus attention on the region's exploration potential over and above what the region has already yielded at Ravenswood (2 million ounces), Pajingo (3 million ounces), Mount Leyhson (3 million ounces) and Charters Towers (7 million ounces).

It's against that backdrop that Liontown Resources (ASX: LTR) has secured a big-spending farm-in deal for its Mt Windsor gold project with cashed-up WA gold producer Ramelius Resources (ASX: RMS).

Ramelius is to spend $7 million in stages to earn a 60 per cent interest in Mt Windsor, chasing the same intrusion-related gold deposits at Mount Leyshon, Mount Wright and Ravenswood and the Pajingo style of low-sulphidation epithermal vein deposits.

Ramelius is to be the manager and it won't be messing around. Liontown last traded at 6.8 cents a share for a market capitalisation of $14.8 million. It is holding cash of about $3.8 million, which means it should be able to add another project to its portfolio now that Ramelius has picked up the running at Mt Windsor.

RIVERSDALE Mining (ASX: RIV) now boasts a $1.8 billion market value on the strength of its 65 per cent-owned Benga coking and thermal coal project in Mozambique, a joint venture with India's Tata Steel.

Good luck to it, too, as it works towards becoming a long-term 20-million-tonne-a-year producer, one that the world's steel producers - including Tata - are banking on to help ease the grip that BHP Billiton has on coking coal supplies thanks to its fabulous Bowen Basin operations.

But Garimpeiro's interest today is in RTL Corporation (ASX: RTL), which is making the switch to mineral exploration after plodding along as a mining services technology group.

It has just picked up an option over three mineral concessions in Mozambique's Zambezi coal basin, with one of them adjacent to Riversdale's holdings and within 20 kilometres of its Benga coal project.

The deal is with the privately held Dugal, which RTL said is sponsored by US-based investment group Varuna Capital. Under the option, Dugal could get $US550,000 ($A594,000) for giving RTL the right to earn a 70 per cent interest by paying an additional $US500,000 within 12 months, plus some other bits and pieces, not the least of which is 250 million shares with options.

All that reflects what RTL reckons is an ''exciting opportunity (subject to shareholder approval) with potential for large deposits of coking and thermal coal''.

Having a concession next door to Riversdale's Benga project means the claim will not fall on deaf ears.

RTL has got more than 600 million shares on issue. So, even at Friday's close of 3.8 a share, its $23 million market value is not exactly down there with the penny dreadfuls. But that won't seem much if it eventually proves the presence of some thick coal seams on its own patch of Mozambique.